One new answer we are getting when we ask for the identity of the real holder in due course of the note is “that information is confidential. You are not entitled to that.” Of course this is ridiculous — if you signed a note and it has been “assigned” to some third party, you have a right to know where to send your payments and to whom. There is no confidential status under any law or theory, legally, morally or ethically. And you have the right to know if the holder in due course is getting paid if there is a mortgage servicer involved. And if there is a mortgage servicer, you have a right to know whether they are indeed authorized to make collections — authorized by the real holder of the note, whoever that might be.
Lawsuits in Texas and other states indicate that the distribution reports to investors are vague at best and outright fabrications in other cases.
All of this brings us back to how they did it. How did they sell a $300,000 mortgage for $1 million and get away with it? And what happened to all that money? ANSWER: They sold the same mortgage over and over again. That is called fraud. They put the loan documents in pools that were described in tables that were impossible to decipher. See dsvrn.6m.d.htm .
They were able to do this and make it “work” because they wanted and pressured the lenders to give them the worst loans possible carrying the highest interest rates possible with the most onerous terms for prepayment etc. that were possible to insert. That is because these loans were made with a note bearing an interest rate of 16% or more but they were put into pools of assets that contained a few real loans, thus bringing the average STATED return on investment to perhaps 6-8%. This was a fictitious return because none of the 16% loans were paying anything other than zero or teaser rates.
Even though the pool contained numerous loans on homes that were appraised at 50% over market, and terms wherein the “borrower” was paying nothing to nearly nothing on the loan for the first few months or years, the loan went into the pool as a “performing loan” (because nothing was expected from the borrower) and sold as though the 16% income ($48,000 on a $300,000 note) was being paid. An unsuspecting investor would put up perhaps $750,000 to buy certificates for the $48,000 in income, especially if it was insured and carried a AAA rating. There is a $450,000 profit on a $300,000 loan — available to the investment banker only if the the loan was toxic waste (Z tranche) classified as such because there was no chance whatsoever that it could ever be repaid.
But wait there is more. If you assign the $48,000 fictitious income into multiple parts (say $8 parts of $6,000), you could assign the same note to eight different pools. In other words they were selling the same note multiple times. If you and I did that we have free room and board courtesy of the state or federal government in a prison of their choosing. But on this scale, despite the clear presence of two sets of victims that were coerced, deceived, cheated and misled (borrowers and investors) the bailout went to the thieves instead of the victims.
What this means to foreclosure defense is that your defense goes far beyond the “where’s the note” strategy. It goes to whether the note has been paid in full and whether there are multiple parties (investors) who are equity holders in the note and perhaps even the mortgage, all of whom have at least an arguable right to collection — totaling perhaps 300%-500% of your loan amount. It means that your payments probably went into the wrong pockets. It means that even if you made no payments, they probably paid the investor anyway out of reserves, overcollateralization, cross collateralization or one of several insurance products.
The reason the note is gone in most cases (destroyed in 40% of all cases) and lost in most other cases is that the terms of the note do not match up with the description that went up line in the securitization process. That leads to only two possible conclusions:
Either the note was separated from the mortgage making the secured obligation into an unsecured obligation thus voiding the power to foreclose OR the “assignments” were invalid because they were undated or otherwise defective leaving the mortgage and note intact — but PAID in full. Either there are assignees out there who have rights to the note obligation or there are not assignees with any rights.
If there are assignees with rights, you need to know who they are, how they got the loan, and whether they are proper holders and if they are still holders in due course and if the seller of your mortgage sold the same deal to other assignees. And if so whether your payments or someone else’s payments were properly or improperly allocated to your account — not at the mortgage servicer level but much higher up at the level of the Trustee for asset backed securities series AAAA2007. You find that in the distribution reports. And if it isn’t there you find it through discovery asking for explanations of exactly where the payments went, who got them and why, along with proof of deposits and how they wer entered on the books of the receiving party.
If there are not assignees with rights, then the case is simple it is defended by one word: PAYMENT. They were paid in full by a third party, plus an undisclosed fee (TILA violation) for “borrowing” the lender’s license in a “table funded loan” where the agent (mortgage aggregator) of the investment banker, directed by the CDO Manager (Collateralized debt obligation manager) reached around the apparent lender and placed the money on the table to fund your loan. The apparent lender’s name was put on the note and mortgage. Why? Because they wanted to qualify for all the exemptions that apply to banks and lending institutions even though those institutions were not making the loans.
The apparent lender was paid a fee for 2.5% for pretending to underwrite the loan, perform due diligence, confirm the appraisal, confirm the viability of the transaction, confirm the affordability and benefits etc. The lender did no such thing. Brown’s lawsuit brought by the Attorney general of California, shows that the people doing the underwriting were under quotas that amounted to approving 70-80 loans PER DAY. 10,000 convicted felons were recruited in Florida to become LICENSED mortgage brokers. A virtual army of people were given scripts and amrching orders to get those loans signed no matter what they had to offer or what lie they had to tell.
THIS MEANS THAT EVEN YOUR PRIME MORTGAGE FIXED RATE 30 YEAR AMORTIZATION WITH ESCROW FOR TAXES AND INSURANCE WAS SOLD IN THE SAME WAY BECAUSE IT WAS SOLD AS PART OF A POOL WITH THESE FRAUDULENT ASSETS. ALL THE REMEDIES AND STRATEGIES PROPOSED HERE IN THIS BLOG APPLY TO YOU WHETHER YOU ARE IN TROUBLE ON YOUR MORTGAGE OR NOT.
Bottom Line: Go Get Them. They don’t have the goods and can’t produce them because if they do produce them it may be an admission of criminal fraud.
Check with local counsel before taking any action or deciding on any course of action in your particular case. This is general information only.