How to Use Lost Documents and Destroyed or Withheld Documents

Floyd Norris - Notions on High and Low Finance

EDITOR’S NOTE: Earth,the final frontier. Somewhere there are people who grasp the concept of reality. But to give credit where credit is due Floyd gives primary print space to contrary points of view. Even better, he shows his professionalism by asking the two questions (1) why would banks lose the note and (2) “what am I missing here?”

So here is my response and I invite you all to forward the article toFloyd and see what he says in response.

A note is cash equivalent. So why would anyone rip up cash? His question is not so far-fetched. It turns everything on its head to think of banks ripping up money. You have a $10 bill in your hand. Later when things are looking litigious, you rip it up. Why?

The answer Floyd — the only possible answer — is that there is greater risk in having the $10 bill than in keeping it. What circumstances would make the banks believe there wass more risk in cash equivalents than in throwing them out and pretending they had them?

Well, here’s a simple example. Suppose you took a Loan for $1000 after certifying through third parties (whom you control) and your own warraqnty that you had a $1,000 bill in your pocket. Yes, that would be the $10 bill in our example. Now the loan goes bad or the lender wants to actually see the bill. Which would you rather do (1) show the $10 bill and go to jail or (2) say you lost it or it was accidentally destroyed?

The THIING you are missing Floyd is that this was all based upon representations and not the real thing. Fraud was committed on BOTH the investors and the borowers who both purchased financial products predicated on the same assets which were intentionally   viability (investment grade, remember?) at an unsustainable value and which were represented to be of the highest quality when in fact the securitization chain all the way from investor to borrower was predominantly toxic.

What you are missing is that there were two HUGE financial incentives to perform in what appears to you and others as erratic: (1) the huge yield spread premium between the aggregating pool and the SPV pool (that’s right there are ALWAYS TWO POOLS NOT ONE) and (2) the geometric steroidal profit rained on the investment banks who created these pools by leveraging insurance 30-70 times over. In simple terms the investment banks (NOT THE INVESTORS) received $30-$70 for each $1 in the promissory note that was funded for the benefit of the homeowner.

In other words, it was ONLY through failure of the pool that a $300,000 note could (a) be paid off with over $9 million (even if it wasn’t in default) through credit default swaps that are insusrance but specifically excluded from official definitions of insurance or securities.

Borrowers are right when they demand the documents becuase it will lead to collapse of the “lender” side (actually pretender lender” because they simply steal the identity of the investor the same way the stole the identity of many borrowers in order to make the pool look good. They are looking for low-hanging fruit not cases where the deceit will be exposed. Or it will lead to a reasonable settlement that reflects true value and affordability wth normal underwriting standards applied.

Floyd this is not legalmumbo jumbo or some technical sleight of hand trick. NONE of these foreclosures are initiated by the creditor. All of these foreclosures are blatent in that they seek to steal the home wihtout having advanced ONE PENNY to anyone for funding or buying the obligation. 

December 4, 2009, 3:59 pm <!– — Updated: 5:42 pm –>Are Banks Losing Lots of Documents?

My column today has provoked a number of e-mail messages from readers saying — some politely, some not — that I failed to discover that the big problem is that banks are losing documents, over and over again.

“I have faxed/mailed every document requested, for a year now,” complained one troubled homeowner.

Another, who thinks I asked foxes to tell me about chickens, adds:

My employer came under S.E.C. investigation, early this year, resulting in multiple rounds of layoffs. As a result, I was forced — through no fault of my own — to reach out to Bank of America, phoning regularly since MAY, at least twice monthly and faxing copies after each call (the only delivery method they allow — for EACH and every earnings document this year). Between regular assertions that they “lost the copies” and outright, documented LIES that I did not call or fax, I am still struggling with them in DECEMBER!! I can assure you that I have complied promptly and completely with their every request — and I am certain I am not a limited statistic — as your column strongly implies.

Jean Braucher, a law professor at the University of Arizona, points me to a paper she wrote: “Fixing the Home Affordable Modification Program to Mitigate the Foreclosure Crisis.” She thinks the banks are far more culpable than I made it sound:

I think the major reason we are seeing so few permanent modifications may turn out to be that many servicers are losing documents or perhaps refusing to admit that they have documents. There have been many accounts of borrowers getting the runaround at the stage of trying to get a trial modification, and now I believe there is reason to suspect that pattern may be continuing at the stage of conversion from trial to permanent modification.

After reading your column, I posted a query on a listserv this morning to a group of bankruptcy lawyers, some of whom have had experience helping clients try to get HAMP modifications. I got back reports that lenders deny getting documents that have been sent 3 or 4 times. In short, I don’t think you had the full story in your column.

I think that the first thing that the administration needs to do is make sure that Freddie Mac, the compliance agency for HAMP, does a searching audit of the procedures servicers are using, including by talking to borrowers and housing counselors and lawyers for borrowers. I think this will turn up a lot of evidence, some of it concerning continuing lack of capacity to handle modifications but some of it also indicating unfair and deceptive practices and even fraud are occurring. Then the Federal Trade Commission needs to make an example of the worst offenders with some enforcement actions.

I have a couple of reactions.

First, I see no reason for the banks to purposefully lose the papers. What am I missing?

Second, a theory that banks can be clumsy and even incompetent deserves respect.

I am not sure to what extent lost documents are a major part of the problem, but I am now sure that many people think a lot of documents are vanishing.

Perhaps each bank should appoint someone to receive documents from people who think their documents have previously been lost, hand out receipts, and then be available to intervene if that bank’s bureaucracy claims the documents are lost. That person should be willing to take the documents in person, as well as by fax. (The banks have scanners to put the documents into their systems.)

If that solves a big part of the problem, great. But I suspect there are many other reasons that modifications are not becoming permanent.

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32 Responses

  1. Is it possible to find the cusip number for the mortgage contract. It will surley show the securitization and fraud, would it not.

  2. Really don’t matter where I am the UCC is clear he who holds the note is the owner in due coarse. FDic is federal also . I am the legal rightful owner but it does not matter the FDIC makes there own rules and cannot be governed by any outside enity. they get the last say does not matter if they are changing the rules ignoring laws not a da-n thing we can do about it. Scary huh I hope this opens people eyes to see we are not free our government controls us like puppets on a string, coruption is rampant.

  3. @Tony Brown:

    What city are you & property in?

  4. Diane Olick CNBC do you want a story ?

  5. Upon futher investigation it seems that the Bank of New York Mellon is successor trustee for JP Morgan Chase as trustee for certificates holders of bear stearns asset backed securties,Inc. Asset backed certificates series2003-2,c/o EMC Mortgage corp it’s successors and assigns , all it’s rights, title interest in and to a certain mortgage, together with the note executed by……… to MERS acting solely as a nominee for RBMG. witnessed and signed by the famous scribble looking like a big U. Bhy one and I believe I’ve seen that name on here before LIQUENDA ALLOTEY as VP !!!!! of MERS. He is also a forclosure specialist for fidility. HMMMM. Let’s see according to the Prospectus of the 2003-2 series we have some major fraud going on. Securities exchange commission needs to start a formal federal investigation. ALOT of BIG companies in volved in this. Can you Believe this anyone wanting to Bust all these people need to contact me. Criminal , fraud, Federal Agency I have it all. Any comments ????

    i

  6. Please read. Mortage Notes are worthless (not my opinion) FDIC not protecting the public. Here goes long story, I have the note stamped fully paid and satisfied properly endorsed with the signature stamp of the VP of RBMG dated March 18,2002 along with a letter from RBMG stating that the loan is paid in full. RBMG was aquired by NETBANK, The FDIC shut down NETbank September 28,2007.ROD office will not satisfy the mortgage because they say they don’t make copies of the note, only the mortgage go to RBMG for satisfaction of lien. AS stated RBMG/Netbank are in fdic receivership.Now according to the FDIC as long as the loan was paid off prior to the receivership and that the failed corporation is in receivership they can satisfy the lien. proof of payment to include such things as a copy of the “PAID” note, cancelled check , HUd -1 or anything else that would indicate payment in full. I sent the paid note, a letter stating that the loan is paid in full, and a copy of the envelope stamped lien release on the outside. The FDIC refuses to issue the lien release saying the paid in full NOTE is not PROOF that the mortgage has been satisfied!!! The letter is not proof of payment. This is where it get’s even better the FDIC said they went to a public website that shows their has been an assignment from RBMG/MERS to the Bank of New York Mellon on March 19th 2009. RBMG IS DEFUNT has been since the take over by the FDIC in 2007. Mers said the MIN # has been deactivated since 2002 and that the servicer is The FDIC as receiver for NETBANK/ RMBG. I ask 3 supervisors at the FDIC for a formal investigation, I have reported to this to the inspector generals office, the office of omsbudman.I will not stop till I get answers. Media outlets, senators my state attorney general as there is some questionable activity surrounding this. SO forget produce the note cause I can and nobody cares. It is funny that these so-called mortgage companies can sell a non- existent NOTE to in vestors, Take your home by Forclosure on a Lost note / non existent note. But when I have the real thing original in ink paid in full it is not worth the paper it is written on, FDIC, Mers, Morgtage compaines are all crooked!!!

  7. KyleNYC,

    Please do not be alarmed, this is the extreme cases I have read a few things like this, but you are correct, as in my case, and of which I use an the example for me, and from what the many lawyers have told me, including my own lawyer have told me this, the loan app on my case stated that I made many tens of thousands more that I actually made, this worried me too, but as I became educated on this issue, even the fact that I did sign this loan application, it was doctored, long after I signed it.

    This caused me a lot of sleepless nights, but I figured it out, in the end. “Do not worry”, is what my lawyer told me, this is why I hate the mods so much. but “do not be bothered”, as far as my lawyer stated to me, this problem will not bother me at all.

  8. Mr. Kenny,

    I’m not trying to “challenge” you on this, but I have to respectfully ask: what are you basing this on?

    Inside information? First hand knowledge?

    ‘Cause if they do this, the SECOND person the FBI should be going after is the Mortgage Broker who “approved” said numbers.

    As a professional in the real estate industry, I can tell you that I’ve heard from RELIABLE sources that one of the tricks the brokers pulled was to modify the mortgage application WITHOUT the borrowers knowledge.

  9. Please know this, if a borrower submits a loan application that has drastic differences, to the app the borrower did on inception of the loan the banksters are turning that file over to the FBI, this method is another manner that the banksters are implementing to foreclose the homes, once again. This proven method makes for a clean walkaway.

  10. Well so what does modify mean?, does it mean a proper reduction on the inflated principal, and the interest and no tricks on the back end of the loan like those nasty lump sums?

    Why should someone take a Mod when the value of the asset is worth so much less than the real market value? and what is the real value anyways. I knew some people who got a huge discount off the loan amount but the apartment was still only worth much less than they were, exposed to the lender for. look the lender got 100 cents on the dollar so let us start there.

  11. This report is even worse than Floyd’s. At least he asked the questions…

    Bank of America: 2/3 of Borrowers May Lose Government Mods

    “Mr. Schakett told me that of the 65 thousand trial modifications set to expire Dec. 31st with B of A, a full two thirds of the borrowers, while current on their payments, have not submitted the full documentation required to turn a trial mod permanent under the HAMP guidelines.

    We don’t really know the major reason why the customers are not returning the documentation,” Schakett claims. Well I can tell you why (and I’m sure he knows this too). The trial modification process only requires oral verification of income to begin, but to go permanent, you need to prove your income, submit your tax returns, and basically come clean with all your finances. I’m guessing a lot of folks who took out their initial loans with false or non-existent documentation, aren’t eager to let the government know that.

    I can’t fully dismiss the banks when they tell me that 2/3 of the borrowers won’t submit the paperwork. I also happen to know that a huge percentage of borrowers being offered modifications are rejecting them. They don’t want to pay.”

    Diane Olick
    CNBC

    4closureFraud

  12. Sadly ours has become a corrupt system.

    Steve
    99Libra@gmail.com

  13. The problem as I see it, is that lawyers are allowed
    to become Judges. This is like putting the foxes in charge of the chicken coup, alot of chickens will wind
    up missing.
    In France, judges and lawyers (advocates) go to separate schools. Only the best students can be Judges and no “avocat” can ever be a judge.
    By doing it this way, you remove most of the corruption from the system of justice. I think it
    was Napoleon ,himself who put this system in place.
    I’m not sure if France still has this system, but 40
    years ago, when I was a student there, that is what
    I was told.

  14. The problem this might be considered a Class action and I do not want to be part of a class, my opinion of class is that it does not serve us very well, it is very expensive and the Judge has to approve the class.

  15. I was visiting a county recorders site and I found this notice:

    Property Fraud Alert

    Be Informed…Be Alert…Be Notified

    According to the FBI, Property and Mortgage Fraud is the fastest growing white-collar crime. It can be as simple as someone recording a fraudulent document in the County land Records office making it look like they now own your home or property.

    To address these concerns, John Warren, Dallas County Clerk has joined with Fidlar Technologies to create a service that will help you combat the effects of Land fraud and other similar fraudulent activities.

    SIGN UP NOW!! It’s simple! Just enter your personal and /or business name at http://www.propertyfraudalert.com/dallastx and you will be notified when a document is recorded with your name match.

    I recommend EVERY SINGLE PERSON check their county records and take appropriate action as necessary.

    Thanks,
    Dan Edstrom
    dmedstrom@hotmail.com

  16. “The four corners of deceit are government, academia, science, and the media”, is a phrase that Rush coined the past few weeks on his radio show. The “Climategate” situation is another perfect example of the media conspiring with the other three to brainwash the populace into submission. That’s a pretty simple explanation. The first three are all government entities. The “drive-by media” is the enabler.
    Great article on “Seeking Alpha” about Geithner, Bernanke, the collusion between the New York Fed, and the fact that they paid full price for all the garbage accumulated in TARP when they should have, and had the power and ability,to demand “haircuts” from the investment/national banks; a large part of those payouts also flowing overseas to HSBC, BARCLAYS, and DEUTSCHE Bank, among others.

    The media, often times claiming independence, has made itself the “mouthpiece of manipulation”. The internet, and this site in particular, is going to prove to be the most powerful weapon in our arsenal.

  17. I agree with Mario we should find a way to get many, many of us together and act as one. We are putting together a plan to raise 100m and hire just out of school attorney’s. Train them and get hundreds of case in about 10 states going on all fronts. We can save homes, hold the banks accountable and change the mortgage business for the better. Any ideas, home owners and or new attorneys please contact Robert 860-599-5557.

  18. Floyd seems like a real hard hitting journalist. And they say papers are dead?. The one’s that are still publishing, are owned by the banks, although the St Pete Times has had some good investgative articals, and nobody wants to rock the boat so hard it sinks. All network news organizations report bonus payments and bailouts, with a look of disgust but other than “house of cards” that exposed Quick Loan Funding, they have never got into investor fraud or how they scamed the whole world. Of course the extent of the fraud is not truly known, as the payments to most investors are up to date. But even a dumb question about”how do they lose all the papers” is good. Maybe somebody could write Floyd a nice letter, dummied down, tellind him what a great artical and help bring him up to speed.

  19. I’ve known Mario a long time. He’s a fighter to the bitter end, and he knows this stuff better than most attorneys seem to.

  20. mansion no more Mario, i guess the only mansions are the ones that are paid in full, regardless of where they’re at.

  21. Zillow sent me an email just a second ago, it said my house is worth 2.7% more, what a joke the mansion by the corner was selling for 1.2 million, sold for $450,000.00

    Joke is on them.

  22. So who cares, really when a person cuts the same branch they are sitting on, do you know what will happen? the branch will fall, simple. So the banks take all these homes, from people, then the roamers pillage the kitchen sink and every other thing that moves, sells it to the swap shop, then the city comes in to further collect taxes, and other fees. The house now has no value and no one buys the house, in my neighborhood for instance there are many sweet homes with no doors, no windows, and every movable thing in the has been sold to the swap shop.

    So now I hear that the banks and Freddy MAC and fanny are going into the Landlord business, sure, come fix the roof for me Freddy, or Mr bankster paint the house for me or I am calling the city inspector, fix my plum ming and I will sue you when or if the tree falls on my car, pay the tax on time, or leave the house empty forever until the city raises it off the ground and send you the bill, but the bank still has to pay property tax all the same, and insurance.

    Look Dubai is dumping all the real estate, the Arabs are mad as they were duped, the bankster duped all its investors, they are all mad, the home owner hate the bloody banksters, to the core, now you are gonna rent an x homeowner a house? the Chinese do not want all these homes, essentially no one wants them, AIG and Ambac are dead in the water, so swaps are out, do you think a bank wants all these homes? to do what with?

    Fight a few months more and the banks are all going to cave and run like hell.

  23. Have a Tiger Woods day :)

  24. have you heard? Floyd Norris’s column next week will be titled:
    “how to play dumb with my eyes closed, and thumb in my mouth hoping that everybody else will follow” , seriously now, is it surprising to you as much as it is to me that this character Floyd is even allowed to write such dumb column? that goes to show us why our country is turning into a hot steaming pile of *&^%$#, it is “writers”(could we even consider him a writer?) like this caricature that turn my stomach inside out, every single word in that column it is absolutely grotesque and disgusting!!! i have a feeling that many judges that don’t get it may be reading his articles, YIKES!!!! that though will not allow me to sleep tonight!!!
    may god help us all!!! to victory America!!!!!

  25. So why do we not all join together each and every homeowner, to file an action in the federal court all the thousands of us, as Plaintiffs vs all the banks and trusts, to file a TRO, and a federal law suit, complete with rescission, on the instant of the suit, as the truth we do not to this day know who the owner of the loan is. The style of the case could be that all the parties formulate jurisdiction in their respective town and cities, with the same case number and the same pleadings, attend the hearing in the same time zones, same case number and the same pleading.

    In other words one huge lawsuit, in my own words a sort of a nationwide Judicial civil action, my reasoning is I see Investors suing banks, home owners suing banks, Banks suing other banks, its a huge waste of money, so why do we not all do one law suit with all the same causes of action, on the all the plaintiffs which are all the same banks.

  26. Floyd works for the media; the media is a sock-puppet for the government, which is a sock-puppet for the banks. Welcome to the USSA.

    Steve
    99Libra@gmail.com

  27. Floyd..outta spend about 10 hrs a week reading Weblie’s then maybe he would now what we already know! He should start with, “Anatomony of a Train Wreck”..then maybe he be qualified to write a column! Just another “robotic drone” the Banks pay to write articles.

  28. Supporting Neil’s assertion, and answering Floyd’s question: here are some snippets from a big-boys lawsuit, Deutshe Bank v. BofA, that shines some amazing light on what banks HAVE vs. what they SAY THEY HAVE–

    UNITED STATES DISTRICT COURT
    SOUTHERN DISTRICT OF NEW YORK
    DEUTSCHE BANK, AG,
    Plaintiff,
    v.
    BANK OF AMERICA, N.A.
    Defendant.
    Civil Action No.: 09-cv-9784(RWS)
    ECF Case

    COMPLAINT
    Plaintiff Deutsche Bank AG (“DB”), by and through its attorneys, Williams & Connolly
    LLP, as and for its Complaint against Defendant Bank of America, N.A. (“BOA”), as successor
    in interest to LaSalle Bank, National Association, alleges as follows:

    NATURE OF CASE
    1. This is an action for (1) damages for breach of contract resulting from BOA’s
    failure to secure and safeguard over $1.25 billion worth of cash and mortgage loans that it was
    contractually obligated to secure on behalf of DB and (2) contractual indemnity for the losses
    caused by BOA’s negligent performance of its duties to DB.

    2. On December 13, 2007, DB invested $750 million in asset-backed commercial
    paper (“ABCP”) issued by a special purpose entity called Ocala Funding, LLC (“Ocala”). On
    June 30, 2008, DB increased this investment by approximately $450 million to a total
    investment in Ocala’s ABCP of approximately $1.2 billion. On June 30, 2008, BNP Paribas
    Bank (“BNP,” and collectively with DB the “Secured Parties”) also invested approximately
    $481 million in the ABCP issued by Ocala. DB’s investment in Ocala was to be renewed on a
    monthly basis, and Ocala was required to maintain at least $1.25 billion in cash and collateral
    as security against its obligations to DB.

    3. Ocala was established for the sole purpose of providing funding for mortgage
    loans originated by Taylor, Bean & Whitaker Mortgage Corp. (“TBW”). Mortgages purchased
    by Ocala were required to conform to the requirements of, and were intended to be sold to, the
    Federal Home Loan Mortgage Corporation (“Freddie Mac”), a government-sponsored entity
    that is implicitly backed by the full faith and credit of the United States government.

    4. Ocala’s ABCP was structured to minimize risks to DB’s investment. Robust
    contractual mechanisms existed to ensure that DB’s investment would be protected from credit
    risk, market risk, interest rate risk, the risk of bankruptcy by TBW, and the counterparty risk
    associated with dealing with TBW as originator of the mortgages. In that regard, BOA
    assumed the responsibility to act as trustee, collateral agent, custodian, and depositary agent on
    behalf of the ABCP holders, including DB.

    5. One vital mechanism protecting DB against risk was the requirement that DB’s
    investment be at all times over-collateralized by a combination of cash and “dry” mortgages
    purchased by Ocala. “Dry” mortgages are mortgages that have been reviewed by the lender
    and are actually in the lender’s possession at the time the mortgage loan is acquired by the
    lender. By contrast, “wet” funding of mortgages is riskier from the lender’s perspective
    because financing is provided to a borrower before the mortgage note has been received and
    reviewed by the lender (i.e., when the ink on the mortgage note is still “wet”). The lender
    providing wet funding for TBW was Colonial Bank (“Colonial”). In making its investment in
    Ocala on June 30, 2008, DB insisted that its investment be used only for dry mortgages.

    6. DB’s investment was further protected by the requirement that Ocala purchase
    only mortgages that satisfied the requirements of Freddie Mac, and DB obtained assurances
    from Freddie Mac that Freddie Mac would purchase mortgages held by Ocala in the event
    TBW became ineligible to sell mortgages to Freddie Mac itself. In short, DB’s investment was
    required at all times to be secured by a combination of cash and dry mortgages that readily
    could be sold to Freddie Mac.

    7. A number of protections existed to ensure the reliability of the collateral
    securing DB’s investment. First, Ocala was permitted to purchase only fully-documented and
    executed mortgages that were in the possession of a collateral agent representing the Secured
    Parties.

    8. Second, the only purpose for which Ocala could use the funds invested by DB
    (other than to repay DB or to cover other specified expenses) was to purchase such mortgages.
    Any proceeds garnered from the subsequent sale of such mortgages were subject to the same
    limitation.

    9. Third, the Ocala facility could continue operating only so long as the borrowing
    base of cash and mortgages allocated to DB as collateral totaled at least $1.25 billion (the
    “Borrowing Base Condition”). If the Borrowing Base Condition was not satisfied, the trustee
    would trip this “circuit breaker” to suspend any further outflow of cash and to prevent the
    automatic monthly renewal of DB’s investment.

    10. These carefully crafted safeguards protecting DB’s investment from risk were
    only as reliable as the gatekeeper who administered them. To ensure that Ocala complied with
    these measures, DB relied on a credit-worthy trustee/custodian/collateral and depositary agent
    to serve as the gatekeeper that would at all times control: (1) the flow of mortgages into and out
    of Ocala; (2) the mortgages and cash that were to be held to secure DB’s investment; and (3) all
    accounts in which Ocala’s funds were to be held or to which they were to be distributed.

    11. BOA, as successor-in-interest to LaSalle Bank, N.A., assumed this gatekeeper
    role. By way of a series of contracts that governed the existence and activities of Ocala, BOA
    accepted the responsibility to enforce the provisions that had been designed to protect DB’s
    investment. BOA represented that it would perform its duties with due care, and was obligated
    by the contracts to do so. It was BOA’s charge to ensure that Ocala at all times retained cash
    and mortgages totaling at least $1.25 billion to secure DB’s investment (“DB Collateral”).
    ………………..
    72. Furthermore, the payments made by BOA to the Colonial IFA on a daily basis bore no relationship to the value of the mortgages being purchased. On average, BOA, on behalf of Ocala, would receive approximately $40-50 million of mortgages for purchase each day. In order to pay for those mortgages, BOA was required to pay an amount equal to the face value of the mortgages to the Colonial IFA.
    73. On some days, BOA failed to transmit the funds to the Colonial IFA necessary to complete the purchase of those mortgages. For example, on February 27, 2009, BOA transmitted only $8.8 million to Colonial despite the fact that BOA’s records indicated that $54.5 million in mortgages were acquired from Colonial that day for the benefit of DB. By failing to transmit payment for the mortgages, BOA prevented Ocala from perfecting the security interests in those mortgages that was intended to serve as the primary collateral for DB’s investment. BOA nonetheless represented in daily reports to DB that the security interests had been perfected by accounting for the mortgages as collateral securing DB’s investment.
    74. On other days, BOA transmitted far more money to the Colonial IFA than was warranted to purchase the mortgages that BOA’s records indicate were acquired by BOA for the benefit of Ocala. For example, on May 29, 2009, BOA transmitted the large sum of $690 million to the Colonial IFA, despite the fact that BOA’s own records indicate that only $36.7 million in mortgages were acquired from Colonial that day for the benefit of Ocala. By conducting such transfers, BOA permitted the funds invested by DB to be transferred out of Ocala without obtaining mortgages in return.
    82. In connection with its duties under the Custodial Agreement, BOA agreed to provide DB with a daily report of all such mortgage loans (the “BOA Loan Reports”), and began transmitting these reports to DB in September 2008. The BOA Loan Reports listed each mortgage loan held by BOA for the benefit of DB, and noted whether the loan was either still in the physical possession of BOA or out to a prospective third party purchaser pursuant to a BOA Bailee Letter. Having assumed this additional daily reporting obligation, BOA was
    required to perform it in a non-negligent manner.
    83. In August 2009, after TBW collapsed, DB discovered that the BOA Loan Reports were false. For example, the August 12, 2009 BOA Loan Report showed that there was approximately $1,160,530,265 in mortgages securing DB’s investment. BOA’s own internal information, however, shows that at least $470 million of these mortgages already had been delivered and sold to Freddie Mac at least two weeks prior to the date of the BOA Loan Report and so could not have constituted collateral securing DB’s investment. Further, on information and belief, as of August 12, 2009, there were virtually no mortgages held by BOA to secure DB’s investment.
    84. This false reporting of the state of the collateral securing DB’s investment began almost a year prior to TBW’s collapse. For example, on September 15, 2008, the date on which BOA delivered the first BOA Loan Report, BOA represented that the amount of mortgages securing DB’s investment was approximately $1,147,268,192. BOA’s own internal information, however, shows that only about half of these mortgages totaling about $538 million were either still on hand or had not been delivered and/or sold to Freddie Mac.
    85. On information and belief, hundreds (and potentially all) of the BOA Loan Reports delivered by BOA to DB during the period between September 15, 2008 and August 4, 2009 were similarly false.
    86. Had BOA properly reported the amount of mortgages securing DB’s investment, DB would have known of the under-collateralization of its investment, and could have prevented the loss of its investment.
    88. In August 2009, however, after TBW and Colonial collapsed, DB discovered that BOA did not have ownership, possession, or control of virtually any of the mortgages that were listed on the BOA Loan Reports.
    89. BOA has been unable to produce the mortgages that it represented to DB as being held by BOA on behalf of DB. Moreover, BOA has been unable to account for where the mortgages are or even to establish that the mortgages were ever purchased by Ocala.
    90. BOA’s inability to produce or account for the mortgages that were supposed to be the collateral for DB’s investment stems from, among other things, BOA’s failure to keep records concerning the purchase and sale of mortgages on behalf of Ocala.
    91. With respect to the purchase of mortgages, BOA failed to maintain the internal documentation necessary to establish Ocala’s ownership of purchased mortgages. BOA recently admitted to DB that it failed to maintain loan level detail with respect to the mortgages it purchased. As such, BOA has been unable to prove with specificity that it paid for any particular mortgage or that it was paid by third parties for particular mortgages
    92. BOA also failed to obtain documentation from third parties necessary to establish Ocala’s purchase and ownership of mortgages. BOA failed to obtain letters from Colonial confirming Colonial’s release of its security interest with respect to particular mortgages for which BOA transmitted payment to Colonial.
    93. BOA’s failure to obtain such documentation was particularly egregious because BOA was fully aware that Colonial was TBW’s and/or Freddie Mac’s agent with respect to the sale of mortgages by Ocala to Freddie Mac. BOA, therefore, would have to transfer mortgages back to Colonial (as Freddie Mac’s agent) pursuant to a BOA Bailee Letter after having purchased the mortgages from Colonial (as TBW’s agent). The possibility existed that once BOA transferred the mortgages to Colonial, Colonial could assert ownership of the mortgages and refuse to either return the mortgages or remit payment received from Freddie Mac for the mortgages unless BOA could prove that Colonial’s security interest had been released. This made it even more critical that BOA document that it properly had taken the steps necessary to release Colonial’s security interest in the mortgages, and that Colonial had in fact released that interest.

  29. A lot of judges are in on this fraud as well. And why not, the banks effectively own the court system … and they dare not rule against their masters.

    Steve
    99Libra@gmail.com

  30. I’ve lost my job/home bcuz of the banking industry. Some people are finally catching on to whose behind the fraud.

    They basically get by with promoting HELL ON EARTH for trying to always do the RIGHT THING! What is the RIGHT THING? MAYBE they have to STEAL THE HOMES in order to have money even though they’ve already made how much on each deal? Then the borrower is had when its the BANKERS AND TRUSTEES FAULT! The JUDGES are TO BLAME as well. It looks like my case will be heating up. Some people are finally asking ??? about the lady I lost my job over. If their not I’ll be asking of them why no-1 will tell the truth!

    Oops! How many ACTORS-trustees,attys, judges and lenders are promoting real FRAUD? While this is a TN case its insturmental in putting doubt out there about what I’ve been saying about the owner of Nkt Land Acquisitions, Bennett Abstract, The Enforcer Inc., here’s a link from last year from one of her purchases of non performing assets…She just doesn’t go after homeowners she goes after the very people she wants to sell her the non perf assets to reap her rewards from! http://docs.google.com/viewer?a=v&q=cache:Z-VpDUwQHOUJ:www.tsc.state.tn.us/OPINIONS/TCA/PDF/083/Washington%2520Mutual%2520Bank%2520v.%2520NKTopn.pdf+nkt+land+acquistions&hl=en&gl=us&sig=AHIEtbQxyaLoGVGP-UTuadq_Ba7_hDtItA

    Interesting !

  31. Floyd is seemingly as ignorant as the judges who are handling the foreclosures. Anyone who thinks a bank is there to serve customers is….STUPID! I hate using pejorative words like that, but it’s true. There hasn’t been one person in the media that I know of (except the gal at the New York Times, Morganstern?)who has questioned the banks behavior in all of this. Steve Forbes can be your friend, Floyd. He is certainly not our friend. I used to like Steve Forbes, Mr. Flat Tax. But I caught him last Saturday on Fox News spouting the old “blame the borrower, they over spent” line of baloney (or do you say bologna?) and he just pissed me off!

    Neil is right that there is not enough anger out there. People are taking it in the pooper and just letting it go. “Oh, gosh, I screwed up” is the mindset When we are all homeless and hungry, the SHIITE will hit the fan

  32. The direct link to Floyd’s blog post is here…

    http://norris.blogs.nytimes.com/2009/12/04/are-banks-losing-lots-of-documents/

    Comments are moderated but seem to be approved quickly. You can also send him an email in the link next to his picture on the right side of the page…

    Let’s see if we can get a response from Floyd to Neils post.

    4closureFraud

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