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As I have reported on past occasions I have sources from the securities and more specifically the securitization industry that provide comments and information on the promise that I will keep their identities anonymous. This one in particular caught my attention. The source is from a Southeastern state who packaged and sold pools of loans of all types and qualities.
I believe regardless of whether the note and mortgage / deed of trust was assigned or not, it can be demonstrated they did not move as a unit, unless the price paid was the payoff value of the loan and/or value of property. [Editor's Note: The importance of this fellow's statement cannot be overstated. And his method for determining the true nature of an assignment, allonge or indorsement transaction is extremely helpful. While there are contrary arguments to his contention, they are a stretch to accept]
A different price (which I have hitting on this theme) would indicate the two are not a unit, because the value of the promissory note is not related to the actual security value. Also how the transaction was booked and valued on the bank’s accounts would reveal the same. I am guessing that they were valuing notes at a price much higher than the market value of the home. [Editor's Note: Yes and as I have already been seen informed with documentation, the transactions were never booked as accounting transactions because from the standpoint of the assignor or assignee no transaction took place. These were assignments of convenience. They do not show on the balance sheet of the either the assignor or the assignee as a loan receivable. If they come to court claiming ownership or that someone else acquired ownership through them, they are doing so contrary to their own admissions in the own bookkeeping. THIS is where confidence and knowledge in motion practice and confidence and knowledge in discovery will put the homeowner in either extreme jeopardy or in a winning position --- because the loan was never owned by ANY of the intermediaries who acted as conduits]
I believe the key is to assert the note as a ‘financial asset.’ That there is a market or exchange in which it trades. In fact on many of the bank’s annual reports, they speak that the primary business is originating loans for sale/securitization, i.e. a market exists. Along with pricing, this will be an easy case to make. [Editor's Note: Read this carefully --- it proves the point by reference to information in the public domain --- and it is not subject to attack as being opinion or questionable fact or standing to raise the issue. What I believe he is telling me here is that even if there was ($10.00, or other valuable consideration), there are only three values that conceivably be used --- the principal due on the note, the value of the collateral or the fair market value of the loan as determined by the freely traded secondary market. In nearly all cases the "traders" never even pretended that this was a real transaction and so there was no exchange of money at all. But if there was an exchange of money, this index could be used to prove that the transaction was a sham because it never met the elements of a reasonable business transaction. Judge Shack in New York asked the question himself --- why and under what terms would anyone buy a loan that is in default? How could a loan declared in default be assigned into an investor pool where the investors were promised that they would at least initially receive performing loans. And how could they receive any loan after the 90 day cutoff period included in the PSA and the REMIC statute? The collateral question that Judge Shack might have asked is why anyone would pay a price different than the price set on the secondary market regardless of the principal stated on the note or the current fair market value?]
Here is the kicker: SECTION 36‑8‑406. Obligation to notify issuer of lost, destroyed, or wrongfully taken security certificate.
If a security certificate has been lost, apparently destroyed, or wrongfully taken, and the owner fails to notify the issuer of that fact within a reasonable time after the owner has notice of it and the issuer registers a transfer of the security before receiving notification, the owner may not assert against the issuer a claim for registering the transfer under Section 36‑8‑404 (wrongful registration) or a claim to a new security certificate under Section 36‑8‑405 (replacement of a lost, destroyed or wrongfully taken security certificate).
I wonder out loud why I should not reregister my note. Imagine the bank now arguing all the points of having to present an actual note, etc in order to change ownership.
The next big thing I am digging into is whether an owner/purchaser of a security has any authority to electronically register and transfer ownership. I believe, but cannot find exact wording, that such is only limited to the issuer. On the entire face, MERs may not even be allowed because the issuer of the note, the homeowner, never authorized them to keep track.
Think of why there are laws that require lenders to notify borrowers when their mortgage is sold, it is because the issuer needs a record. Worse case is that the bank argues the issuer under Chapter 8 is the one who ‘becomes responsible for, or in place of, another person described as an issuer in this section.’ That is still not the bank, but the county registrar.
Filed under: foreclosure Tagged: | accounting transactions, allonge, assignment, auction fraud, borrower, Chapter 8, county registrar, current fair market value, financial asset, foreclosure, foreclosure defense, foreclosure fraud, foreclosure offense, fraud, indorsement, investor pool, Judge Shack, Mortgage, Obligation to notify issuer of lost destroyed or wrongfully taken security certificate, owner/purchaser of a security, predatory lending, PSA, REMIC, secondary market, Section 36-8-405, Section 36-8-406, securitization, securitization industry, security certificate, who would buy a loan in default?