REMIC Status Under Fire: HUGE LOSSES FROM TAX LIABILITIES

If, however, the transaction does not coincide with the parties’ bona fide intentions, courts will ignore the stated intentions.19  The analysis of ownership cannot merely look to the agreements the parties entered into because the label parties give to a transaction does determine its character.20  Consequently, the analysis must examine the underlying economics and the attendant facts and circumstances to determine who owns the mortgage notes for tax purposes.21

(Bradley T. Borden & David Reiss are professors at Brooklyn Law School.1)

“They take aggressive positions, and they figure that if enough of them take an aggressive position, and there’s billions of dollars at stake, then the IRS is kind of estopped from arguing with them because so much would blow up. And that is called the Wall Street Rule. That is literally the nickname for it.”2

Editor’s Note: We have been discussing the sham nature of securitization and assignment claims for years. The IRS and others have begun to take notice. The effect will be staggering unless “the Wall Street rule” is established. The article below from two professors at Brooklyn Law School is a mirror of the Fordham Law Review Article written 7 years ago entitled “Will the Real Party in Interest Please Stand Up.”

The author’s state “This calamity is compounded by the fact that those professional advisers should have known that the REMICs they created were flawed from the start.  If these losses are realized, those professionals will face suits for damages so large that they could put them out of business.” We are talking about bankers, insurers, lawyers, accounting firms and all the other players that were engaged in the make-believe game of securitization.

The scheme was not flawed in my opinion, it was intentional and based on the sole premise of every PONZI scheme artist: they thought they could get away with it and they still think so. Madoff, whose PONZI scheme is now being traced to the early 1970″s, Drier who used Solow’s name to create the appearance of legitimate transactions that were faked from start to finish, are all in the same pot. When you look closely, there isn’t any difference. They took money, they used it not the way the lender or investor intended, and they ended up lavishing on themselves huge bonuses, salaries and other gains (off-shore) that make Madoff and Dreir look like small potatoes.

A REMIC allows for the pooling of mortgage loans that can then be issued as a mortgage-backed security.  It is a pass-through entity for tax purposes, meaning that unlike corporations, they do not pay income tax and their owners thereby avoid the double taxation they would face from receiving corporate dividends.  A REMIC is intended to be a passive investment.

Because of its passive nature, a REMIC is limited as to how and when it can acquire mortgage.  In particular, a REMIC must in most cases acquire its mortgages within 90 days of its start-up.3  The Internal Revenue Code provides for draconian penalties for REMICs that fail to comply with applicable legal requirements.”

“By failing to transfer possession of the note to the pool backing the securities, Countrywide failed to comply with the requirements necessary to obtain REMIC status.  Numerous other filings and reports suggest that Countrywide’s practice was typical of many major lenders during the early 2000s.  Thus, although we rely on the facts in the Kemp case in this brief article, it has very broad application.”

The article maintains a focus on the paperwork which is a common occurrence in these analyses, assuming that the REMIC existed and was somehow funded with cash and/or “assets.” But this was not the case and so the scenario that these authors paint are actually understated. The money appears to have been diverted from the REMIC from the very start, with no bank account or other “account” held by a financial institution or trustee in control of it.

The authors give the banks the benefit of the doubt when they describe the actions as negligent. They stop at the doorway leading to the PONZI scheme that went into full swing at the beginning of the 2000’s. BY diverting the money and then diverting the documents away from the REMICs, the banks were able to assert “ownership” of the loan thus enabling them to collect insurance, credit default swap and Federal bailout proceeds for themselves instead of the REMICs or the REMIC investors.

The reason why so many notes were lost, destroyed, stolen or whatever is that if the insurers, investors, and counterparties on hedge products had actually seen the notes rather than data describing the notes, they would have known that the wrong parties were named on all the instruments, and that the REMICs were violating the rules to avoid double-taxation on a regular basis — all without the investors knowledge. Further, the profits from tier 2 yield spread premiums, which were huge (especially in loans classified as subprime) together with the payoffs from entities who contractually agreed to waive subrogation, left the investors with no way to know, much less understand, that trillions of dollars were being paid on notes, whether they were in default or not — because they were in pools where the Master Servicer ordered a write-down of the pool.

Like any PONZI scheme, two things are true here i the scheme that is papered over with false claims of securitization and assignments: the deal falls apart when people stop buying the bogus mortgage bonds and when it comes time to pay up or prove the transaction, there is no money to cover it. So the banks painted themselves into a corner that is causing the long arm of the law to close in on them due to upcoming statutes of limitations: in an ironic twist, if the loans turn out to be performing or were false declared to be in default or were false declared to be devalued, then the money received by the banks is due back to the insurers and other parties who paid.

And that is why the insurers and counterparties are suing the banks — based upon the misrepresentation of the quality of the loans or even the existence of the loans, and the fact that the payment was predicated upon a good faith belief that defaults had occurred when in fact they had not.

Since the loans were aggregated into false mortgage bonds, the banks were able to sell the same pool  multiple times which they called leveraging. And THAT is why a modified loan represents a huge loss to them. When the number of modified, reinstated or  settled loans reaches critical mass, the recipients of the insurance, credit default swap and federal bailouts must pay that money back under either contract law or tort law (fraud). In monetary terms a $30 million commercial loan might have been sold a few times with the “lender” receiving tens of millions of dollars, or even hundreds of millions of dollars (depending upon how bold they became).

So the “lender” must do everything within its power to maintain the appearance of a default even if there was no default or else they not only give up their claim for default interest, they must give up multiples of the original loan that they received from third parties based upon false pretenses.

It gets worse. Having received the insurance, credit default swap and federal bailout money, the original debt has been extinguished because the “creditor” has been paid in full according to the paperwork existing at the time of the payment from these co-obligors. The parties that paid would ordinarily have a claim for contribution against the borrower, but in most cases they contracted that right away. Hence the commercial property could emerge debt free and definitely unencumbered by a mortgage.

Whether we are discussing residential loans or commercial property loans, the borrower should do their homework and realize that they actually have more leverage than the lender who is pressing for foreclosure. We already have had one case where a whistle-blower received a huge sum of money for reporting these practices and the IRS collected enormous tax revenues from one deal.

The article below shows that out of the $13 trillion in mortgages, most of it followed a path of false paper and diverted money; the liability for the professionals that put these deals together might include a criminal conspiracy — but even without that the REMIC rules are very clear. Violation means double taxation, and with interest and penalties that alone could be enough to change the landscape of banks, insurers, law firms and accountants.

That failure appears to cause the trusts to fail both the definitional requirement and the timing requirement that are necessary to elect REMIC status. They fail the definition requirement because they do not own obligations, and what they do own does not appear to be secured by interests in real property.

Wall Street Rules Applied to REMIC Classification

By Bradley T. Borden & David Reiss 

(Bradley T. Borden & David Reiss are professors atBrooklyn Law School.1)

“They take aggressive positions, and they figure that if enough of them take an aggressive position, and there’s billions of dollars at stake, then the IRS is kind of estopped from arguing with them because so much would blow up. And that is called the Wall Street Rule. That is literally the nickname for it.”2

Investors in mortgage-backed securities, built on the shoulders of the tax-advantaged Real Estate Mortgage Investment Conduit (“REMIC”), may be facing extraordinary tax losses because of how bankers and lawyers structured these securities.  This calamity is compounded by the fact that those professional advisers should have known that the REMICs they created were flawed from the start.  If these losses are realized, those professionals will face suits for damages so large that they could put them out of business.  That is, unless the Wall Street Rule is applied.

The issue of REMIC failure for tax purposes is important in at least three contexts:

(1) in any potential effort by the IRS to clean up this industry;

(2) in civil lawsuits brought by REMIC investors against promoters, underwriters, and other parties who pooled mortgages and sold mortgage-backed securities; and

(3) state and federal prosecutors and regulators who consider bringing criminal or civil claims against promoters, underwriters, and other parties who pooled mortgages and sold MBSs.

A History of REMIC-able Growth

The first mortgage-backed securities (“MBS”) were issued by entities related to the federal government, like Fannie Mae and Freddie Mac, in the early 1970s.  These MBS paid out to investors from their proportional share of ownership of a securitized pool of mortgages’ cash flow.  Starting in the late 1970s, private issuers such as commercial banks and mortgage companies began to issue residential mortgage-backed securities.  These “private label” securities are issued without the governmental or quasi-governmental guaranty that a federally related issuer would give.  Private label securitization gained momentum during the savings-and-loan crisis in the early 1980s, when Wall Street firms were able to expand market share at the expense of the beleaguered thrift sector.

Before 1986, mortgage-backed securities had various tax-related inefficiencies.  First among them, such securities were taxable at the entity level, thus investors faced double taxation.  Wall Street firms successfully lobbied Congress to do away with double taxation in 1986.  This legislation created the REMIC, which was not taxed at the entity level.  This one change automatically boosted its yields over other types of mortgage-backed securities.  Unsurprisingly, REMICs displaced these other types of mortgage-backed securities and soon became the dominant choice of entity for such transactions.

A REMIC allows for the pooling of mortgage loans that can then be issued as a mortgage-backed security.  It is a pass-through entity for tax purposes, meaning that unlike corporations, they do not pay income tax and their owners thereby avoid the double taxation they would face from receiving corporate dividends.  A REMIC is intended to be a passive investment.

Because of its passive nature, a REMIC is limited as to how and when it can acquire mortgage.  In particular, a REMIC must in most cases acquire its mortgages within 90 days of its start-up.3  The Internal Revenue Code provides for draconian penalties for REMICs that fail to comply with applicable legal requirements.

In the 1990s, the housing finance industry, still faced with the patchwork of state and local laws relating to real estate, sought to streamline the process of assigning mortgages from one mortgage pool to another.  Industry players, including Fannie and Freddie and the Mortgage Bankers Association, advocated for The Mortgage Electronic Recording System (“MERS”), which was up and running by the end of the decade.

A MERS mortgage contains a statement that “MERS is a separate corporation that is acting solely as nominee for the Lender and Lender’s successors and assigns. MERS is the mortgagee under this Security Instrument.”4

MERS is not named on any note endorsement.  This new system saved lenders a small but not insignificant amount of money every time a mortgage was transferred.  However, the legal status of this private recording system was not clear and had not been ratified by Congress.  Notwithstanding that fact, nearly all of the major mortgage originators participated in MERS and MERS registered millions of mortgages within a couple of years of being up and running.

Beginning in early 2000s, MERS and other parties in the mortgage securitization industry began to relax many of the procedures and practices they originally used to assign mortgages among industry players.  Litigation documents and decided cases reveal how relaxed the procedures and practices became.  Hitting a crescendo right before the global financial crisis hit, the practices became egregiously negligent.

The practices at Countrywide Home Loans Inc. (then one of the nation’s largest loan originators in terms of volume and now part of Bank of America) illustrate the outrageous behavior of mortgage securitizers that was typical during that period.

Kemp-temptable Practices

 In re Kemp demonstrates that securitizers did not follow the rules applicable to REMICs when issuing mortgage-backed securities.

On May 31, 2006, Countrywide Home Loans Inc., lent $167,000 to John Kemp.5  At that time, Kemp signed a note listing Countrywide Home Loans Inc., as the lender; no indorsement appeared on the note.

An unsigned allonge (a piece of paper attached to a negotiable note that allows for the memorialization of additional assignments if there is not sufficient room on the note itself to do so) of the same date accompanied the note and directed Kemp to “Pay to the Order of Countrywide Home Loans Inc., d/b/a America’s Wholesale Lender.”

On the same day, Kemp signed a mortgage in the amount of $167,000, which listed the lender as America’s Wholesale Lender.  The mortgage named MERS as the mortgagee and authorized it to act solely as nominee for the lender and the lender’s successors and assigns.  The mortgage referenced the note Kemp signed, and it was recorded in the local county clerk’s office on July 13, 2006.

On June 28, 2006, Countrywide Home Loans Inc., as seller, entered into a Pooling and Servicing Agreement (PSA) with CWABS, Inc., as depositor; Countrywide Home Loans Servicing LP as master servicer; and Bank of New York as trustee.  The PSA provided that Countrywide Home Loans Inc., sold, transferred, or assigned to the depositor “all the right, title and interest of [Countrywide Home Loans, Inc.] in and to the Initial Mortgage Loans, including all interest and principal received and receivable by” Countrywide.

The PSA further provided that the depositor would then transfer the Initial Mortgage Loans, which include Kemp’s loan, to the trustee in exchange for certificates referred to as Asset-backed Certificates, Series 2006-8.  The depositor apparently then sold the certificates to investors.

The PSA also provided that the depositor would deliver “the original Mortgage Note, endorsed by manual or facsimile signature in blank in the following form: ‘Pay to the order of ________ without recourse’, with all intervening endorsements from the originator to the Person endorsing the Mortgage Note.”

Although Kemp’s note was supposed to be subject to the PSA, it was never endorsed in blank or delivered to the depositor or trustee as required by the PSA.  At that time, no one recorded a transfer of the note or the mortgage with the county clerk.

On March 14, 2007, MERS assigned Kemp’s mortgage to Bank of New York as trustee for the Certificate Holders CWABS Inc. Asset-backed Certificates, Series 2006-8.  The assignment purported to assign Kemp’s mortgage “[t]ogether with the Bond, Note or other obligation described in the Mortgage, and the money due and to become due thereon, with interest.”  That assignment was recorded on March 24, 2008.

On May 9, 2008, Kemp filed a voluntary bankruptcy petition.  On June 11, 2008, Countrywide, identifying itself as servicer for the Bank of New York, filed a secured proof of claim noting Kemp’s property as collateral for the claim.  In response, Kemp filed an adversary complaint on October 16, 2008, against Countrywide Home Loans, Inc., seeking to expunge its proof of claim.

At trial, Countrywide Home Loans, Inc., produced a new undated Allonge to Promissory Note, which directed Kemp to “Pay to the Order of Bank of New York, as Trustee for the Certificate-holders CWABS, Inc., Asset-backed Certificates, Series 6006-8.”  A supervisor and operational team leader for the apparent successor entity of Countrywide Home Loans Servicing LP testified that the new allonge was prepared in anticipation of the litigation and was signed weeks before the trial.  That same person testified that the Kemp’s original note never left the possession of Countrywide Home Loans, Inc., but instead, it went to its foreclosure unit.  She also testified that the new allonge had not been attached to Kemp’s note and that customarily, Countrywide Home Loans, Inc., maintained possession of the notes and related loan documents.  In a later submission, Countrywide Home Loans, Inc., represented that it had the original note with the new allonge attached, but it provided no additional information regarding the chain of title of the note.  It also produced a Lost Note Certificate dated February 1, 2007, providing that Kemp’s original note had been “misplaced, lost or destroyed, and after a thorough and diligent search, no one has been able to locate the original Note.”

The court therefore concluded that at the time of the filing of the proof of claim, Kemp’s mortgage had been assigned to the Bank of New York, but Countrywide had not transferred possession of the associated note to the Bank of New York.

By failing to transfer possession of the note to the pool backing the securities, Countrywide failed to comply with the requirements necessary to obtain REMIC status.  Numerous other filings and reports suggest that Countrywide’s practice was typical of many major lenders during the early 2000s.  Thus, although we rely on the facts in the Kemp case in this brief article, it has very broad application.

Sloppiness and REMICs Rules Don’t Mix Well

Even though a minority of securitizers may have followed the terms contained in the applicable Pooling and Servicing Agreements, there is very low tolerance for deviation in the REMIC rules.  This suggests that compliance in a minority of situations would not prevent the IRS from finding that individual REMICs fail to comply with their strict requirements in an overwhelming number of cases.  And the failure of a very small number of mortgages to comply with the rules would be sufficient to cause a putative REMIC to lose its preferred-tax status.

Federal tax treatment of REMICs is important in two respects.  First, it treats regular interests in REMICs as debt instruments.6 Second, federal tax law specially classifies REMICs as something other than tax corporations, tax partnerships, or trust and generally exempts them from federal income taxation.7

These two aspects of REMICs work hand in hand to provide REMICs favorable tax treatment.  REMICs must compute taxable income, but because the regular interests are treated as debt instruments, REMICs deduct amounts that constitute interest payments to the holders of residual interests.8

Without these rules, a REMIC could be a tax corporation and the regular interests could be equity interests.  If that were the case, the REMIC would not be able to deduct payments made to the regular interest holders and would owe federal income tax on its taxable income.  That is how the REMIC classification provides significant tax benefits.

To obtain REMIC classification, a trust must satisfy several requirements.  Of particular interest is the requirement that within three months after the trusts startup date, substantially all of its assets must be qualified mortgages.9  The regulations provide that substantially all of the assets of a trust are qualified mortgages if no more than a de minimis amount of the trust’s assets are not qualified mortgages.10 

The regulations do not define what constitutes a de minimis amount of assets, but they provide that substantially all of the assets are permitted assets if no more than one percent of the aggregate basis of all of the trust’s assets is attributed to prohibited assets.11  If the aggregate basis of the prohibited assets exceeds the one percent threshold, the trust may nonetheless be able to demonstrate that it owns no more than a de minimis amount of prohibited assets.12 Thus, almost all of a REMIC’s assets must be qualified mortgages.

A ‘qualified mortgage’ is an obligation that is principally secured by an interest in real property.13  The trust must acquire the obligation by contribution on the startup date or by purchase within three months after the startup date.14  Thus, to be a qualified mortgage, an asset must satisfy both a definitional requirement (be an obligation principally secured by an interest in real property) and a timing requirement (be acquired within three months after the startup date).

Industry practices raise questions about whether trusts satisfied either the definitional requirement or the timing requirement.  The general practice was for trusts and loan originators to enter into PSAs, which required the originator to transfer the mortgage note and mortgage to the trust.  Nonetheless, as with Kemp, reports and court documents indicate that originators and trusts frequently did not comply with the terms of the PSAs and the originator typically retained the mortgage notes and mortgages.

That failure appears to cause the trusts to fail both the definitional requirement and the timing requirement that are necessary to elect REMIC status. They fail the definition requirement because they do not own obligations, and what they do own does not appear to be secured by interests in real property.

They fail the timing requirement because they do not acquire the requisite interests within the three-month prescribed time frame.  And even if the trusts acquired some obligations principally secured by interests in real property, many of their assets would not satisfy the REMIC requirements.  This would result in the trusts owning more than a de minimis amount of prohibited assets.  If more than a de minimis amount of a trust’s assets are prohibited assets, then it would not be eligible for REMIC status.

The Un-MERS-iful Stringency of the REMIC Regulations

Federal tax law does not rely upon the state-law definition of ownership, but it looks to state law to determine parties’ rights, obligations, and interests in property.15  Tax law can also disregard the transfer (or lack of transfer) of formal title where the transferor retains many of the benefits and burdens of ownership.16

Courts focus on whether the benefits and burdens of ownership pass from one party to another when considering who is the owner of property for tax purposes.17  As the Tax Court has stated, to “properly discern the true character of [a transaction], it is necessary to ascertain the intention of the parties as evidenced by the written agreements, read in light of the attending facts and circumstances.”18

If, however, the transaction does not coincide with the parties’ bona fide intentions, courts will ignore the stated intentions.19  Thus, the analysis of ownership cannot merely look to the agreements the parties entered into because the label parties give to a transaction does determine its character.20  Consequently, the analysis must examine the underlying economics and the attendant facts and circumstances to determine who owns the mortgage notes for tax purposes.21 

Courts in many states have considered the legal rights and obligations of REMICs with respect to mortgage notes and mortgages they claim to own.  The range of issues state courts have considered with respect to REMIC mortgage notes and mortgages range from standing to foreclose,22 entitlement to notice of bankruptcy proceeding against a mortgagor,23 to ownership of a mortgage note under a state’s commercial code.24 As these cases indicate, at least with respect to the question of security interest, the courts are split with some ruling in favor of MERS and others ruling in favor of other parties whose interests are adverse to MERS. Apparently, no court has considered how significant these rules are with respect to REMIC classification. Standing to foreclose and participate in a bankruptcy proceeding will likely affect the analysis of whether REMIC trust assets are secured by an interest in real property, but they probably do not affect the analysis of whether the REMIC trusts own obligations. This analysis turns on the ownership of the mortgage notes.

In re Kemp addressed the issue of enforceability of a note under the uniform commercial code (UCC) for bankruptcy purposes.25 The court in that case held that a note was unenforceable against the maker of the note and the maker’s property under New Jersey law on two grounds.26 The court held that because the owner of the note, the Bank of New York, did not have possession and the lack of proper indorsement upon sale made the note unenforceable.27 Recognizing that the mortgage note came within the UCC definition of negotiable instrument,28 the court then considered who is a party entitled to enforce a negotiable instrument.29

Only the following three types persons are entitled to enforce a negotiable instrument:

1) “the holder of the instrument,”

2) “a nonholder in possession of the instrument who has the right of a holder,” or

3)  “a person not in possession of the instrument who is entitled to enforce the instrument pursuant to UCC § 3-309 or 3-418(d).”30

The Kemp court then explained why the Bank of New York did not come within the definition of a party entitled to enforce the negotiable instrument.

This analysis illustrates how courts may reach results that undercut arguments that REMICs were the owners of the mortgage notes and mortgages for tax purposes.  But even if the majority of states rule in favor of REMICs, the few that do not can destroy the REMIC classification of many MBS that were structured to be – and promoted to investors as – REMICs.

Because rating agencies require that REMICs be geographically diversified in order to spread the risk of default caused by local economic conditions, REMICs hold notes and mortgages from multiple jurisdictions.  Most, if not all, REMICs own mortgages notes and mortgages from states governed by laws that the courts determine do not support REMIC eligibility for the mortgages from those jurisdictions.  This diversification requirement ensures that REMICs will have more than a de minimis amount of mortgages notes that do not come within the definition of qualified mortgage under the REMIC regulations.

IRS-ponsible Industry Regulation

Law firms issued opinions that MBS transactions would qualify as REMICs.  They did so even though they knew or should have known that an insufficient percent of trust assets would satisfy the definition of qualified mortgage under the REMIC rules.  Nonetheless, the IRS does not appear to be engaged in auditing REMICs.  Its reasons for not challenging REMIC status at this time may be justified as they study the issue and observe the outcome of the numerous actions against REMICs and originators.

Because REMICs did not file the correct returns and may have committed fraud, the statute of limitations for earlier years will remain open indefinitely, giving the IRS adequate time to pursue REMIC litigation after it obtains the information it needs.  If the IRS does not take action at the appropriate time, however, it will be a serious failure and will result in the loss of billions of dollars of tax revenue for the federal government.

More troubling still is the IRS’s failure to address the wide-scale abuse and problems that existed during the years leading up to the financial meltdown.  The IRS’s failure to adequately police REMICs is one more reason that the mortgage industry was able to overly inflate the housing market.  And that, inexorably, led to the crash and our tepid recovery from it.

More generally, by overlooking the serious defects in the transactions, courts and governmental agencies encourage the type of behavior that led to the financial crisis.  Lawmakers, law enforcement agencies and the judiciary cede their governing functions to private industry if they allow players to disregard the law and stride to create law through their own practices.

If we allow the Wall Street Rule to apply, then Wall Street rules.  If the rule of law is respected, then Main Street can look forward to the equal protection of the law and returned prosperity without fear of bubbles inflating because powerful special interests can flout the law that applies to the rest of us.

Notes

1          This brief article is drawn from a forthcoming study by the authors.  © 2012 Bradley T. Borden and David Reiss.

Professor David Reiss is the founding director of the Community Development Clinic at Brooklyn Law School and teaches property law and real estate law. His articles expound upon the secondary mortgage markets, predatory lending, and housing policy and he is a regular commentator in the news on these topics.

Professor Bradley Borden is a leading authority on taxation of real property transactions and flow-through entities. He teaches Partnership Taxation, Taxation of Real Estate Transactions, and a general income tax course. He is also a prolific writer whose articles appear in numerous journals and is the author or co-author of several books. He is also a regular commentator on these topics in the news.

2          Lee Shepard,  Bain Capital Tax Documents Draw Mixed Reaction, ALL THINGS CONSIDERED, (NPR Business broadcast Aug. 28, 2012) (discussing taxation of private equity management compensation), available at http://www.npr.org/player/v2/mediaPlayer.html?action=1&t=1&islist=false&id=160196045&m=160201502 (emphasis added).

3          26 U.S.C. § 860G(a)(3), (9).

4          See, e.g., Brook Boyd, Real Estate Financing § 14.05[9] (2005).

5          See In re Kemp, 440 B.R. 624, 627 (Bkrtcy D.N.J. 2010).

6          SeeIRC §§ 860B(a), 860C(b)(1)(A).

7          SeeIRC § 860A(a).

8          SeeIRC §§ 163(a), 860C(b)(1)(A).

9          SeeIRC § 860D(a)(4).

10        SeeTreas. Reg. § 1.860D-1(b)(3)(i).

11        SeeTreas. Reg. § 1.860D-1(b)(3)(ii).

12        See Treas. Reg. § 1.860D-1(b)(3)(ii).

13        SeeIRC § 860G(a)(3)(A).

14        SeeIRC § 860G(a)(3)(A)(i), (ii).

15        See, e.g., Burnet v. Harmel, 287 U.S. 103, 110 (1932).

16        See Bailey v. Comm’r, 912 F.2d 44, 47 (2d Cir. 1990).

17        Grodt & McKay Realty, Inc. v. Comm’r, 77 T.C. 1221, 1237 (1981).

18        See Haggard v. Comm’r, 24 T.C. 1124, 1129 (1955), aff’d 241 F.2d 288 (9th Cir. 1956).

19        See Union Planters National Bank of Memphis v. United States, 426 F.2d 115, 117 (6th Cir. 1970).

20        See Helvering v. F. & R. Lazarus & Co.308 U.S. 252, 255 (1939).

21        See Helvering v. F. & R. Lazarus & Co., 308 U.S. 252, 255 (1939).

22        See Bain v. Metropolitan Mortgage Group, Inc., 2012 WL 3517326 (Wash. 2012) (holding that MERS was not a beneficiary under Washington Deed of Trust Act because it did not hold the mortgage note); Eaton v. Federal National Mortgage Association, 462 Mass. 569 (Mass. 2012); Ralph v. Met Life Home Loans, ____ (5th D. Idaho August 10, 2011) (holding that MERS was not the beneficial owner of a deed of trust, so its assignment was a nullity and the assignee could not bring a nonjudicial foreclosure against the borrower); Fowler v. Recontrust Company, N.A., 2011 WL 839863 (D. Utah March 10, 2011) (holding that MERS is the beneficial owner under Utah law); Jackson v. Mortgage Electronic Registration Systems, Inc., 770 N.W.2d 487 (Minn. 2009) (holding that MERS, as nominee, could institute a foreclosure by advertisement, i.e., a nonjudicial foreclosure, based upon Minnesota “MERS statute” that allows nominee to foreclose).

23        See Landmark National Bank v. Kesler, 289 Kan. 528, 216 P.3d 158 (Kan. 2009) (holding that MERS had no interest in the property and was not entitled to notice of bankruptcy or to intervene to challenge it).

24        See In re Kemp, 440 B.R. 624 (Bkrtcy.D.N.J. 2010).

25        See In re Kemp, 440 B.R. 624 (Bkrtcy.D.N.J. 2010). A claim in bankruptcy is disallowed after an objection “to the extent that . . . such claim is unenforceable against the debtor and property of the debtor, under any agreement or applicable law for a reason other than because such claim is contingent or unmatured.” See id. at 629 (citing 11 U.S.C. § 502(b)(1). New Jersey adopted the UCC in ____. See ____. This article cites to the UCC generally instead of specifically to the New Jersey UCC to illustrate the general applicability of the holding.

26        See In re Kemp at 629–30.

27        See In re Kemp at 629–30.

28        See In re Kempat 630.

29        See In re Kempat 630.

30        SeeUnif. Commercial Code § 3-301.

139 Responses

  1. This is why standing is so important … if the wrong party were allowed to fc or even file LP … the title would be forever tainted and unmarkable. The homeowner would be left with multiple liabilites.

  2. @ZUR, some states found that the note and mortgage can be re-united per say … as long as it does not alter the chain of title. Others found that once the note and mortgage were severed.. it was permnant. Its been an education for me … watching the states rule.

  3. @ET/JG:

    Yes, it IS Twilight Zone stuff. I mean, the judge essentially found that both I am right (i.e., the mortgage follows the note) AND that the Defendants are right (the mortgage can be transferred separately from the note, i.e., Fannie can hold the note but transfer the mortgage to BAC). I’ll say it again–I didn’t appeal for a number of reasons (money and distance being the main ones), but one big reason I didn’t appeal was precisely because of this Twilight Zone pretzel logic. I figured that the appeals court would just continue this doublespeak if they didn’t just outright decide that the lower court’s decision didn’t need review and then my time, money, and aggravation would just be wasted. After all, I had just been through 2.5 years of doublespeak from both the Defendants and the court and I was, frankly, just tired of it. I didn’t and don’t live in the house anymore. I don’t live in the state anymore.

    What I was tired of was being told that, no matter how many times the judge agreed with me that the Defendants HAD violated the rules of civil procedure, it was ultimately harmless and didn’t prejudice me. Here’s a representative quote of the kind I’m talking about:

    “As to whether the Defendants violated Federal Rule of Civil Procedure 26 by failing to disclose the most recent version of the Note, the Court finds that the Defendants did indeed violate the
    Rule but finds this violation harmless…the [Plaintiffs] will suffer no prejudice from the Note [the new version with the Sjolander/Meder fake endorsement] being accepted into evidence. While the Defendants bear most of the responsibility for the oversight, the [Plaintiffs] could have requested the original Note earlier but failed to do so.”

    In his mind, NOTHING prejudiced me, not even allowing the “ta-da” Sjolander/Meder endorsement which he readily admitted without which the Defendants would’ve lost at least the quiet title portion of the suit. Here’s his exact quote on that point: “Without this crucial document [i.e., the Sjolander/Meder note], the Defendants’ present Motion for Summary Judgment would have failed, at least with respect to the [Plaintiffs’] quiet title claim.”

    I find and found all this unbelievable then and now. And so I didn’t appeal because hello, I’m trying to have a life over here, and one can only beat one’s head against the wall for so long before one gets the idea that maybe the pain will go away if one stops beating one’s head. The whole lawsuit was like screaming into a void–the void is all that is there and the void doesn’t care.

    One last thing, though. They haven’t taken my house yet, and it’s been at least 4 months since my motion for reconsideration was (of course) denied. So I’m watching the Defendants very closely, looking for causes of action. I know they didn’t really win the case (even though I lost) and I think THEY know it too. So when I inevitably have to sue them again, it will be difficult for them to argue res judicata since the judge essentially ruled both for them and for me (yes, he dismissed my claims, but the logic for that dismissal was completely flawed). Or at least that’s my thought process at the moment.

  4. E Tolle,
    You used to live in Hattiesburg? Shut the front door! You must contact me at leftbehindchild@gmail.com!

  5. “UCC Classification: No Receivable is secured by “real property” or “fixtures” or evidenced by an “instrument” under and as defined in the UCC.”

    Right ON, Patrick.

    Only receivables were securitized in the subprime. Hence, fake documents are created and homes are stolen to cover up the truth…but how long can they get away with it?

  6. This is too weird zurenarrh, I believe I read your case yesterday on scribd, as I was researching something completely different from an old link on Yves Smith’s site. I recognized the arguments because the judge was reciting exactly what you said the judge was saying in your case about the note and mortgage following….. Twilight Zone stuff. Hattiesburg, right?

    I used to live there….even more Twilight Zone stuff.

  7. Obama Romney Debate ignores RESPA QWR and IRS 211 REMIC fraud by banksters in fraudclosure cases.

    http://mortgagemovies.blogspot.com/2012/10/2012-presidential-debate-1-kingcast.html

  8. From the article “That failure appears to cause the trusts to fail both the definitional requirement and the timing requirement that are necessary to elect REMIC status. They fail the definition requirement because they do not own obligations, and what they do own does not appear to be secured by interests in real property.”

    Well, duh.

    UCC Classification: No Receivable is secured by “real property” or “fixtures” or evidenced by an “instrument” under and as defined in the UCC. The Aggregate Receivables constitute “general intangibles” within the meaning of the applicable UCC.
    Read more: http://www.faqs.org/sec-filings/120210/HOME-LOAN-SERVICING-SOLUTIONS-LTD_S-1.A/d151656dex107.htm#ixzz28FH2FP6S

    Securitization is nothing more than an elaborate scheme to finance anticipated loan receivables.

    The lender has already realized the value of the commercial paper when it financed (i.e. sold) the aggregate loan receivables

    They’ve made you an account debtor without your knowledge or consent.

    UCC 9-105(1)(a) “Account debtor” means the person who is obligated on an account, chattel paper or general intangible

    An account debtor pays on unsecured debt, no different than credit card debt. Difference is, the mortgage borrower only agreed to pay an obligation evidenced by an instrument. If the value of the instrument has already been realized through financing….. POOF

  9. zur – no, my second prop on the assgt doesn’t work because CW is toast so mers can’t be its agent. BUT, they could assert that it’s the tardy orig assgt to fnma if it read something like “to fnma by mers for boa, successor in interest to CW”. But doing this ignores the fact that
    fnma subsequently sold the loan and all that entails. All the same, I’d say that’s the game: “CW sold loan to fnma, mers held dot as CW’s agent and then as fnma’s agent and now dot is assigned to b of a, fnma’s servicer.” And I still say that even if that were true, which app it isn’t, the assgt should have been to b of a as agent for fnma, as I
    said earlier.
    All messed up. Such a ghastly operation, MERS. Musical chairs, anything goes, bring in the band. If you’re in fed court, since the assgt wasn’t to b of a as fnma’s agent, if all else fails, they have to join fnma as the real party in interest under rule 17. But maybe after you read the material, you will agree that fnma did not have control of the note and that is the big dispositive issue: no transfer.
    And that will be interesting. FNMA can’t enforce what it didn’t get and no one else (CW / BofA) can, either, because CW was already paid for the loan. imo.
    The unwarranted presumptions your judge appears to be making
    really frost me. It happens a lot.

  10. @zur – think I did hear that, but if so, I forgot. But that’s……impossible. How can fnma, or anyone, be the trustee for a trust to which it sells loans? Given that fnma guarantees payments and may have to buy loans or payment rights back from the trust, that’s a patent conflict of interest.
    FNMA, as trustee, tells MERS, its alleged agent (trust is mers member?) to execute an assgt of the dot to fnma? How nice for them! No, patent conflict. Something is askew. But you know what? That handy little arrangement was made before the MERS’ Consent Order, i.e., when f/c’s were done handily in MERS’ name. Could it be that fnma really thought at the time, because of MERS’ cover, no one would notice the conflict?! it never ends. Good lord, how can a guarantor
    also be a trustee? Is this the twilight zone?!

    You said:

    “I think the main reason that the assignment didn’t mention a trust/pool is this: the way the assignment reads, it mentions only parties named in the DOT and note, and the purpose of that is to make it seem as though everything is on the up and up in a way that mentioning the trust/pool would not.”

    *Yes, of course. it’s an attempt to pretend the loan was never
    securitized, even tho they admit it was! Or how’s this: the assgt is the rather tardy assgt from CW by Mers its alleged agent when CW allegedly sold the loan to FNMA BEFORE FNMA sold it to a trust?!
    Oh, boy. If no transfer of note to fnma, note and dot bifurcated by
    the assgt to fnma.

    I can’t make your para about recontrust. Please say it again. What I got at all was that recon was taken out as dot trustee long enough to
    execute the assgt to bac in mers’ name and then made dot trustee again? but sitll, I’m missing some other stuff, so please do say it again.

    I have been arguing dot trustee fid since 2008. It was not well-received when I brought it out. People thought I was nuts (not here – attorneys).
    It does vary from one juris to another, as it turns out -or- we have not found all the cases which rule in favor of dual fid in some jurisdictions.
    Another case:

    Lewis v Jordan Investment, Inc., 725 A.2d 4955 (1999), recognized the long-standing tenet that a trustee has a dual fiduciary:

    “A trustee of deeds has the fiduciary obligation to comply with the powers and duties of the trust instrument, as well as the applicable statute under the District of Columbia Code. Perry v. Virginia Mortgage & Inv. Co., 412 A.2d 1194, 1197 (D.C. 1980) (citations omitted). THIS COURT HAS LONG RECOGNIZED THAT TRUSTEES OWE FIDUCIARY DUTIES TO BOTH THE NOTEHOLDER AND THE BORROWER.- S&G Inv., Inc. v. Home Fed. Sav. & Loan Ass’n, 164
    U.S. App. D.C. 263, 270-71 n. 21, 505 F.2d 370, 377-78 n. 21 (1974)”:

    I have been reading your last comment, typing, reading some more.
    I just got to where you said “yes, of course”. Are we related?

  11. @ ET: Mississippi

    @JG,
    You said: “mers didn’t exec or shouldnt have exec’d assgt as fnma’s agent; mers could
    only execute assgt as sec’n trustee’s agent.”

    Bingo! But the catch with Fannie Mae is that according to Fannie’s prospectus docs, Fannie IS the securitization trustee! When you read their prospectuses, Fannie is EVERYTHING–Trustee, Guarantor, Master Servicer, Issuer, Depositor, etc. It’s really quite something–the double- and triple-speak is breathtaking and pretty confusing, actually.

    I think the main reason that the assignment didn’t mention a trust/pool is this: the way the assignment reads, it mentions only parties named in the DOT and note, and the purpose of that is to make it seem as though everything is on the up and up in a way that mentioning the trust/pool would not.

    You said: “You know of course that “MERS” didn’t execute that assgt. An employee of the assignee did, in MERS’ name and by order of his or her employer, not “MERS” or the assignor.”

    Yes, of course–the assignment was prepared by employees of Recontrust, which they admitted. And the goal of the whole charade was to empower Recontrust to schedule a trustee’s sale, and Recontrust was the original trustee of the DOT. So it worked like this: Recontrust employee (Jill Arnold, to be specific) prepares assignment from MERS to BAC, then same Recontrust employee prepares “re-appointment of trustee” from BAC to Recontrust, then same Recontrust employee prepares notice of sale and puts it in the newspaper. Voila! Recontrust makes itself the trustee it originally was, presumably (in hindsight) to take over from Fannie having been the trustee of the trust/pool into which the note was placed. Or something. Despite my pointing this out over and over, the judge didn’t/wouldn’t touch it with a 10 ft. pole.

    I finally found case law towards the end of the case which explained in no uncertain terms that the trustee of a DOT has as much fiduciary duty to the Trustor (i.e., you and me) in a Deed of Trust as it does to the beneficiary of a DOT (in Mississippi, that case is Lee v. Lee from 1959, which says “The trustee in a deed of trust is the agent of both parties, and he therefore occupies a fiduciary relationship to both parties”). You would think that such sneaky behavior by Recontrust–which under state law owed a fiduciary duty to me–would be pounced upon by the judge, but alas. You guessed it, ignored by the judge.

    JG, I started reading the Douglas Whaley post you mentioned. It’s really good. I’ll have to finish it later as time allows. Thank you guys for talking all this through with me.

  12. Oh, wait, zur. Under your coll follows note, fnma would be the one telling mers to exec an assgt to bac. If bac is not its agent for that purpose, the note, if fnma owns, and coll instrument mght be split.
    The assgt imo has to read to bac as agent of fnma. This ignores the secn the judge ignored. If sec’d, for enforcement of the loan, trustee had to order mers to exec assgt to fnma or bac as agent of fnma and to do the latter, required fnma’s permission. Most people apparently don’t believe that enforcement, whether coll follows note or not, requires Notice of the claimant’s rights to at least the party against whom enforcement is sought, and that Notice must be given prior to an attempt at enforcement.

    @jim@ 2:58. It’s appears true that in 2008 they didn’t want to ack the tax issue since it would undermine the prop job. But the tbtf’s had 4 years of propping up and preparation for this inevitable event. I do believe it’s inevIitable, as in sooner or later, and a 4 year pass is damn well long enough. When it happens, maybe the IRS will waive the penalties, etc. After all, by not ack’g the tax rams for 4 + years, they contributed imo to the penalties. Be a better world if investors would settle with homeowners (equity) who keep their homes, taxes due got paid sans penalty, investors hit banksters for their losses from the settlements with homeowners and the tax hits. No one player loses or bears all.

  13. @e. tolle – no, not lately anyway, so I don’t know but would like to.

  14. zur – so in your case the bankster admits the loan was sec’d.
    okay, but not okay – the court does not get to ignore this. That would make the secn trustee (assuming he in fact has such auth for the trust and where is the evidence of this?) the party with the auth to tell mers to execute an assgt of the dot to someone else. IF fnma bought the loan or rights to payments,whatever, back from the trust, then the assgt should be to fnma or its designated agent by my thinking.
    By your thinking, i.e., the coll instrument (which is it mtg? dot?) follows the note and therefore no assgt nec is part right and part wrong imo.
    Even if no assgt necessary between the parties, Notice of the assgt
    is necessary for Enforcement since otherwise a borrower has no way of knowing of the transfer of the loan.
    I’m continuing on your theory of sec follows note (which again,is not mine).
    So let’s see. If fnma got note, fnma has coll instrument. The only reason to record assgt from sec trustee or its (evidenced) agent is to impart notice for enforcement. But the court was wrong: mers didn’t exec or shouldnt have exec’d assgt as fnma’s agent; mers could
    only execute assgt as sec’n trustee’s agent. (quite a game read load of
    dog doo , that mullarkey, because who the h knows). The assgt should’ve said mers is assigning coll instrument for X trust to fnma or its agent. And assigning it to fnma’s agent requires mers to be provided such a request from fnma, in addition to the instruction from the secn trustee for the assgt in the first place.

    How is the court managing to ignore the secn of this loan, since it’s been admitted, I do so wonder.
    Even ignoring the secn, mers cannot assign a dot for a business which is out of business or otherwise toast. I’m sure you argued this. What did you say? The “mers” assignment can’t read for CW; it has to read for whomever allegedly took over CW and can’t be off at all or no assignment.
    I’m making this up because I don’t know:
    “MERS for Bank of America Loan Servicing formerly known as CW
    Home Loan Corporation”
    “MERS for Bank of America, N.A. as survivor by merger (can’t think of the right words if these are wrong) with CW HLC”
    “MERS for Bank of America blah blah by acquisition of the assets
    of CW HLM.”
    And the assignmnt should have read to BofA what not as agent for fnma. Yes, that is actually the proper way of assignment to an agent.
    I’m pretty sure anything else makes the assignee a nominee and does not appropriately reflect the (alleged) fact of agency. But of course, to do that, the agency must exist and as to you, (and the court) must be evidenced. You might want to take a short while looking into real
    property and agency. Case law or even just law supporting expressed written agency when it comes to real property would be a good thing.

    You know of course that “MERS” didn’t execute that assgt. An employee of the assignee did, in MERS’ name and by order of his or her employer, not “MERS” or the assignor. But you’ve got enough on your plate, and you may not need this particular argument.

    Your strongest argument imo is the business with the note. It’s the dispositve one, which is not to say you should ignore the invalidity of the assgt.

    Lay opinions, as always and not legal advice. Ask a lawyer.

    @NG – looks like a lot of work went into this post. Need 40 hours in a day.

  15. Has Zur mentioned the state?

  16. Zur – gotta think about that one, but I suspected as to CW, the assgt might not say s & a’s. Now I have to take care of some business. Be back later. Please read the material at the link re: the note.

  17. As to the note, zur, the only thing fnma et al can try to posit is that
    so and so at CW (where ever) is really a fnma employee! They’ll try to deputize someone else’s employee as a fnma ‘assgt v.p.” or some such nonsense and as if it had already been done long ago. This is all like something out of a bad horror flick.

  18. JG,
    The assignment does NOT contain a reference to successors and/or assigns of Countrywide Bank, FSB. Just checked it. And I even went to the FDIC webpage and printed out the info there regarding Countrywide Bank, FSB having become an “inactive institution” approx. 3 mos. before the assignment and made it an exhibit to my whole case. I beat that point into the ground, also. Judge never mentioned it.

    It actually makes sense that they did the assignment of behalf of CWFSB because in fact the note WAS with CWFSB, and not Fannie Mae.

  19. One last thing, zur – does the assgt say mers for cw “its successors and or assigns”? Unless they mess up, and they do, it will say that.
    “MERS’ is not claiming in most assgts to be executing the assgt on behalf of the original lender – it is oh so tacitly alleging it assigns for the unknown “successor or assign”, generally. In this CW mess, MERS might be alleging to assign for CW. But really, in any event, it wouldn’t be for CW because CW is toast. So at a min, MERS is contending it assigns on behalf of whomever IS CW’s successor and or assign, assuming there is one (!). Is that the same BAC who is the assignee, also, or a different bac entity? I have to think about that sucker, if it’s the same one.
    general info: In Vargas, the court found that a mtn for relief from stay
    styled as ” Bankster 4753, it’s successors and or assigns” was a wrongful attempt to get relief from stay for unknown parties, and kicked it. Yet, assignments of real property interest by “MERS” are done and accepted in this manner all day, every day. It’s crap.

  20. JG,
    Gotta write this fast. Now gotta go pick kids up. But I want to keep this going, so I’m writing quickly and I’ll pick it up later.

    I disagree that Fannie can assign only the DOT to its agent BAC. I think the rule that “the mortgage follows the note” is absolute, as well as the Carpenter v. Longan proviso to that, i.e., “an assignment of the mortgage alone is a nullity.” So if Fannie wanted to assign anything to anybody, it would have to have been as a result of a true sale of the note that would automatically carry the DOT with it to the purchaser of the note.

    But now I think I get what you were saying before, to wit: if BAC is Fannie’s agent–meaning that for all assignments, etc. BAC IS Fannie–then an assignment of the DOT from principal Fannie to Fannie’s agent BAC IS indeed a self-assignment, which is clearly unnecessary and I would wager, illegal. More later…

  21. FNMA could assign only the dot to bac without splitting it from the note. Before fnma could do that, however, fnma has to 1) get the assgt itself from the last noteowner or its agent either by the last noteowner executing the assignment itself or by the last noteowner telling its agent to exec an assignment to fnma, OR
    2) fnma has to have requested the last noteowner or its agent, the party with assgt authority / ability, to assign that note to fnma’s agent, boa.
    BAc may get the assignment without bifurcation IF bac is the lawfully appointed agent of fnma for that purpose, not a fact in evidence from what I gather. When there is evidence of agency for that expressed purpose, there is no bifurcation. An assignment to one’s true agent doesn’t bifurcate stuff. But where is the evidence bac is fnma’s agent for the purpose of the assignment of the dot? Real property agency may NOt be implied; it must be expressed in writing and even in a writing, what the agent can do must be clearly articulated to create agency for particular acts.* IF an agreement (and let’s see it, says the law) says bac is fnma’s agent to foreclose, my take on that is that is not an expressed agreement that bac is fnma’s agent for the purpose of taking an assgt. An assgt is not an act of foreclosure. Yes, the judge made rash and unsupported conclusions in that regard, but his biggest gaffe at your expense was ignoring basic principles of the UCC in finding fnma took the note, which was admittedly still in the poss and significantly, control, of CW.

    * I may, for instance, appoint e.tolle as my agent to execute a dot for me. I didn’t, however, appoint him as my agent to execute a deed
    to sell my home, so he can’t. As to real property agency, any act to be performed or undertaken by the agent must be clearly spelled out. If not, if e.tolle were a crook, he could just say his agency gave him a right to sell my home. And if there were no law, e. tolle wouldn’t even have to produce his agency agreement to defend that lie.

  22. I am not encouraging you, zur, to fight any more. But if you wanted to,
    you could try a mtn for recon under rule 60. Whether or not one may make new arguments in a 60, I just don’t remember. If you give any consideration to a rule 60 mtn, make sure to check out some case law for that one. If no new args allowed, have to try to tie in new stuff under an old premise you advanced. Like you said CW never transferred the note. So maybe you could get the highly salient and if fact dispositive issue of control in, under that already-made argument, for instance. If dcb doesn’t link the material soon, I’ll try to find it. Or, you could search comments under posts over the last 5 days or so for his link.
    Or maybe you could try the good old ‘court had no jurisdiction’ argument, a threshold issue, because for fnma’s lack of control of the note, fnma had no interest, was not an aggrieved party capable of invoking the court’s jurisdiction. When a court lacks jurisdiction, any orders / decisions are void. I stated this no jurisdiction sort of
    cavilierly, but it’s a sound legal principle.

  23. @JG,
    I think I see what you’re saying, but I might have not been clear. The judge ruled that the assignor was ultimately Fannie Mae (never mind the fact that the assignment itself was from “MERS as nominee for Countrywide Bank, FSB,” a point I beat into the ground). The assignee–of the Deed of Trust, NOT the note–was purportedly BAC, not Fannie Mae. To me, THAT is the problem. That’s where the judge went astray–in his mind, Fannie Mae held the Note, and then assigned ONLY the Deed of Trust (not the note) to BAC. That, in my mind, is the very definition of the mortgage NOT following the note, and as the judge stated, the law is that the mortgage follows the note.

    So if Fannie Mae is the noteholder, Fannie Mae can’t assign only the Deed of Trust to BAC or ANYONE, because, as the judge said, the mortgage follows the note and not the other way around. So if Fannie Mae holds the note, Fannie Mae also holds the Deed of Trust. In other words, wherever the note is–in the judge’s mind, the note was with Fannie Mae–the mortgage is there also and any assignment or documentation to the contrary, i.e. the assignment of the Deed of Trust in my case, is null and void.

    As for your suggestion to look at Fannie prospectuses, I have done that. I gave them to the court. I pounded on that point over and over. Fannie’s documents say that they “irrevocably” grant, transfer and assign all of Fannie’s beneficial interest in the notes to the pools, for the benefit of the holders of certificates issued by the pools. And in my case, they claimed that my note was in a securitization pool. So according to Fannie itself, Fannie irrevocably gave all Fannie’s beneficial interest to this particular pool. In his order, the judge COMPLETELY ignored anything to do with securitization and pools.

  24. Enraged, on October 3, 2012 at 2:10 pm said:

    “Go back a few weeks when you and your pal Raysik were attacking everyone you didn’t agree with.”

    Nope. Never did—FIRST. EVER. YOU (and your buddy) always, always, always said something rude FIRST. You just can’t stand it that I was unable to take your advice for whatever reason, (you don’t care about the reasons, you just judge), and you have deeply resented me ever since. That’s called a bruised ego.
    I finally just decided I didn’t want to take it from you anymore…I put up with it as long as I could and then I just got totally got sick of it and started fighting back every time you said something rude directed at me.
    Like I said—you (and your buddy) do not own this site, and you do not have the right to be the “moderator”, and tell people what to post or not post.
    If Neil says something UNTRUE—like “investor-lenders” funded something—I will post the truth. He is a great guy and I appreciate him, but he keeps spinning the “investor-lender” crap and it is just not the truth…and he knows it.

    Please let this be the end of the pettiness.

  25. zur – even tho your assgt from “mers” was to fnma’s servicer, and not fnma, it’s the same thing. order to mers for assgt had to come from assignor, not assgnee.
    The only thing diff might be the law in your venue and juris as to rpii. Many venues hold that a servicer must join the rpii, in your case allegedly fnma. I personally think that even if fnma did own and control the note, by the assg to another party, even fnma’s servicer,
    the note and dot are bifurcated. The only thing which could imo find otherwise is an evidenced agency agreement in regard to a dot between fnma and the servicer. Of course servicing agreements
    have agreements, but is this one of them? Or would we find in that servicing agreement that the servicer is to foreclose on a dot in the
    ben’s name, not one with the servicer’s name as ben for the real ben?
    I didn’t say that very well. Does the servicing agreement say that the servicer should be the assignee in the dot for fnma or does it just
    say the servicer should perform the f/c functions? Since you don’t know, neither does the court. The (apparently raw and unsupported) legal conclusion your judge has drawn is not a fact and definitely not a fact in evidence.
    As always, lay opinion.

  26. @JG:

    Thanks for the kind words. Yes, I do feel that even though I lost the case, the Defendants didn’t really win, either. They are now nailed down to a version of events–boxed-in, as you say. Any subsequent actions of theirs will be scrutinized against their version of these events, now ratified by the court. And I will take legal action accordingly. I don’t really want to because I’ve learned that a homeowner just isn’t going to win in court. Even in Kemp, after reading the trial transcript, I think it’s pretty clear that if the actions of Countrywide hadn’t been SO see-through and SO egregious, the judge would’ve ruled against Kemp. In fact, the judge even said at one point that some document–I think it was the PSA–would “be an out for Countrywide.” She quickly tried to cover that little observation by saying “Oh, not that I’m advocating for Countrywide.” I mean, Countrywide printed up a back-dated allonge 2 WEEKS before the trial and admitted that that’s what they did. Kinda puts the judge in a tight spot.

    Yes, I would like to see this document you’re talking about. I have wrestled with the document custodian question. I think you’re right–control of the note is what’s important.

  27. zur re:

    “Fannie Mae’s procedure when a loan becomes delinquent is to assign the Deed of Trust to the servicer to carry out the foreclosure sale. Thus, on July 13, 2009, MERS, as Fannie Mae’s agent, executed a Corporate Assignment of the Deed of Trust…..”

    Mers isn’t an agent, but forget that for now – you don’t need that battle. Mers executed the assignment as FNMA’s agent? NOT! Let’s just say mers can and does exec assignments. I gag as I write. Even so, mers may not execute the assgt because fnma said to. In order for mers to execute an assgt, the order to mers had to come from the party with the auth and of course, mers would have to be its agent. The party with the authority isn’t fnma, the assignee; it’s the assignor.
    Take out mers, or anyone, as fnma’s agent and now let’s say fnma wants an assgt. fnma can’t execute an assgt to itself, right? since fnma can’t, then of course neither can fnma’s agent. WHO auth’d
    mers to execute the assgt to the assignee, fnma? WHO is the assignor on whose behalf mers acts in executing the assignment?
    If the basis for the assgt were on the basis that mers acted for fnma, the assignee, what do you think?! See? If they’ve alleged themselves that it were fnma who auth’d mers to exec the assgt to fnma, then hopefully they’re locked into that position: no wiggle room to change the story if you challenge the asst by asking the question: who told mers to execute the assgt to fnma?
    And btw, from FNMA material, in order for FNMA to foreclose a loan it
    sold into sec’n, and that’s what they did, fnma has to repurchase the loan or payment rights or whatever the heck. (See fnma prospectuses – they all demonstrate this fact. yahoo “fnma mbs prospectus” – it’s easy to get them. Even if you don’t readily find your own or know it, what you will find will reasonably demonstrate that fnma does have to repurchase to enforce.) So, mers had to be told by the sec’n trustee, the assignor, to exec an assgt to fnma. And, hey, banksters, please proffer evidence that mers is the secn trustee’s agent. (membership agreement?) Alternatively, if you can’t or don’t want to mess with proving the loan were securitized and fnma had to buy it back which would mean that the party telling mers to act would be the secn trustee, then the order for the assgt of the dot to mers had to have come from CW. Someone other than the assignee, fnma. Hopefully, as I said, they’ve boxed themselves into a story with no validity. If so, they’ve made another false claim.
    If they ever said something like the assgt was ordered by fnma to mers in error, then at a min, they can’t just try to ‘renounce’
    the assgt. FNMA or its legit agent has to assign it back to mers or its alleged principal and then mers or the right principal has to assign it to fnma. I wouldn’t not make these arguments. But that’s me. Still, I think your biggest bet is the control issue of the note: CW retained control.
    Lay opinions, as always.

  28. @enraged

    “I’m done with that.”

    Promise?

  29. @enraged

    “Don’t worry: I am ignoring you.”

    Unfortunately, not yet. Please make it so.

  30. and, zur, if this is right as I believe it is, you’re in good shape because they are now boxed-in, hugely committed to a particular story. No (infamous) wiggle room.

  31. Zur – if a lender, or any of its affiliates, who made the loan can’t be the custodian for the warehouse lender- secured interest holder*, I’m gonna bet the farm that CW, segregated area story or not, cannot be the custodian for FNMA, GNMA, the man in the moon to whom it allegedly sold a note. The rule is all about who has control of the physical note. Even (allegedly) segregated, CW had CONTROL of the note. That’s the argument – control – imo and that’s the material I directed you to. Maybe dcb will be so kind as to link it again.
    Would you please, dcb? If he does, zur, please read it. It’s also
    annotated with case law. You have shown yourself, zur, to be a good fighter and worthy opponent, so the info in your hands would be a good thing for you and many others. And as I noted, it’s not a lousy read because it’s very well-formatted.

    *If I am the lender and have made a loan using XYZ warehouse line, neither I nor any of my affiliates may act as custodian of the note for XYZ. I or my aff will be deemd to have the (absolutely requisite) control, not XYZ and therefore, XYZ does not have a perfected security interest. In order to perfect XYZ’s security interest in the note, XYZ must have control.
    CW’s segregated area yet leaves the instrument in CW’s control. Control is the bar. Lay opinions.

  32. Go back a few weeks when you and your pal Raysik were attacking everyone you didn’t agree with. Do you like the feeling of being on the receiving end of what you were dishing? What goes around comes around.

    Don’t worry: I am ignoring you. But apparently, you’re having a hard time with that, as evidenced by the recent days… Grow up. And stop trying to pass for a martyr. There are no martyrs on this site. Only people who make decisions and learn from them and people who don’t make any and don’t learn from it.

    I’m done with that.

  33. @SC

    People have thanked me for posting that information.

    Just because you don’t like what I post gives you the right to attack and insult me…

    Ok…sure…that makes sense.

  34. Sad case.

  35. “Stop trying to void the contract you signed and start trying to enforce it”, said shadowcat. Might just be pretty good advice. You said MERS could be your ben, you said a title co. you’d heard of was your dot trustee. You didn’t know “MERS” was nothing but a computer software program. You didn’t know MERS doesn’t do anything – in a legally skewed, and that’s nice, operation, MERS does nothing and allows others for 20.00 to do whatever they want in MERS name. You didn’t know MERS would make a (judicially noticeable) disclaimer about veracity and accuracy of the voluntary-only entries into its computer-self and even then, yet allow the for-20.00-others to act in its name allegedly based on those voluntary entries it specifically denies and disclaims the accuracy of. MERS does not honor the agreement you were wrongfully induced into making and had no intention of honoring it nor did the lender, who by providing the document participated in the bad inducement. Title company trustees, referees with duty of good faith and fair dealing if not fiduciary to you and the ben, were replaced by bottom-feeding bankster-controlled mutts who wouldn’t know a real party in interest if it bit them in the heiny or know how to read let alone understand any of the controlling instruments or laws. The dot discusses the lender’s rights. Then the lender should be excercizing those rights, not other yeahoos.
    The fact is, though, that by these acts of false inducement, there truly was no meeting of the minds, one of the tenets of a contract. No one is his right mind would have agreed to any of this. We only signed these docs because of (clearly) materially false inducement. The investors whose money is connected to this mess or their reps are held to a higher knowledge / sophistication standard than the homeowner. If they are the ones bearing the loss (tho they have their own remedy, rights of recourse if they don’t like that: sue the bad actors – the one causing a loss must bear the loss), that higher standard works against them. But as an equitable consideration, sure, we’ll save them from total loss by agreeing to something reasonable. If they don’t like the hit, they can exercize their rights against the bad actors. We need to get together. The owner of this site imo knows how we could move in that direction. And here’s my 10 bucks toward the effort.

  36. An Eye for an Eye … No More..No Less

  37. @neidmeyer re: your IRS report. You gave the IRS evidence the remic was not a remic? Like to see that, I would. I believe what I said – no remic = tax consequences to investors and monster lawsuits for
    nondelivery from the investors against the banksters. I believe that’s what drives the IRS’ position. Now you and others say its because the banksters own everything and everybody. Maybe, and maybe even probably. I don’t know. Our gov’t headed down a tbtf path, for better or worse. At the time, I believe it appeared the most prudent course of action. So that is what it is. In keeping on that path, the ack that
    there is no remic or an ack of any situation which leads to taxation or which gives rise to mongo lawsuits against the tbtfs by the investors aren’t, or at least in 2009 weren’t, going to be favored. You wanted to rock their boat and they apparently didn’t want it rocked. But that was three years ago. If you are bullet-proof, maybe it’s time to try again with the IRS, or you could go at the investors in that no-remic. You’d be dealing with a group then facing taxation by their own claims of non-delivery against the banksters. Would they risk taxation to
    make that claim? Hard to say, yes? If they won, though, their damages would include the taxes, I would think. And chances are if the goods are in fact the goods, the banksters would settle, maybe even pre-suit. Very nasty precedent if they didn’t. You’d have to figure out how to score on the whistle-blower part of that if you want.
    Sooner or later, suits centered around non-delivery rather than “sacks of sh$t” are going to crop up. The investors better file lis pendens or whatever they can.

  38. Neil… I’m offended by the pervert here talking about my ass all the time. Its kinda … gross. You know … to have a FREE LOADER the size of a Garbage Truck trying to poke at it all day.

  39. “Pompous asses” is right.

  40. @Ivent,

    Enraged….why are you paying the mortgage if you feel you were so irreparably harmed…?

    ???
    Read my posts. I haven’t paid in almost 3 years.

  41. CNBC just celebrating the birthday of TARP with a big fat cake. CNBC anchors said the big fat cake is in celebration of the banks having their cake and eating it too.

  42. @Shadowcrap

    “…the answer they want to hear…”

    You are unbelievable. Your insults and derision (attacks) directed at me have NOTHING to do with an “answer.”
    I don’t give a crap if all you’re doing is answering—it’s your RUDE, SNIDE, COMMENTS that you constantly tack on to your “answers” that are incredibly bitchy that are the problem—and everybody here is SICK OF IT.
    You judge and insult me, and pretend like all you did was “answer.” You are not Neil’s mommy.
    Again—PLEASE IGNORE ME.
    I will continue to post what I feel needs to be known. So you best just shut up—because every time you tell me not to post something—guess what—I WILL POST IT AGAIN.

  43. Well said, Poppy.

  44. Yes, there are some who do that and get indignant if you challenge them.

    There is no need here for that. We are all in this together. All here are suffering, as far as I can see. Pompous asses need to show me the proof they are as good as they claim. If you are in the trenches and doing battle with “them”, you are valuable. Any information can be used to benefit a homeowner, as our cases are all slightly different. ‘Nuff said!

  45. Why is it when some people ask questions or make comments … if they dont hear the answer they want to hear …. they attack? Why is it that someone would remain around this site to critize those who operate it and write the articles free of charge and of their own free will to help you? Why would someone stay around and take homeowners on a wild goose hunt while they loose their homes? Attention! YEP! Attention…. What goes around … comes around Sweetie, whats passed is recieved back. How you treat others is how they will treat you ….. just returning the jesture back at ya … before we part ways.

  46. “…I think he works for investors. If you assume that loans were legitimately funded, security investors by investing in the REMIC trust — do not fund the loans. Security investors are NOT your lender for TILA purposes. The “bank” lends the money to borrowers, and then sells the cash flows (that are owed to them) to the REMIC security lenders. Homeowner borrowers have NO relationship with security investors. Security lenders are not in the business of giving mortgage loans. This is why the Federal Reserve, in Opinion (now Rule) to the TILA Amendment states that security investors (REMICs) are NOT the creditor. Neil simply wants to ignore this.

    Now, when the word “investor” is applied, not security investors, a different analysis is appropriate. The “lender” that is stated on the (fake) mortgage loan documents is not the lender that funded the loan. These mortgage brokers/mortgage bankers that told borrowers they were funding the loan, did not fund the loans either. They immediately sold/assigned the loan rights to either banks or “investors”, who would be the party that actually “funded” the loan (again assuming that funding did occur). Those investors, separate from “security investors,” were largely the debt buying divisions of the major banks. These investors are the “mortgagee/Lender” – for the purpose of establishing FUNDING.

    Of course, these “investors” had already purchased the default (false or otherwise) from the GSEs and did not have to fund the loan at subprime “refinance.” Collection rights are just “reaffirmed” by the modification to the amount owed – falsely asserted as a valid mortgage loan to the borrower. I have told Neil many, many, many, times to distinguish between “security investors” and “investors” — he has refused.

    Further, “investment bankers” do not collect on insurance and credit swaps — unless they actually own tranches in the REMIC — which they likely do. Investment banking, as related to REMICs, is the security underwriter that securitized the cash flows (to the collection rights). Since the tranches to the trusts were FIRST sold to the security underwriters, and security underwriters likely retained most of those tranches for their parent corporation (who is the original debt buyer by another subsidiary), then the “investment bankers/security underwriters” did collect on insurance via credit default swaps (paid by the government bailout). Whether or not the “investors” passed on their insurance proceeds to the security investors — is irrelevant to borrowers.

    The “investors” also collect on additional insurance when they purchase the (false) default loans from the GSEs (so they purchased the collection rights for free).

    Thus, swaps and insurance, REMICs, and “security investors,” are simply irrelevant to borrowers. It does not matter how many times insurance is paid on the debt, the borrower still owes the debt to SOMEONE. What does matter is that the borrower has a right to KNOW THE IDENTITY of the “investor/CURRENT creditor” who claims that the debt is owed to. And, by demonstrating that the subprime refinance was never a valid mortgage, and only a modification of the already classified default debt, the “debt” is subject to discharge in bankruptcy and/or fraud by a court of law.

    Neil is doing much harm by his analysis. It does not show what really happened —- and will not help foreclosure/homeowner victims. I believe by his continued wrong assertions, that he has assisted in covering up the fraud. Had he been forthright from the onset, perhaps the AGs would have recognized the real fraud and not signed the settlement.

    One other point, even though the “bank” debt buyers were the original Creditor/Investor — they are likely not the Creditor/Investor today. They have, most likely, already sold collection rights to other distressed debt buyers such as hedge funds. And, homeowers have a right to know the CURRENT CREDITOR.

    Who does Neil really work for??”

  47. @SC
    “Carie… he has to leave the door open for the lawful creditor/lender/invester”.

    COMPLETE BULLSHIT. “Investor” is NOT CREDITOR/LENDER.
    SC, Would you PLEASE STOP addressing me—I NEVER address you. PLEASE IGNORE ME. PLEASE. You always end up being a bully and we’re all sick of it—have you read the comments? Everyone is sick of the petty bullying from you and your buddy—“Thing One” and Thing Two”. Knock it off already.

  48. Having filed claims with the title company and having them dismiss me, as irrelevant I am going to file a civil claim against them too. The title companies are skirting the legal language of their contracts too. Just beware…we have turned over every rock and it is a challenge.

  49. usedkarguy’s comments could be connected to the local latest news report that the feds are considering declaring internet overusage a severe mental illness. We could probably file a counterclaim that fascism is also a severe mental illness.

  50. @ET–yes, Sjolander is a piece of work. And yes, that sort of “transfer” is not the kind of transfer contemplated by the statute. The judges know that. We know that. Doesn’t matter! Any links to the Temple Law report you mentioned earlier?

    @JG:
    I may have posted this before, but I want to post it again. Here are actual quotes from the judge’s order–which completely contradict each other:

    1. ASSIGNMENT OF DEED OF TRUST SEPARATE FROM NOTE IS A-OK ACCORDING TO THIS JUDGE:

    “Fannie Mae’s procedure when a loan becomes delinquent is to assign the Deed of Trust to the servicer to carry out the foreclosure sale. Thus, on July 13, 2009, MERS, as Fannie Mae’s agent, executed a Corporate Assignment of the Deed of Trust to BAC, and on July 20, 2009, the transfer of the Deed of Trust was recorded in the land records. This assignment made BAC…the beneficiary of the Deed of Trust…”

    2. THE JUDGE ACKNOWLEDGES MY CASE LAW–FROM HIS CIRCUIT–WHICH COMPLETELY DESTROYS WHAT HE SAID ABOVE BUT CONCLUDES THAT THE CASE LAW ACTUALLY HELPS THE DEFENDANTS:

    “To support their legal position, the [Plaintiffs] cite a case decided under Texas law in which the Fifth Circuit Court of Appeals stated that “An assignment of the note carries the mortgage with
    it, while an assignment of the latter alone is a nullity.” See Kirby Lumber Corp. v. Williams, 230 F.2d 330, 333 (5th Cir. 1956). The Plaintiffs, however, misunderstand the meaning of this concept, which, if anything, bolsters the Defendants’ position.”

    3. JUDGE THEN TRIES TO EXPLAIN OUR SUPPOSED MISUNDERSTANDING OF THIS CONCEPT BY CITING CASES THAT SAY THE EXACT SAME THING AS WHAT HE JUST SAID WE MISUNDERSTOOD:

    “The Mississippi Supreme Court has articulated this rule in a way that better suits the present circumstance: “[when] the mortgage and the note[] are sufficiently connected. . . . [t]he assignment of the note[] operate[s] an assignment of the mortgage also.” Holmes v.
    McGinty, 44 Miss. 94, 1870 WL 4406, at *1 (Miss. 1870); see also Lindsey v. Bates, 42 Miss. 397, 1869 WL 3765, at *2 (Miss. Err. & App. 1869)(“[T]he assignment of the note carries with it the
    mortgage, which is a mere incident to the debt, and the assignee of the note is entitled to resort to the mortgage and all other securities, which were given for the purpose of assuring its
    payment, as its incidents.”).”

    4. INCREDIBLY, THE JUDGE THEN STATES THE OBVIOUS, COMPLETELY CONTRADICTING WHAT HE SAID WAS LEGAL IN #1 ABOVE:

    “Under Mississippi case law, which is consistent with general principles of mortgage law, the mortgage follows the note. See also Restatement (Third) of Property 10
    (Mortgages) § 5.4.”

    Am I crazy? Didn’t he say that Fannie Mae held the note since 07, then MERS legally transferred only the Deed of Trust to BAC (which would be the mortgage NOT following the note) in 09 and then capped it all off by saying the mortgage follows the note under Mississippi law? He essentially said that under Mississippi law, the mortgage follows the note, but in my case, the mortgage not following the note is not a problem. Am I missing something?

  51. Carie… he has to leave the door open for the lawful creditor/lender/invester, it would difficult to take the proper parties right away to fc if they are not aware that a pretender is trying to fc? Right? How many strikes before they are out? You need to finish your homework …

  52. @ukg

    Sad but true.

    A judge literally said to a friend of mine who had all kinds of discovery:

    “I don’t care who the creditor is, I don’t care about the accounting, I will NEVER dismiss a foreclosure with prejudice!!”.

    We are in hell.

  53. @ usedkarguy, does this have to do with your own case? Or the situation in general?

  54. I have come to the conclusion that this is a waste of time, energy, and thought. The order is in: civil forfeiture will be enforced regardless of any claims or defenses brought by homeowners to stop fraudulent foreclosure. Wire fraud, racketeering, mail fraud, fraud on the court, you can stick it all up your ass! The judges have been told to “Stop this, NOW”. How can claims go from “voluminous and serious allegations” to “without merit” in the blink of an eye? It’s easy, the judge got the memo.
    We’re all fucked.

  55. I hope your daughter bought an owners policy from the title company. That protects her title against any fraud on her title. An attorney told me that is more valuable than the warranty deed to the house.

  56. Shadowcat….I am familiar with Illinois law. However, I am not familiar with the facts of your case which you left out. If your daughter bought a fraudclosure, you are right. She can be thrown out at any time. Sounds like she has issues with the title company. But, don’t we all…?

  57. @Ivent… you need to brush up on Illinois Law. She is subject to the previous homeowner whom was fraudulently forclosed upon coming back to reclaim his property. BOO! If she files … she brings it to his attention. Its absulute madness … that they set this many homeowners up for lawsuits. They knew the courts couldnt handle it …

  58. Lesson of the Day …. They count on you losing based on your… Ignorance of the Law’ …. its not a defense. Use this to your advantage….. Ignorance of the Law is not a defense for Mr Banker and Co-horts either..

  59. What do you mean a house she “thought” she bought? My county recorders office told me I own my house…If you want to believe the lies that is certainly your choice. If I were your daughter I would pocket the mortgage money and sue the crooks for destroying her property value by committing a quadrillion in fraud with her signature without her knowledge. Maybe she can recoup some of her losses & go on a nice vacation with her kids.

  60. After being poked by three ends of a stick .. you learn the rules of their game. You find your strengths then play on their weakness …… just like they did yours. After all these years I’m flabber gasted with Congress and their lack of doing anything but pad their wallets.. There is still no disclosure in a Human Language! People are Losing on Ignorance of the Law issues …..

  61. She cant sell it. If she abandons it .. a theif will take it, along with all her improvements and she still owes loan. Why should she file BK… she has no debt other than a mortgage on a house she thought she bought? I know about the BK loophole.. but its not for everybody. I want Justice … Real Justice!

  62. Do you blame the house or the people who are trying to destroy the house? I look around my house and I see who was here. You need to throw out the trash…

  63. Some people can manage to make lemonade out of a lemon by not looking back.

  64. In some cases as ER has suggested …. you have to let go of it. But as she is finding out …. its not that easy. Here is how it works here … she is still responsible for the debt .. house or no house. Apparently she should have been aware she was signing an unsecured debt in exchange for a non marketable title. ???

  65. Maybe you can find a foreclosure defense attorney who specializes in Contract Law…

  66. The House”… 5yrs down the road cost my daughter a marriage. The House has left 2 young babies without a father ….. The House is a Nightmare! How do you make a Nightmare a Home? You Cant!

  67. Enraged….why are you paying the mortgage if you feel you were so irreparably harmed…? If they sold you a bad bill of goods I would withhold payments until the situation was rectified to your satisfaction. Sounds like they misrepresented that mortgage contract. Maybe you need to consult with a good contractual law attorney .

  68. My daughter feels your pain Enraged. A house is just a house if you cant make it a home.

  69. Poppy,

    “My goal: to keep costing them, tying it up and maybe get to a point of diminishing returns. Very close right now…the mortgage is very low.”

    I don’t have the same servicer but that’s exactly my intent: to make sure that, when my case is resoled (I am not hellbent on the outcome and, quite frankly, i don’t even like the damn house anymore!), they will have smoked the entire house three times over.

    I’m in federal court and I went on the attack. Then I decided to stop paying: can’t pay both the mortgage and an attorney and they forced me to go that route. They made it painful for me. I’ll make it painful for them.

    Can’t jeopardize my case by giving my name here yet but I will when it’s over.

  70. Poppy..I have found the Judge won’t bear witness to fraud unless you get through the discovery process. I filed a motion to dismiss early on re the altering of documents that were apparent on the face of the documents ……that should have been a case ending fatal flaw in my State…..however, the Judge said (he would not bear witness to that felony fraud) I need to have a hearing. The Judge apparently wants to see a preponderance of the evidence. You can’t get there without discovery.. Best of Luck to you in your evidence gathering..! That’s how you will win.

  71. Great Grandma always said … Stash your Cash, someday it will save your bacon. She was right.

  72. LOL…looks like I missed a call from Harris bank..wonder if the bank attorney told them their bogus security interest lien they were handed by the FDIC was released in 2007 & I have the PROOF…I have the cancelled notes in my possession..? The rule of law is a beautiful thing when you know what it is.

  73. @ Ivent

    I too am fighting with CW, BOA, whatever they are calling themselves these days.

    FYI: went before the judge with lots of “actual” evidence of the fraud…the judge said: if you don’t like my decision appeal it. Never even got to first base. So, yes, I am appealing. In process right now.
    We tie it up for 9-12 months and if I lose I will file a Chapter 13, get a stay and hopefully “cram down” or get mortgage released, from the fraud.

    My goal: to keep costing them, tying it up and maybe get to a point of diminishing returns. Very close right now…the mortgage is very low.

  74. @Ivent, …. compare the paper trail and the title. Thats what matters. No secured asset … no fc. I’m the kind of person, when I see a fly … I swat it Twice! No note .. no fc…… just a debt floating out there owed… and the paper trail say the origional broker lender. Who in my case is still in Business operating under another name dba as themselves to refi and get as may Homestead Waiver Releases as possible for those loans from the investor/lender still on their books. Example ….. Broker/lender still owes back the 200,000 he borrowed from his lender. Homeowner only borrowed 100,000 on note. Somebody is in the Frying Pan when the homeowner refuses loan mod or refi. Ut Oh. Now lets not forget about all that ins CW collected on a loan it didnt own, but defaulted. BofA is liable to pay that back if broker/lender cant fc.lm or refi. Ut Oh!

  75. @ Shadowcat

    Yes, this is a problem. The stress and cost in various terms are unbearable for most. It is an outrage dutiful, hardworking, taxpayers in this system are being pulverized by the government and courts.

    This shit is crazy. And it is shit!

    Having fought many a court fight in my life, this has been the most difficult and draining. Very little support out there.

    I only know 2 people in court that financed 100% of their house, but the vast majority have not done that. Most of us just want what we have been paying for and are entitled to, under the law.

    People should not judge…until they walked in anothers’ shoes. Every situation is different, yet similar.

  76. The crooks are hoping we who “get it” all had a good heaping helping of that listeria laced popcorn that just popped up out of nowhere….

  77. Where’s the national call for the seizing of the bank accounts both foreign & domestic & audits of the TBTF….? That’s the only fight that makes any sense.. That would make every one of these crooks….including indemnified Hank Paulson go running for cover…

  78. @Poppy, … Heart Attack … Yes, been there and done that …. bad enough what they did to the homeowners and home values and most of all the economy and now taxes. Add the Cherry on top and get told your gonna lose your life savings,pensions and probably SS and MC …. its a recipie for a Heart Attack.

  79. “Table funded by broker” doesn’t mean a damned thing without the LEGAL ASSIGNMENT….the LEGAL PROOF THE US. TREASURY WAS PAID BACK FOR THE ORIGINAL LOAN..Without the LEGAL ASSIGNMENTS…the broker/dealers were simply gambling..The real payoff for the BROKER/DEALERS & THEIR CLIENTS was THE CREDIT DEFAULT SWAP INSURANCE MONEY….THEY ALL GOT BACK 10X THE AMOUNT OF THEIR ORIGINAL GAMBLE BY COMMITTING MASSIVE INSURANCE FRAUD AFTER THEY INTENTIONALLY DESTROYED THE SOLVENCY OF OUR MORTGAGES..BY COMMITTING A QUADRILLION DOLLÁRS IN INSURANCE FRAUD…..DON’T YOU KNOW AIG HAS BEEN INSOLVENT FOR YEARS…..?

  80. @Poppy

    “People have the right to find the level of comfort they desire. The legal battles are very draining and killing many with heart attacks, strokes, etc…fighting is fine, but at what point do you value your health, sanity and peace of mind? You do not get to decide that with quips and quotes. ”

    Beautifully said—thank you.

  81. Your just not hearing us fight for you, because you only hear what you want to hear …. and that gets you no where.

  82. If CW never owed it …. how will BofA get possesion thru CW? It Cant! CW never transferred broker/lender note to itself. It never registered with SEC and FFG Maes never got it. Ut OH!

  83. @E.Tolle

    As usual, your writing is brilliant and moving.

    This last thing you wrote is the biggest problem, as I see it:

    “10 million deadbeats who struggle to eat and stay out of the rain have no audible voice, and therefore no legislative representation.”

    When a “voice” begins to be the slightest bit audible—it is snuffed by the “big boys”…just because they can.

  84. The way they are getting around this is with the Substitute Trustees on many of the deeds, using the Special Proceedings in non-judicial states.

  85. Really, enraged?

    Other people’s quotes are at my fingertips. Just like Do unto others’…Treat people the way…people in glass houses…you know the drill.

    People have the right to find the level of comfort they desire. The legal battles are very draining and killing many with heart attacks, strokes, etc…fighting is fine, but at what point do you value your health, sanity and peace of mind? You do not get to decide that with quips and quotes.

    As far as fighting, been in the military, sued people for discrimination and won, been in the courts many, many times. This is a huge battle and so far, homeowners 2% – government and judiciaries 98%, homelessness and poverty on the rise!

    Reveal yourself and we can start our own Occupy movement…I’ll join immdeiately!

  86. You can control what happens to you by using what God gave everyone… the human spirit. That is more powerful than anything they can throw our way.

  87. ETolle ..apply this situation. Table Funded byBroker (broker listed as lender on note, broker is not a MERS member). CW claims ownership and possession. And files fraud LP. Case dismissed. No paper trail for the sale from Broker/lender to CW. How will BofA get title (slander)? How will BofA get Note (MERS..when the Broker lender is a non member)? Ut Oh…… Even is MERS is given authority to transfer the note in your state …. It can only transfer Note for Members… Ut Oh

  88. E Tolle…..you guys need to come to grips with the fact that you are not going to be able to destroy the human spirit in everyone. Especially in people who have come this far. For some people, bullying and being told negative things like, you are screwed & you just can’t win has had an opposite effect. It makes people who know things just don’t add up furious and empowers them even more. There are millions of Americans who refuse to accept failure as the so called “new normal” because it just does not make sense in the richest nation on the planet. ESPECIALLY when WE THE PEOPLE KNOW the TRUTH IS…..WE THE PEOPLE ARE WHO FUNDED & PAID FOR EVERYTHING …….UPFRONT …AT THE ORIGINATION…., that is the reaon why…….WE THE PEOPLE should NEVER accept MASSIVE BANK FRAUD and “fixes” for a QUADRILLION DOLLARS IN BANK FRAUD …..BECAUSE…WE THE PEOPLE WERE THE ORIGINAL INVESTORS IN THIS LOW DOWN DIRTY FED CREDIT SCAM……..THE GOVERNMENTS FAILURE TO CORRECT THEIR FAILURES AND USE THEIR FAILURES TO CAUSE OUR FAILURE & LABEL THAT AS SUCCESS..Sorry, that is not SUCCESS….THAT IS SUCK-CESS…..and that is UNACCEPTABLE. The UNEXPLAINED DISAPPEARANCE of gazillions in our pension money, livelihoods, wealth & notes to our property. In exchange for a QUADRILLION IN BANK FRAUD…poverty……10 buck an hour corporate jobs, OBAMACARE food stamps and homelessness are simply UNACCEPTABLE to many AMERICANS because…..IT IS MORE FRAUD…… WE THE PEOPLE just worked too damned hard for all of that FRAUD to EVER BE ACCEPTABLE as a replacement for all of our hard work.

  89. Poppy,

    The same way it worked out for the Natives and the Mexicans when the whites came…

  90. Just FYI—“rampid” is not a word.

    http://www.urbandictionary.com/define.php?term=rampid

  91. You cannot control what happens to you, but you can control your attitude toward what happens to you, and in that, you will be mastering change rather than allowing it to master you.

    Sri Ram

  92. SC,

    So am I. No reason to leave. But plenty to fight.

  93. Didn’t ask for approval and do know quite a few people who have gone…living in RV’s, Boats, etc…sold everything. People have a right to choose, not matter what anyone thinks. The country is already altered by millions of people coming here and taking what the citizens have worked for. How’s that going to work long-term?

  94. @ zurenarrh, thanks for the kind words, and to D Wynn as well. As to your case, I knew that that would be the issue as far back as the Kemp trial. Linda DeMartini set the stage with the lack of note transfers, but Sjolander kicked their illegal field goal in her deposition when she said:

    Q Okay. Was there actually a physical transfer of
    15 this original note from Countrywide Bank, FSB, to Countrywide
    16 Home Loan Servicing, L.P., to Ginnie Mae?
    17 A In the vault, yes.
    18 Q Okay. So the note physically remained in a vault
    19 during all times?
    20 A Well, the note, yes; but when it’s sold to Ginnie,
    21 it’s then isolated in the vault in the Ginnie Mae portfolio
    22 area.

    The NY trust laws that they’re attempting to rewrite here, and unfortunately in your case they were successful with blatant criminality, is a clever device exactly mimicking three shells on a card table, one with a pea underneath. By renaming an aisle of their vault as the ****Mae vault (pick your executioner), they believe they’ve gamed the system, and they’re getting away with it for now.

    To paraphrase Yves Smith again, there’s simply no way that this act can stand up to the rigors of the strict transfers as called out by well established trust law. But as long as we’re captured, as long as the door swings both ways from Wall Street to DC and back, who is there to complain? Deadbeats? 10 million deadbeats who struggle to eat and stay out of the rain have no audible voice, and therefore no legislative representation.

  95. I wish you Well ER. But I have generations of Family, Roots and Assets here in the fields of Illinois. This is my Home..This is my Land.. This is my Country.. This is my Goverment. I’ bare alot of Responsibility …. I’m gonna stay behind and help restructure our Goverment and prosecute those who took advantage of my fellow Americans. I will continue to fight for educational rights, voter rights and human rights …… Mutt

  96. Poppy,

    “There are quite a few Americans considering leaving this country.” So, that’s how it’s going to be played out? By fleeing?

    If it’s the case, then people have no right to complain that this country has been sold to foreign investors. China is looking for space to put its population. Leave and this country won’t remain empty for very long…

  97. There are quite a few Americans considering leaving this country. The citizens here are getting screwed in every orifice. Leaving the U.S. right now seems like a better option than living in a cardboard box, under the freeway, sipping leftover bottles of soda, filled with Monsantos’ genetically altered “high fructose corn syrup” additives.

    The leaders in this country should be brought up on charges of Treason!

  98. SC,

    “…especially if you have assets and cash…”

    That’s my whole point! I have neither and much better plans for my money than give it to the feds. They don’t give me theirs. Why should i give them mine?

    ToLLe,

    That would be the dumbest idea! Ever heard of malaria and mosquitoes? Nah! Rain forest mean fully clothed. Unless you’re a native with DNA-built in antibodies.

    Otherwise, I’m in. When are we leaving? I know the rain forest from the Venezuelan side and I tasted the one in Congo. Haven’t gone to Ecuador yet.

  99. @E. Tolle–right on, my brother! Links to your books/blog(s)? You are a great writer! I will have to look into that Temple Report…

    @johngault: what did the judge actually say? He just accepted the Defendants’ story as gospel–the order was It’s not so much that he said “I am ignoring Kemp and physical possession.” In his recitation of the relevant facts he said the following:
    1. In 2007, CW sold my note to FM
    2. 8 days after that (purported) sale, CW (purportedly) endorsed (Sjolander/Meder) the note and “transferred” it to the “Fannie vault” in Simi Valley, CA

    I never noticed until just now that he used the word “transfer”–the magic UCC word that is one prong of the two prongs of negotiation–to describe what actually WASN’T a transfer to Fannie Mae at all. It was only a semantic transfer–CW said that their vault was the “Fannie vault,” which I pointed out was only a deceptive euphemism for a vault at CW/Recontrust. But the judge bought it. What if I pretended to sell things to Fannie Mae, but kept those things in the drawer of my bedside table, which I called the “Fannie drawer” whenever asked by some busybody? I’d be thrown under the jail.

    I’ll write more later this morning–gotta take the kids to school…

  100. I know what is left of our pensions and 401ks will be wiped out here very soon. There is not a dag gone thing I can do about it …… but I can save my house and I did save my house. In reality it all balances out …. An Eye for a Eye!

  101. also ER, keep in mind that when you get all payments back that you paid them, you will owe taxes. Dont forget you used the Intrest on the mortgage as a tax deduction. Be prepared ….

  102. @ER… the previous owner of my daughters house went to Jail for tax evasion … left the door wide open for Theifs to come in ….. Dont put yourself in that situation. Your kidding yourself if you think they wont do it to you ….. especially if you have assets and cash.

  103. Enraged, why do I have a vision of you and I half naked squatting around a firepit in the Ecuadorian rain forest chewing on python skins and drinking ayahuasca like it’s iced tea?

    It could be worse.

  104. ToLLe,

    I know you’re right. You know you’re right. But look at what is going on: people are not taking any kind of pacific action, they are not calling their elected officials, they are not sending letters, they are not contacting newspapers, nothing. Forget gather in the streets and make waves!

    I’ve been advocating for a long time for people to:
    1) Sue the banks. Investigate their mortgage, do their homework, check their records, find the many “mistakes”, and simply sue. Then, as soon as they have an attorney willing to do it, stop paying (and those exist everywhere. Only thing is: you have to pay them. Well, you have to pay something. why not an attorney?)
    2) Close their bank account. If they must have one, go the credit union route.
    3) Stop paying the IRS.
    4) Get involved! Be a pest with their reps, senators, AGs. Become visible.

    They won’t. They’ll yell, rant, vent, whine, scream and cry. Forget about taking action. And not only that but i find it remarkable how, as soon as anyone here takes action (I mean real action), the fear mongers start drawing the worst possible scenario to try and get you back in line. I haven’t done my tax return. I won’t. Gov. doesn’t need my lousy $2500 to invest into war and I won’t participate. If you listen to the posts, I have already been “deported” (no, American citizens don’t get “deported” for something that stupid!), jailed, put in a concentration camp and what not! I personally don’t believe any of it but the great majority of people here do, including those with education. Why? Pack mentality. Fear, abject fear.

    Nonsense. Absolute nonsense! And in the end, we’ll all croak anyway. I, for one, will test that fucked up system to its limits. Hey, if Assange can find asylum in the Equadorian consulate, I’m sure there are plenty of African or European consulates (including mine) willing to house me if I get into trouble: right now, not too many countries really like America… I bet Russia and China would too, just to stick it to the US! And in the meantime, I’ll have fun. And I’ll keep my money for myself.

  105. CNN reporting U.S. will sue more banks. Maybe it would have been more beneficial if they would have audited them BEFORE handing these crooks trillions in U.S. TAXPAYER MONEY & PROPERTY. It took the most well educated people on the planet 4 years to realize this whole thing smells bad? Things just keep getting weirder. Yesterday, the media reported Obama went clear over CONgress heads again and purchased a prison in Illinois. More things that just don’t add up. Even the media is wondering what Obama is doing……?? http://m.nydailynews.com/1.1173284

  106. Stop trying to void the contract you signed and start trying to enforce it ….. There within … you will find your Wins. Fly with the Wind beneath your Wings.

  107. Was it Childish Bulling (after years of rampid ramblings) or was it to redirect you to the Consent Orders, The statue of Limitations, Criminal Law, Slander to Title, wire fraud, mail fraud, extorsion, money laundering etc,,,….. heck I dont know. After all what do I know … Right?

  108. ETolle
    i have developed respect for you.

  109. Great point about the ref call Poppy. Although I’d change your last statement from “this is so skewed” to “we are so screwed”!

  110. @ All

    I cannot remember where this information was gleaned from right now, but if memory serves, BOA has 39 Trillion in assets, somewhere, somehow?

  111. Enter the REMIC, MERS, the Special Warranty Deeds, Erroneously named Originators as Lenders, Substitute Trustees as Owners, etc…all by design and circumventing tax obligations to the entities the rest of us are obligated to pay. There are Billions to be acquired if the Judiciaries and AG’s would do the jobs they were hired to do. Again, all these agencies are on the dole from taxpayers…people really need to understand the actual cost of this behavior and the depravity of these sociopaths, to our system. They will never stop if they are not punished and everything the citizens own (sort of) can be targeted and taken. Somehow this just does not sound like a once great Democratic system.

    Last point: when the replacement referees last week made a bad call on the field over 70,000 people were enraged enough to call and demand change…we now have over 10 Million foreclosures and counting and we do not see that kind of outcry…this is so skewed!

  112. Once you get passed the childish bullying bullshit rampant on LL these days, there are some great comments in here. I’m not sure just how much evidence we the people need to make the final determination that we’re simply cannon fodder, bricks in their wall, cogs in their machine, foamed bodies on their runways; we are of no value to the elite save for our cheap labor and the fact that we purchase the goods built by us in their factories. They’ve operated for years under their belief that we’re expendable, but when times get tough they manage to provide us just enough bread and circuses to reglaze the eyes of us all, settling us back into TeeVee Trance.

    Zurenarrh, well said my friend. As a backer to your points, I’ve posted before about a Temple Law report that went out to all judges last year as a primer for how they should rule on foreclosure cases across the land. In a nutshell, they counseled ruling for the banks unless forced to do otherwise by little things like legal issues, where they should then rule against the banks with leave to amend and a quicky refile. Without prejudice is king.

    Sooner or later we’ll come to the conclusion that we the people outside of Wall Street and the beltway are yet another form of QE…..yet another backdoor bailout provided by them to them via us. They have the ability to morph from NY to DC in the blink of an eye. We have legislators and regulators who are more like those little turn signal dogs in the back windows of cars whose heads shake up and down incessantly; they act like they hear us and then they act like they care and then they act like they’ll do something about the problems….over and over again. All the time there’s no intention whatsoever to fix the travesties that are shredding civilization.

    The article above states, “Lawmakers, law enforcement agencies and the judiciary cede their governing functions to private industry if they allow players to disregard the law and stride to create law through their own practices.” I believe it was Matt Stoller who wrote on Naked capitalism last year about code being the law….a great work that. He explained that when the government sits back and allows private concerns to write industry standard code that is then interpreted as law, these multi-nationals have usurped the legislative process, duping us all into believing that their arguments are indeed sound and we must all be wrong.

    We need look no further than MERS to see how an industry can usurp the laws of the land and convince or coerce everyone that to deny them their code, their existence would be threatened, which translates to the threat that all title of the land cannot be allowed to be tarnished; when the exact opposite is the underlying issue. MERS is the demon that has stolen the land recording system, plundered it for its gain, and left their set of institutional guidelines to now serve as the law of the land. Look no further than a judge opining on the MERS membership agreement in a court order to get this drift dead center.

    The perpetraitors (not misspelled) knew exactly what they were doing, going all in on the bet that our weak-kneed government would never stand up to them and their bullying ways. They were right. Now we the people will need to lose our homes and move into their rental units, to stave off what they consider too painful an outcome; the collapse of a banking industry that pays its players in DC extremely well, finances their war machine, and securitizes us all into debt peonage.

    More to the point of Neil’s post above and also on NC last year was Yves Smith’s write-up where she stated all matter of fact that the white house is (of course it is) aware of the failed status of the REMICs, but has decided not to use the IRS in policy matters. There you have it. More proof that no matter what, you and I need to play by the rules, as Wall Street skates by unharmed on their “Wall Street Rules”.

    I’m in the extreme minority here on LL when I constantly write that we will have to see REV 2.0 in order to right these problems. THEY will not loosen their grasp willingly, look at any chapter in any history book. What would make anyone believe otherwise? Only when threatened with severe repercussions will THEY back down. If you don’t agree, cite some historical precedents. I’ll start…let’s compare what’s going on today with oh…say…the French Revolution? It fits like Michael Jackson’s hand in a sequined glove. Or Marie Antoinette’s head in a wicker basket.

  113. All I know is I filed a IRS whistleblower report in 2009 about remic status regarding my loan submitted with good proof and it was rejected ,, the FedGov/IRS doesn’t want the banks to pay because the government IS the banks…

  114. And by the way, when you consider the liability issue, maybe you’ll give a new thought to why MERS chose not to be designated an AGENT.
    Sooner or later and I sure hope it’s sooner, that alleged agency is going to find a path to bite the butt that deserves it. I can visualize the red bead. I just hope I get to actually see it and the shot. An agent is not liable for the acts of its principal, but an agent is liable for acts in which it participated or for acts done in its name or under its agency with its consent.

  115. @zur – what did your judge actually say? You only said he didn’t give a hooey about the law and facts, but I’m curious to know if I may what he actually said. In that material dcb linked the other day, (perfected security interests) it says essentially imo that CW could not be the custodian for FNMA. Well, literally it describes who may not be a custodian for a party with a security interest in a note. I’m just saying if anyone is positing that CW-the-seller was the cust for FNMA, that material may give you arguments against.

  116. “The IRS and others have begun to take notice”. I have to disagree.
    From material from a year or two ago, it appeared the IRS was aware
    of the issue (come on, this is the relentless-hand-out IRS) well before now and chose not to pursue the taxation because

    “If these losses are realized, those professionals will face suits for damages so large that they could put them out of business.”
    Now that’s the truth. Taxation acknowledges the trusts don’t own the loans.
    That is class warfare imo: members of one class who have no rights of recourse are allowed to pursue claims to which they have no right against another class, the homeowners. And btw, imo, at least some judges know this and fall in with the “we can’t have this” gang and some here speculate about personal ramifications to judges’ pensions. I don’t know about that and wouldn’t make the allegation. I would only say what I did, and that’s that some judges know the tax rams of the trusts not owning the loans and as some say ‘equity abhors a forfeiture.’ Okay, but there are times when equitable considerations
    just can’t trump law and imo, this is one of them.

    As you may recall, I’ve noted that investor law suits don’t allege what they could – that the loans never made it. Taxation ram is likely why, so they concentrate on the known poor quality – zilch – of a terrible percentage of the loans. If they sue for non-delivery, they’ve got tax problems and WS et al has got such liability issues, it COULD poss take them down. OUR biggest concern is who owns the loans and has any right of recourse against the homeowner. Who owns it? Is that guy a bailee? is he a surety? But by hauling out Art 3, the banksters say heck with that, we’ve got possession.

    I still think the loans were traded electronically – no physical delivery and no endorsements. So what they do is mess with who controls the authoritative electronic copy of the note. Let’s see, stuff they could come up with……”If bankster A is not the controller of the auth copy, then let’s say he’s the custodian, a bailee, or can enforce by possession or whatever gets up what we want.” There’s a registry for digital notes, but is there a “custodian”? I don’t know. What else I don’t know and may never know (I truly pray someone finds out sooner than later) is if the paper note may exist when there is an authoritative elec version of the note with a “controller” – I didn’t make that up – that’s the term the UCC uses.
    If I were right and the notes were digitalized with a “controller”, why don’t the banksters just say so and go from there? I don’t know beyond speculation, even if the spec is reasonable; my recent introduction to the issue is too limited.
    I noted today or yesterday that Ross Perot says the U.S. is ripe for a hostile takeover. I don’t know much about him, but I do know he has a drastically more informed opinion than me. I’d like to think if he said it, he believed it, and wasn’t just plugging his book. Now you can go off and say it’s already happened, but whatever has happened is not what he meant, way I get it.

  117. @Z

    Thanks…I agree. I just can’t stand bullies.

  118. @Jim–thanks for saying very simply and directly what I took several paragraphs and two separate posts to say!

    @carie–right you are about the preparations against the people. Over a billion bullets bought by the federal government. And I’m glad you aren’t bullied off this great site. I wish we wouldn’t fight amongst ourselves.

  119. In fact, now that I look at it again, this article even acknowledges what I’m saying, to wit:

    “More generally, by overlooking the serious defects in the transactions, courts and governmental agencies encourage the type of behavior that led to the financial crisis. Lawmakers, law enforcement agencies and the judiciary cede their governing functions to private industry if they allow players to disregard the law and stride to create law through their own practices.”

    Yes, OF COURSE the courts are encouraging the type of behavior that led to the financial crisis. It hasn’t BEEN a crisis for any of the entities that CAUSED it–i.e., the banks, it’s only been a crisis for regular people. The “crisis” has been a BOON to the banks–they’re even MORE profitable now, they’re even bigger and more powerful than they were before the “crisis.” None of them have gone to jail, had to admit wrongdoing, had to pay any money back, etc. MAYBE an isolated case here and there–like in Kemp–a homeowner got a fair shake, but that isn’t happening anywhere near as often as it should in light of the facts in cases like Kemp, mine, and many others we read about, participate in, and follow every single day.

    And it’s not because the lawyers or the pro se litigants aren’t making the right arguments or because they’re not saying the magic words that they’re losing. They’re losing because they AREN’T BANKS. It’s as simple as that–the word has gone out, and the judges know that the banks must win, and the people must lose. The fix is in. The fix is, always has been, and always will be in. “The banks own the place,” as Dick Durbin said. “We’re all slaves to central bankers,” as a CNBC host (on the Kudlow Report) and his pundit guests all agreed.

    I have come to the conclusion that there is no way that these wrongs will be righted through the courts–almost to a person, the judges do what they want, ignore precedents, ignore case law, ignore statutory law, ignore common sense, just ignore anything that favors the homeowner. And when wrongs can’t be righted through the courts, they will have to be righted through the streets. And my god, the squeeze is on–here in southern California (Riverside County), gas just went up fifteen cents from a week ago. It was $4.15 last week and $4.30 when I filled up my wife’s tank about an hour ago. QE3 at work? Maybe–probably. Maybe not. I don’t know–it’s probably actually QE 1 and/or 2 finally jumpstarting the inflation. My bachelor-degreed ass hasn’t had a full-time job since 2007. Most of the people I associate with on a regular basis don’t have jobs AT ALL, much less a full-time job. But the banks? They’re doing A-OK! And that’s the point of all this.

  120. @Z

    “Eventually even us dumb Americans are going to have had enough of the unchecked, brazen larceny and do something about it for real.”

    And you can bet “they” are already anticipating and preparing for that, somehow.

  121. Very interesting article. Kemp was decided two years ago, and is not at all a secret. The IRS should have been all over this back then, if not way before. But it has obviously been decided by someone, somewhere, that the banks are not to be held accountable for their actions, least of all by the IRS. The banks are virtually untouchable–we do have a two-tiered “justice” system, after all.

    In my own case, as in Kemp, it was finally revealed that my Countrywide note, which was supposedly sold–and more importantly, purportedly “negotiated”–to Fannie Mae, never left the Countrywide/Recontrust vault in Simi Valley, CA. The UCC is very clear on what constitutues “negotiation”–endorsement AND transfer–gotta have both for negotiation to have occurred. I’m not a geography genius, but it seems to me that if my note is admittedly (supposedly) sitting in a vault in California (with Countrywide) while the entity that supposedly holds the bearer paper is in Virginia (i.e., Fannie Mae), it would seem that the possession element of negotiation has not been met. I mean, it’s called “bearer” paper for a reason–if you bear it, you can cash it and if you don’t bear it, you can’t very well cash it. This was the deciding factor in Kemp–physical possession.

    Well, my judge didn’t give two shits about Kemp and he didn’t give two shits about physical possession. Just like the IRS doesn’t and won’t give two shits about this great article and the issues it covers. There will be no enforcement–after all, if the big banks are held accountable, the banks might fail, and the banks aren’t supposed to fail, WE are. That’s why the Congress is eventually going to be surrounded by chanting hordes kicking the shit out of the Darth Vader cops like they’re doing in Madrid now. Eventually even us dumb Americans are going to have had enough of the unchecked, brazen larceny and do something about it for real.

  122. People really need to start telling the truth about how this FED credit scam worked…..There was never any money lent to us, we were the lenders, there were no trusts, the trustees were the title companies who kept up appearances, but never perfected the liens because they couldn’t perfect a mortgage lien that was never paid back by the originating bank, they never sold the mortgages, they passed the paper shredder of notes around from entity to entity..and sold investments in things that never existed, the GSE’s bought back the mortgages they guaranteed with U.S. TAXPAYER MONEY…FOR PENNIES ON THE DOLLAR FOR THE BENEFIT OF THEIR FOREIGN INVESTOR FRIENDS AT THE IMF….they all sold investors investments in chopped up notes, backed by property they never held legal title to because of the ORIGINATION FRAUD…..In refis they got to do the Origination fraud all over again by fraudulently inflating your homes value, and lending you back your own equity, and pocketing all payments as usury……then before the bubble burst, they dumped the insolvent mortgages they destroyed by committing massive investment fraud into a giant black pool of toxic debt fraud. From there they hoped to keep their ponzi scheme going by committing more fraud. Like INSURANCE FRAUD, FRAUDCLOSURES, DEED IN LIEU, SHORT SALES, LOAN MODS …..The mortgage contracts were structured as bonds for the benefit of their investors. The REMICS were a cover up for trusts that never existed, and MERS was a hideout for fraudulent transfers. The CDS insurance fraud is the real story. The banks & the investors were all insured on the fraud. AIG had backed like $600 trilllion in insurance claims by the time the manufactured default claims started coming in. There is an estimated $8 trillion in total property values. These crooks should have been audited, shut down & never bailed out…..Rick Santelli of CNBC said today, ex Treasury Secretary, Hank Paulson was indemnified…insured & bonded by the TBTF against ever being sued or jailed for bailing out these crooks. At the time this treason was occurring, Tim Geithner was the head of the FED. They all need to pay us back our stolen wealth & property & go to prison for life.

  123. Wow—you just won’t let it go. Sad.

  124. … My spelling/typing? But your so easily redirected with it. Your so concerned with the size of my ass and my spelling that the others are actually getting some constructive work done while I entertain you. Your so Gullable… Is that the best you can up with? Come on try again … I know you can do better than that after 2yrs? Give Me Your All… if you do, I will tell you how many eyes I have and you can tell me how many thumbs you have. Ready..Set..Go……….

  125. Hah—maybe you do know how to “use a spell”—you are quite the witch!
    What I meant to say was you can’t spell, yet you act like a know-it-all…now if you’ll excuse me, I have to go find some more TRUTH to re-post!! Because some people appreciate it…and I post it for them—NOT FOR YOU.

  126. @KC/SC—Like I said—you are a bitch supreme—who doesn’t know how to use a spell, but knows how to be insulting. And I’m not going anywhere so you’d best shut up and mind your own business.

    I am being thanked here for posting that information—did you notice? ‘Course not—your ego is to big.

  127. No one in their right mind dare to Agree or Disagree with you. You tend to stick to folks like a leach just for striking up a conversation. I’m merley trying to say … Stop Beating a Dead Horse … Go Find Yourself a Human Playmate …. your fantacy world is starting to stink up the air here. If I worked for Neil, he would have already fired me. So perhaps Neil works for me …and he is to nice a guy to say what needs to be said …. whos to say? Your either a Leader or a Follower. I know what I am and I know what you are. Go Chase that Bone awhile. Soo Gullable.

  128. you’re welcome, UKG.

  129. carie, thanks for that. Good read, print this and keep it around. Good cites. Print a copy of the Kemp case, too, for your case law files.

  130. @Shadowcat/Kathy Charlotte/or whatever your name is:

    I never, ever pretended to be a “know-it-all”. I only relay information from someone who knows all about what really happened.
    YOU however, DO pretend to know it all. And you are incessantly rude, to boot.
    So shut up and mind your own business and if you don’t like what I post then IGNORE IT. YOU DON’T OWN THIS WEBSITE.
    I WILL NEVER STOP POSTING AND RE-POSTING THE TRUTH.
    Everything ANONYMOUS has been saying is being revealed as true.
    I WILL KEEP POSTING—so you are wasting your time with your incredibly rude posts. What a bitch—I feel sorry for your grandkids.

  131. Carrie your 1099 was for property abandoment if I recall. There are several forms of the 1099. You should have listened 2yrs ago to what you were told… and kept your carcus parked in your home. Please dont come here and pretend to be a “Know It All” and keep shoving the same ole rubbish down our throats over and over. Look how that worked for you 2yrs ago.

  132. What about the 1099 A tax form that people get after these foreclosures that state that the servicer/debt collector is the “Lender”? Seems like blatant tax fraud to me. Can’t they be sued for that? What does the IRS say about that?

  133. Neil said:
    “…They took money, they used it not the way the lender or investor intended…” Add to that they took the money from the homeowner and used it not the way it was intended…the homeowners are/were investors in their home…

    Here is how the process went (thank you ANON):

    1) the subprime loans were sold to one of the major banks (this is NOT reflected in any assignments, and only some REMICs disclose this). (will explain why not reflected in assignments in a later here).

    2) the bank’s subsidiary Depositor deposits the loans in an off-balance sheet trust (some Depositors were not subsidiaries of big banks — but they had corridor agreements to sell to the banks — which we also do not see by REMIC disclosoure — (Corridor agreements to sell to the banks, but the Depositor name would remain on the trust )

    3) the REMICs are structured into certificates, which are all sold to the security underwriter (except the bottom tranche which the servicer would usually own).

    4) the security underwriters were subsidiaries of the big banks.

    5) the top tranches of the REMICs were rated the highest because the lower tranches provided support to the upper tranches — that is, given a default, losses would accrue to the lower tranches first.

    6) the big banks sold the top tranches to Fannie/Freddie and kept them for themselves (Louis Ranieri — grandfather of the subprime trust has explained this).

    7) Ranieri has stated that the lower tranches (credit enhancement) were sold first — to hedge funds, and other distressed debt investors, while the banks retained the upper tranches

    8) some of the tranches were sold to other big banks.

    9) Then the banks would take different tranches from different REMICs trusts, and package them into CDOs — to be sold to security investors. And, yes, the guy who sold the software for these CDOS is right — one had to be an idiot to invest in these CDOs, because the ratings on the REMIC trusts from which the CDOs were derived, were manipulated. Anyone who read the prospectus for the REMICs would know that the CDOs were derived from risky “loans”, and that they were not legitimate. From CDOs, CDS (credit default swaps) were derived — which are contracts not even “synthetic securities.” Sometime CDOs were repackaged into Structured Investment Vehicles (SIVs).

    10) The CDO “security” investors are, the pension funds, insurance co., etc, that Neil refers to when he talks about “those who put up the money.” These security investors, however, did not put up one dime to the borrowers, they were just the “synthetic” SECURITY INVESTORS that bought the idea that the derived CDOs, derived from the REMIC certificates, derived from the bogus loans, were actually triple A rated (this deriving is what is called “leverage”). These security investors do NOT fund mortgages, they do NOT give borrowers money, and they are NEVER the creditor. The creditor “investor” is the bank that originally purchased the subprime mortgage — that was never a “mortgage” to begin with.

    11) the CDS (default swaps) remove collection rights from the cash pass-through structure. Once removed from the above — who knows what the original bank does with your loan. Very often, collection rights are sold to the hedge funds who provided credit enhancement by purchasing the lower tranches of the REMIC trust. The “servicer” who owed the bottom tranche, continue to “service” for unidentified CDS holders — who have nothing to do with the REMIC trustee (as CDS are contracts not securities). So creditor is never identified.

    12) Back to #1 — why the assignment to the purchasing bank is never apparent — because in real securitization, the asset/liability balance sheet receivables are removed from the balance sheet to an off-balance sheet conduit (such as a REMIC). BUT, THE SUBPRIME WAS NOT REAL MORTGAGES, THEY WERE GSE CHARGE OFFS, WITH ONLY COLLECTION RIGHTS SURVIVING. Collection rights are not reported as “receivables” on an asset balance sheet. Any pass-through of cash is considered income, not collection of receivables (you can not have receivables when the loan was previously charged-off). Thus, the subprime REMICs were never “true sales” of anything. They were not legitimate balance sheet transfers.

    13) Many of the original tranches to the bogus REMICs have been paid off. At the very least, by the TILA amendment, the remaining certificate holders to the REMICs could be considered your creditor (remember there are only about 15 tranches to begin with). Creditor is NOT the derivative security investors. According to the Fed Res Opinion to the TILA Amendment, when there are multiple creditors, the creditor who holds the largest percentage interest in the loan, must identify itself to the borrower. Thus, the tranche holder with the largest position in your loan — should be identified. This is not happening — foreclosures continue under the bogus name of the trustee to the trust. Again, and again, security investors, trusts, trustees, and servicers are not the creditor.

    And, Neil is on bad track when he starts saying that “security investors” funded the loan. This is in gross error, and has caused more harm than good.

    Security investors were chasing high yields — they expected the subprime borrowers to fund their pensions. I find outrage in this. Interest rates on these loans could go as high as what one might consider “usury.” And, the further outrage is that the properties that funded the bogus subprime were inflated to make these bogus loans higher and higher — which would generate more and higher cash flows. The fact the government still has done nothing to help these victims is the final OUTRAGE…”

  134. When Mortgages/DOTs were put into MERS,…. they never Intended for them to ever come back out. NEVER! MERS members bathed themselves in trillions of stolen money thru ins fraud, cdo fraud, bail out fraud..etc… They could spend 10 million litagating you to death and still come out smelling like a rose. If they felt threatened by a Judge… well, they just sent their Thugs in to beat you up a lil more and intimidate you. If that didnt work … they tried to buy you. And if that didnt work …. they were up shit creek without a paddle. Well… now their boat has sprung to many leaks and its sinking fast.

  135. Tweedle Dee and Tweedle Dum. What else can I say at this point?

  136. (good article—in case you missed it…unfortunately she still doesn’t know about the GSE false default…but we’ll get there—eventually.)

    by Catherine Austin Fitts

    I used to have a deputy who said that the FHA mortgage insurance funds were where mortgages went to die. That was, however, before the creation of MERS, derivatives and the explosion of mortgage fraud during the 1990′s which in combination with the “strong dollar policy” engineered what I have referred to as a financial coup d’etat.

    The challenge for Ben Bernanke and the Fed governors since the 2008 bailouts has been how to deal with the backlog of fraud – not just fraudulent mortgages and fraudulent mortgage securities but the derivatives piled on top and the politics of who owns them, such as sovereign nations with nuclear arsenals, and how they feel about taking massive losses on AAA paper purchased in good faith.

    On one hand, you could let them all default. The problem is the criminal liabilities would drive the global and national leadership into factionalism that could turn violent, not to mention what such defaults would do to liquidity in the financial system. Then there is the fact that a great deal of the fraudulent paper has been purchased by pension funds. So the mark down would hit the retirement savings of the people who have now also lost their homes or equity in their homes. The politics of this in an election year are terrifying for the Administration to contemplate.

    Various court squabbles over the MERS system for registering mortgages are also nipping at the Fed and Treasury heels. It is hard to win a presidential election in 3100 counties when multiple federal agencies are in the local courts trying to foreclose on half the county while supporting arguments that a national registration system is free to violate local property laws with impunity.

    Why should the sheriff respect your rights if you take the position that the county has no rights and local property laws are meaningless? In fact, the Sheriff does not have sufficient staff time to process foreclosures and protect the local citizenry from the growing crime that results from hard times. The Sheriff is also running for election and the people who vote for him or her comprise a much larger group than the handful of local professionals on the big banks payroll, including those processing foreclosures for FHA, VA, Farmers Home and Fannie and Freddie.

    So, it looks like the Fed decision last week to buy $40 billion a month in mortgage paper is the ultimate plan to clear the market once and for all of fraudulent mortgages, mortgage backed securities and related derivatives. This means Fannie and Freddie will be bailed out and winding down through the back door. This means the big banks may be paid in full for your mortgage. It also means your pension fund assets will not be marked to market – at the price of debasing the purchasing power of your assets and benefits.

    The Fed is now where mortgages go to die. Thousands of mortgages on homes that do not exist or on homes that have more than one “first” mortgage are now going to the Fed to disappear. Thousands of multifamily and commercial mortgages will be bought up as well. As this happens, trillions of dollars that have been amassed offshore will be free to come back into the US to buy up and reposition land, farmland, residential and commercial real estate and other tangibles.

    With documents shredded, criminal liabilities extinguished and financial institutions made whole, funds can return without fear of seizure.

    QE3 proves beyond any shadow of a doubt that the extent of the fraud was as bad as I said it was. You can count up the bailouts and QE1, QE2, QE3 the numbers speak for themselves. The fraud was indeed in the many trillions of dollars. It was intentional. It was a plan.

    Now, the $64,000 question for those whose house is underwater or whose mortgage is in default is whether or not you still owe on your mortgage. Certainly, you still do as a legal matter. If the bank has been paid off, arguably in some cases several times, why not you? Let’s see if Fannie, Freddie and the big banks are under orders to quietly pass through a portion of their largesse to troubled homeowners in amounts sufficient to unfreeze the market. If you are in a workout situation, you need to take notice. If enough mortgage write-offs flow through, the Democrats will quickly amass a lock on the elections in November.

    If you are in the market to buy a home or other real estate, you also need to pay attention – a major turn is now underway. Watch to see how much the banks pass through to homeowners and property owners to see how fast and big the turn may be. Watch to see the inflow of funds from offshore. This is not only funds returning but investors around the world looking to exchange their dollars for tangible assets to protect themselves from debasement of the dollar denominated deposits and securities they hold. Watch to see what the renegotiation of federal tax policy and the reengineering of the federal budget in response to the “fiscal cliff” do to reposition housing and real estate prices and cost of financing for an inflow looking for large accumulations.

    Finally, the way the Fed has engineered the Slow Burn to date is to continually offset monetary inflation with labor deflation. It is worth contemplating how much labor deflation will be required to offset QE3 and how sufficient additional labor deflation might be engineered. Ben Bernanke was quite clever to tie QE3 to unemployment. The problem has become the solution, which is the basis for QE-Infinity.

  137. They didn’t save wall street in 08 to try now to take the Street down for alleged tax liability

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