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MISSION STATEMENT: I believe that the mortgage crisis has produced manifest evil and injustice in our society. I believe our recovery will never reach the majority of struggling Americans until we restore equal protection for all citizens and especially borrowers in our debt-ridden society. LivingLies is the vehicle for a collaborative movement to provide homeowners with sufficient resources to combat bloated banks who are flooding the political market with money. We provide thousands of pages of free forms, articles and discussion of statutes, case precedent and policy on this site. And we provide paid services, books and products that enable us to maintain an infrastructure to provide a voice to the victims of Wall Street corruption.

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RECOMMENDED READING:

WHOSE LIEN IS IT ANYWAY? by Neil F Garfield. E-Book available on our online store.

CHAIN OF TITLE by David Dayen. Available on Amazon

LISTEN LIBERALS! by Thomas Frank. Available on Amazon and Kindle.

Pretender Lenders: How Tablefunding and Securitization Go Hand in Hand” By William Paatalo and Kimberly Cromwell. CLICK: http://infotofightforeclosure.com/tools-store/ebooks-and-services/?ap_id_102

Fannie & Freddie Repackage Defective Loans and sell them to Naive Investors.

By J. Guggenheim/Lendinglies staff

Fannie Mae and Freddie Mac have separately announced sales of non-performing loans this week.   Offsetting these toxic mortgage securities target smaller investors, including nonprofits and minority- or women-owned businesses who can’t afford to take the hit when they realize they bought defective repackaged securities the big lenders now avoid.

In 2017, through both Fannie Mae and Freddie Mac, the Treasury guaranteed 70% of all new mortgage lending. The taxpayer’s total exposure to housing is unfathomable, at over $6trn, or 30% of GDP, but it is hidden off the government’s balance-sheet. Reform is long overdue but until then- keep repackaging defective merchandise and selling it off to the highest bidder.

    The Senate Banking Committee, is considering a draft proposal to replace them with multiple privately capitalized firms, whose equity holders would suffer first during any slump. The government would maintain an insurance fund, supported by fees levied on the firms, to cover catastrophic losses—similar to how bank deposits are insured. The hope is that competition between the new firms would prevent any one entity from becoming too big to fail, and would encourage innovation.

A better idea would be to turn Fannie and Freddie into utilities, privately capitalized but with regulators capping returns. This would in theory prevent shareholders and executives from getting rich by selling mispriced taxpayer guarantees, as they did before the crisis.

LivingLies would prefer that the government get out of the housing market altogether. The state has no business subsidizing home buyers, let alone standing behind most mortgage lending.  Fannie and Mae and their lack of transparency and compliance with securitization practices has contributed to the foreclosure crisis.

In reality, a complete withdrawal is a political non-starter although the free market could easily find innovative solutions to these antiquated entities. Fannie and Freddie make possible the 30-year, fixed-rate, prepayable mortgages Americans have come to expect- but there is no reason smaller, more-agile firms couldn’t do the same thing.

The longer today’s system endures, the greater the risk to taxpayers and investors who don’t yet realize the product Fannie and Freddie is selling is defective.  Almost a decade after Fannie and Freddie were rescued, it is long past time for a clean-up.

Fannie Mae’s sale includes its eleventh and twelfth Community Impact Pools, which are typically smaller pools of loans that are geographically focused. The three larger pools include approximately 5,900 loans totaling $1.04 billion in unpaid principal balance (UPB) and the Community Impact Pools of approximately 190 loans totaling $35.68 million in UPB. What a deal!  Basically $1.4 billion in defective loan pools.  The Community Impact Pools consist of one pool geographically located in the metro area of Orlando, Fla., as well as one in the Tampa, Fla., area- areas where LPS and foreclosure mill David Sterns and Co. mucked up many chain of titles.

Meanwhile, Freddie Mac’s sale is an approximately $420 million transaction. The loans, which are currently serviced by Shellpoint Mortgage Servicing, are being marketed via three Standard Pool Offerings and one Extended Timeline Pool Offering.

Fannie and Freddie know that they shouldn’t be reselling these defective loan pools that didn’t comply with their selling and servicing standards- but they will sell off the toxic pools while under government conservatorship and when it ends, they will likely be reestablished as private corporations with enough distance from the fraudulent sales, that everyone will be protected except the small investors and taxpers who takes the hit.

David Dayen: The Source of the Next Recession

History suggests that the Trump administration’s zeal for financial deregulation could lead to an economic crisis.

Happy Birthday Neil Garfield! Super Hero to Millions of Homeowners!

Neil_001

Dear Mr. Garfield,

You are an outlier. Instead of making millions of dollars helping the Banks to defeat homeowners, you have dedicated a decade of your life to those who have been victimized by unscrupulous Banks. You have provided the educational foundation for Millions of Americans to fight back and eventually Justice will be achieved.  Your legacy is ensured.

Best,

The LendingLies Team, TL Anderson and Connie Lasco

Mortgage-Transfer Systems are another layer of Illusion

By T. Anderson

Abstract – US Residential-Mortgage Transfer Systems – A Data Management Crisis

Investigator Bill Paatalo won’t stop digging until he unearths the entire skeleton of the fraudulent securitization scheme.  He recently stumbled upon a golden nugget contained in a white paper on residential mortgage transfers.  Confirming what Paatalo has already discerned from his decade of research, ““The loans are literally impossible to track, have no verifiable accounting, AND the master servicers and trustees manipulate and expunge data with no oversight.”

In a May 16, 2012 white-paper entitled U.S. Residential-Mortgage Transfer Systems: A Data Management Crisis by John Hunty, et al., the paper examines the current state of residential-mortgage data structures and transfers from origination through the securitization supply chain and concludes that it is impossible to trace an individual mortgage loan.

“The data in mortgage loan securitizations was a mortgage-risk management disaster, lacking transparency, consistency and accountability- thus opening the door for wide-scale fraud and masked by plausible deniability.    The securitization system, by design, was engineered with the purpose of facilitating the largest financial hoist the world has never seen.

Current data-management practices make it impossible for homeowners, lenders, investors, government regulators, and law enforcement to perform any oversight, analysis or even access individual loan data to determine the status of the loan (balances, write-down, insurance payoffs, transfers, ownership).  Thus, the servicers create the information as they go along to create the appearance that they have access to this information, and that the information exists.

Any sense of order was shattered in the process, allowing data to be resold, repackaged and recreated with a keystroke.  With this being true, a proper boarding of a loan from servicer to servicer is impossible, and investors in mortgage-backed securities are buying only ink, paper and data backed by nothing.”

      On page 7 of the white paper, under section 2.2 Origination Data, the paper reveals that there is “no permanent, unique, and verifiable loan identifier attached to the loan at origination,” and “instead, loan identification numbers are re-created by the different owners and managers (such as servicers and pool trustees).” If a loan identification number is changed there is no way to trace the prior history back to the securitized pool.  From page 7:

“Mortgage-origination data comprise the set of static information related to the mortgage at the time of the loan origination. As shown at the top of Table 3, the loan record is identified by an internal loan identification number. Currently, in the U.S. there is no permanent, unique, and verifiable loan identifier (like the CUSIP number in the bond market) attached to each loan at origination. Instead, loan identification numbers are re-created by the different owners and managers (such as servicers and pool trustees) of the loan origination and performance data sets. Nearly always, the loan IDs are changed as the loans travel though the mortgage supply chain (which will be described in subsequent sections of this Chapter), making it all but impossible to track a unique loan through the supply chain from its originators, via its servicers, to its securitized pool.”

      To add further insult, the servicers and trustees are attempting to track loans by “common loan elements” like zip code, loan amount and contract features.

“Without unique and permanent identifiers, the only way to track loans is through complicated, and often erroneous, computer matching schemes that link the information by common loan elements such as zip code, loan amount, and contract features.”

     The paper states the data is available to the loan originator, but originators typically aren’t very concerned about contractual details like properly transferring the note by assignment, or maintaining payment details.  An originator is focused on collecting their FEE to fund the loan, not in the quality of data or file transfer.

The paper claims that the data is “fully available internally to the….GSEs and their regulator, the Federal Housing Finance Administration (FHFA)” but there is no way that is true and there is no way that the authors were permitted to audit the GSE or FHFA data.

The Federal Reserve receives incomplete “subsets of the data” that is available through private data vendors.  But according to the private data providers, the “trustees expunge nearly ALL of the borrower and co-borrower identification information.”  The data received by the Federal Reserve is deficient and inaccurate, as well.

When a loan goes into foreclosure, the servicer must create the illusion that the loan file exists- by fabricating a note, assignments, and the appearance of a legitimate loan file when none exists.  The servicer’s game plan in court is to defeat the homeowner by deceiving the courts with fabricated documents, filing a plethora of motions meant to exhaust and deplete the homeowner’s limited resources, and ensure the loan-level data never sees the light of day with the assistance of a biased court.

“The data reported in Table 3 are fully available internally to the analysts of the loan originator, the loan servicer, the GSEs, and their regulator, the Federal Housing Finance Administration (FHFA). However, only subsets of the data are available through the private data vendors who represent the primary data source to investors and analysts in the securitized mortgage bond market and to the regulatory institutions, such as the Federal Reserve. The private data providers and all of the trustees expunge nearly all of the borrower and co-borrower identification information reported in Table 3

        In section 3.2.2 REMIC Data Reporting, the paper states that prior to the financial crisis and in 2012 when the paper was written that there was no loan-level information for mortgage backed assets in the REMIC-SPVs at the “date of the issuance of the prospectus supplement or the date of the initial offering of the certificates.” Thus, the individual loan characteristics including payment of principal and interest are NOT available!  The investors and certificate holders were forced to rely on “summary statistics” of the sub-pool.  The investors and certificate holders are not aware that they bought shares of a “mortgage-data” smoothie where no individual loans could be identified.”

3.2.2 REMIC Data Reporting

“As previously discussed, both prior to the crisis and currently, there is no loan-level information available for the mortgage collateral held as assets in the REMIC-SPVs at the date of the issuance of the prospectus supplement or the date of the initial offering of the certificates.

Because many of the REMIC-SPVs were composed of more than one distinct pool of mortgages, often the summary statistics would be provided for each of the sub-pools rather than for the collateral aggregates. Of course, mortgage analytics based solely on this information would be challenging, because the full distributional effects of the loan characteristics on the payments of principal and interest could not be specified.”

        The servicers, who are the bottom-feeders of this entire fraudulent scheme, are tasked with being the ‘data providers’ that are supposed to comply with the pooling and servicing agreements but typically have no idea what the original loan number was or balance, let alone what PSA is controlling of a particular loan pool.  This is an unmitigated disaster the banks can’t fix and the government doesn’t want to touch.

Shockingly, the prospectus supplements don’t require monthly payment remittance statistics, loan balances, delinquencies, prepayment status or audits to the investors.  There is literally no oversight or accountability for trillions of dollars of mortgage backed securities.

“During the run-up to the crisis, the only data that were available to analyze the loan origination and loan performance data for securitized mortgages were the data generated as the result of the PSA data management and reporting requirements stipulated in the prospectus supplement. These activities were carried out by the servicers and trustees of the REMIC SPVs.

Interestingly, the prospectus supplements never require that the monthly remittance statistics for the principal and interest payouts on the loans, the loan balances, and current loan delinquency or prepayment status be subject to external verification by accountants.

Access to the remittance data are available through subscriptions to private vendors such as ABSNet Lewtan and Bloomberg, the servicers, such as LPS and LoanPerformance (now Corelogic), and the trustees, such as CTSlink. Since the vendors source their data differently, the data that they maintain and sell is in part unique from, and in part overlaps, data available from other sources. Because there was, and is, no unique loan identifier, and because only some of the sources include data on the securitization status of the loans, it was and remains nearly impossible to obtain a consistent aggregate of securitized-loan characteristics and performance in the U.S.

This is consistent with the CA Case that was unsealed in 2016 – United States v. Discovery Sales, Inc. – The originating lenders who made loans to purchase DSI properties, including Wells Fargo and J.P. Morgan Chase, generally would not keep the mortgages and thus did not end up losing money as a result of the DSI fraud scheme. Instead, they would sell the mortgages to other banks who would package them in securities that were sold to other investors. These securities failed when the underlying mortgages went into default. It was impossible to trace the majority of the mortgage loans on the over 300 homes sold by DSI that were the subject of the FBI investigation; it would have been harder yet to identify individual victims of the fraud given that the mortgages were securitized and traded.  (Emphasis added.)”

     Below is the information that is allegedly contained in the loan files at the GSEs.  The GSEs must be audited to determine if such files exist:

Doc1_001

2012 Abstract Shows Absence of Data Credibility for Borrowers, Lenders, Investors and Government Regulators

Hat tip to Bill Paatalo who brought this to my attention.

see: Abstract – US Residential-Mortgage Transfer Systems – A Data Management Crisis

U.S. Residential-Mortgage Transfer Systems: A Data-Management Crisis

John Patrick Hunt† , Richard Stanton‡ , and Nancy Wallace§ May 16, 2012

Abstract

This paper reviews the current state of residential-mortgage data structures from origination through the securitization supply chain. We discuss the various uses of these data, their limitations in mortgage-risk management, and the current lack of transparency in important segments of the mortgage market.

We conclude that despite the size and importance of the mortgage market in the overall U.S. economy, current data-management practices make it difficult or impossible for borrowers, lenders, investors and government regulators to perform the oversight and analysis functions necessary to maintain an orderly market and to ensure fair pricing of securities backed by those mortgages.

Editor’s Note: Except for the seminal study by Katherine Ann Porter that she conducted at the University of Iowa in 2007, there is no study concluding the obvious — that the banks deliberately chose to use and invent systems that make it difficult and in fact, usually impossible, to track any residential loan in either the money trail or the paper trail.

The two things that stand out from this very comprehensive report, are that there is no common number used to identify loan documents and  their finding that the alleged REMIC Trusts are composed of multiple pools. These are high value financial instruments. In the securities markets we use a CUSIP number for every stock and bond purchased and sold. No such control number is used on mortgage loans.

The finding that the alleged REMIC Trusts are at least theoretically composed of MULTIPLE LOAN POOLS corroborates a basic tenet of my analysis, to wit: there is no single pool of loans that is attributable to a REMIC Trust and therefore, the mortgage loan schedule (MLS) presented in court does NOT represent the entire asset picture of the Trust. It’s very clever. If they are caught red handed they only need say that they didn’t think the other loan schedules were relevant. Nonetheless they proffer the MLS as THE MLS when the Trust was formed and that the MLS represents a current picture of the ownership of the PAPER even though it does not represent that the Trust is the obligee of the borrowers’ debts.

Katie Porter, now running for Congress in California, came to a more sinister conclusion that turned out to be true. She predicted that the original note would not be available at time of enforcement because it had been destroyed. I corroborated this conclusion when I surveyed multiple “lenders” who only claimed to be the “holder” of the note, not the obligee of the debt,  and not the holder in due course (i.e., where the REMIC Trust paid for the debt, and didn’t even receive a copy of the note.)

Like many other reports and abstracts prepared by eminently qualified experts in economics, securities, underwriting of loans and underwriting of securities, the conclusion is real, obvious and not contested by anyone representing the banks. The system was rigged to enable all loans and all paper trails to be shifted around at will to suit the needs of the TBTF banks — leaving the borrower, the borrower’s attorney and the court with only clouds of smoke and mirrors.

Let us help you plan your defense or offense: 202-838-6345. Ask for a Consult.

On Sale NOW: Video of 3.5 hour seminar entitled “Neil Garfield’s Mastering Discovery and Evidence in Foreclosure Defense webinar.”
Get a Consult and TEAR (Title & Encumbrances Analysis and & Report) 202-838-6345. The TEAR replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).
https://www.vcita.com/v/lendinglies to schedule CONSULT, leave message or make payments. It’s better than calling!
THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
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Royal Bank of Scotland Trained Employees on How to Forge Signatures

Fraud for the first time in history has been institutionalized into law.

It is foolishness to believe that the banking industry is trustworthy and that they have the right to claim legal presumptions that their fabricated documents, and the forged documents are valid, leaving consumers, borrowers and in particular, homeowners to formulate a defense where the banks are holding all the information necessary to show that the current foreclosing parties are anything but sham conduits.

Here we have confirmation of a practice that is customary in the banking industry today — fabricating and forging instruments that sometimes irreparably damage consumers and borrowers in particular. Wells Fargo Bank did not accidentally create millions of “new accounts” to fictitiously report income from those accounts and growth in their customer base.

Let us help you plan your narrative : 202-838-6345. Ask for a Consult.

Video available now for Neil Garfield’s Mastering Discovery and Evidence in Foreclosure Defense webinar.

Get a Consult and TEAR (Title & Encumbrances Analysis and & Report) 202-838-6345. The TEAR replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).

https://www.vcita.com/v/lendinglies to schedule CONSULT, leave message or make payments. It’s better than calling!
THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
—————-

Across the pond the signs all point to the fact that the custom and practice of the financial industry is to practice fraud. In fact, with the courts rubber stamping the fraudulent representations made by attorneys and robo-witnesses, fraud for the first time in history has been institutionalized into law.

RBS here is shown in one case to have forged a customer’s signature to a financial product she said she didn’t want —not because of some rogue branch manager but because of a sustained institutionalized business plan based solidly on forgery and fabrication in which employees were literally trained to execute the forgeries.

The information is in the public domain — fabrication, robo-signing and robo-winesses testifying in court — and yet government and the courts not only look the other way, but are complicit in the pandemic fraud that has overtaken our financial industries.

Here are notable quotes from an article written by J. Guggenheim.

Once upon a time, in a land far, far away- forgery, fabrication of monetary instruments, and creating fake securities were crimes that would land you in prison.  If you forged the name of your spouse on a check it was a punishable crime.  The Big Banks now forge signatures and fabricate financial instruments on a routine basis to foreclose on homes they can’t prove they own, open accounts in unsuspecting customer’s names, and sign them up for services they don’t want.  If this isn’t the definition of a criminal racketeering enterprise- what is?

RBS, following the Wells Fargo Forgery model, conceded that a fake signature had been used on an official document, which means a customer was signed up to a financial product she did not want.  RBS’s confession comes only two weeks after whistle-blowers came forward claiming that bank staff had been trained to forge customer signatures. [e.s.]

The confession comes only two weeks after The Scottish Mail on Sunday published claims by whistle-blowers that bank staff had been trained to forge signatures.

At first, RBS strenuously denied the allegations, but was forced to publicly acknowledge this was likely a widespread practice. [e.s.]  The bank was forced to apologize publicly after retired teacher Jean Mackay came forward with paperwork that clearly showed her signature was faked on a bank document.  The great-grandmother was charged for payment protection insurance (PPI) back in 2008 even though she had declined to sign up for the optional product.

At first the bank refunded her fees but refused to admit the document was forged.  [e.s.]A forensic graphologist confirmed the signatures were ‘not a match’, forcing the bank to concede and offered her a mere £500 in compensation for their fraudulent act.

Forensic Graphologist Emma Bache, who has almost 30 years’ experience as a handwriting expert, examined the document and said the fundamental handwriting characteristics do not match.

The Banks in Britain, Australia, New Zealand and Canada, along with the United States include forgery and fabrication in their business models to increase profits.  Why shouldn’t they?  There is NO THREAT because they know they will not be held accountable by law enforcement or the courts- so they continue to fleece, defraud, and steal from their customers.

Homeowners must force an urgent investigation into claims of illegal practices by the banks.  Wells Fargo is not doing anything that CitiBank, JPMorgan Chase, Bank of America and others aren’t doing.  To remain competitive in an unethical marketplace, you almost have to resort to the same fraudulent tactics.[e.s.]

However, whistle-blowers have now revealed that managers were coached on how to fake names on key papers.  Whistle-blowers said that staff members had received ‘guidance’ on how to download genuine signatures from the bank’s online system, trace them on to new documents then photocopy the altered paperwork to prevent detection.  When in fact the bank taught its employees how to engage in criminal conduct.

Although clearly against the law, the whistle-blowers claim it was “commonly done to speed up administration and complete files.”  Just like American banks forge notes and assignments to ‘speed up foreclosures and complete files.’  They claim the technique was also used to sign account opening forms – and even loan documents. [e.s.]

Forgery

According to Justia.com, the “criminal offense of forgery consists of creating or changing something with the intent of passing it off as genuine, usually for financial gain or to gain something else of value.” This often involves creation of false financial instruments, such as mortgage notes, assignments, checks, or official documents. It can also include signing another person’s name to a document without his or her consent or faking the individual’s handwriting.  Forgery often occurs in connection with one or more fraud offenses. 

Attorney Fee Debate Heats Up as Florida Supreme Court Accepts Case

https://www.law.com/dailybusinessreview/sites/dailybusinessreview/2018/02/14/attorney-fee-debate-heats-up-as-florida-supreme-court-accepts-case/

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