Fred Smith Explains Why MERS Was Involved — Multiple Securitizations

Reader Has Stumbled onto the Real Reason for the “MERS Paperwork Issue”…The Loans were used for Multiple Collaterizations.

I would like the following points regarding MERS to be clear to all:

1) It’s not a PAPERWORK issue – it’s an OWNERSHIP issue. Whenever we see the word ‘paperwork’ describing the MERS scam, we should know that the correct word is ‘ownership’.

‘Paperwork’ is defined as: written or clerical work, as records or reports, forming a necessary but often a routine and secondary part of some work or job.

That is not the issue with MERS. The issue is one of fundamental ownership – which is determined by signed and recorded paper.

2) The most significant and basic nature of the MERS scam has not been discussed. It is, quite simply, that the obfuscatory nature of the MERS system allows the originating lender to sell the initial mortgage MORE THAN ONE TIME. I will demonstrate the implications with a simple example.

Now, it may never be possible to prove that the same mortgages were sold repeatedly. In fact, because of the very nature of MERS, it is likely that it would not be possible to show clear evidence. The point is, however, that by flaunting the existing, centuries-old state property laws, MERS allows for this to happen. It does not guarantee that it happened but it allows for it to happen. It may well be the real reason the chain of titles were broken and the ‘paperwork’ has all gone missing.

An example of the situation MERS allows and the financial implications:

Consider a pre-MERS/pre-securitization scenario for a real estate loan. Bank A originates a $500,000 loan. The $500,000 is used to pay the seller of the house. In exchange, Bank A will receive monthly payments for the next 30 years at (for example) 6 percent. If Bank A decides that it does not want to collect small amounts each month, then it may sell the rights to the bank that will pay them the highest price, Bank B. For whatever reason (its own belief on what constitutes a ‘good interest rate’) – Bank B may pay $525,000 for this loan. The assignment of the loan is done based on the stable, ancient property laws of the state, and Bank A has then made $25,000 profit on this transaction. Bank B then owns the loan and there is no ambiguity.

It would be hard to imagine Bank A being tempted to then sell the exact same loan to Bank C. The reason is that there is very clear evidence at the county recorder’s office that the loan was already sold to Bank B.

Now consider the same situation with the MERS system in place.

Bank A makes the same original loan for $500,000 which is used to pay the seller of the house. Now, when it is interested in selling this loan to the highest bidder, Bank A realizes that because the way things operate now (regardless of state laws), it will not be selling the loan directly to another bank (Bank B above). Instead, it has become customary for Bank A to ‘bundle’ hundreds of loans together and sell them all to ‘investors’ who are probably made up of entities such as mutual funds, city governments, foreign governments, etc. Each of these entities likely represents many people’s money – none of whom really have any idea of which individual loans they are purchasing.

Well, after all the bundling and selling to entities and stuff, it may turn out that, on average, Bank A gets $525,000 for each loan – and so in that way it made the same profit.

In this scenario it is not at all hard to imagine Bank A being tempted to sell this same loan again. Unlike before, when there was ‘Bank B’ and ‘Bank C’ and very clear records at the county recorder’s office, there is no ‘Bank B’ but only a mish-mash of bundled loans sold to investors/entities who do not know which loans they have bought — and by the way — the documents have been ‘lost’. In this scenario, it is all too tempting to sell this same loan to the securitized version of ‘Bank C’ – which is the same loan bundled with hundreds of other loans – sold to vague entities who do not know what they have really bought.

Comparing the two scenarios, one might think that Bank A has just doubled its profit. It has just sold the loan twice after all. Wrong! In the second scenario, Bank A has made more than 20 times its profit. In the original scenario, Bank A’s profit is ($525,000 – $500,000) = $25,000. Of course, if the loan is fraudulently sold a second time, then all of the $525,000 from that sale would be (illegal) profit because there would be no transfer of $500,000 to the original seller of the house, as was done with the initial loan. Therefore, Bank A’s profit would be ($25,000 + $525,000) = $550,000.

Bank A has increased its profit by 22 times simply by bundling/schmundling. Is that possible to prove? Probably not, given the destruction of so many documents and the entire system of banks/lawyers/politiicans/lobbyists, etc. But it is not necessary to prove any of this. It is only necessary to realize that the system allows for this, it encourages it, and it is likely the key driving dynamic to all we are seeing unfold. It is far more likely than the latest explanations in the media that banks “wanted to evade fees at the county recorders’ offices”.

It explains why we are where we are. The remedy, of course, is to adhere strictly to the state property laws which have been the same for centuries. These laws require clear, recorded, signed documents which do not allow the above confusion to exist. The courts must simply enforce these laws and let the chips fall where they may. If past foreclosures need to be voided, then so be it.

Fred Smith

39 Responses

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  2. Concerned

    Didnt know if you noticed this on page 18 of that CWABS PSA that you mentioned: Here is just a snippit:

    “A trust fund may contain buydown loans that include provisions whereby a
    third party partially subsidizes the monthly payments of the obligors on the
    loans during the early years of the loans, the difference to be made up from a
    buydown fund contributed by the third party at the time of origination of the
    loan. A buydown fund will be in an amount equal either to the discounted value
    or full aggregate amount of future payment subsidies. Thereafter, buydown funds
    are applied to the applicable loan upon receipt by the master servicer of the
    mortgagor’s portion of the monthly payment on the loan….”

    Does the loan you mention stand out by state? (Some of the loans from the “smaller” states are easier to spot.)

  3. If the CW and other fraudsters KNEW the Trustees for these securitized imaginary piles of papers were not looking at any of the materials, what or what would have been the way any of the fraud would have been found INITIALLY?

    And now that the loans are defaulting, with the courts not requiring the proof that the actual party is in court, what keeps the servicers from reporting the funds from the sale of one property thru a foreclosure as the the residual they were able to obtain from the foreclosure on more than one of the loans? Most of these loans were actually paid off by insurance or TARP, so WHO is checking if ANY of the investors supposedly involved ever get a DIME from any particular foreclosure auction?

    BTW, if the bank makes a credit bid, do they REALLY ‘pay’ that amount to the REMIC trust?

    Who is checking?

  4. Mike,

    Dig thru the CWABS 2005-10. I was not looking at a filing that had the fees, I was looking at the speadsheet of the groups of loans per the PSA or prospectus and the attachments, all on the SEC site.

    It sure looked odd to me to see each of the three different groups of mortgages with one that was for the identical amount. Granted the other two were both listed as variable rate instead of fixed and had a higher stated rate than mine (I would have expected the real STARTING rates for a variable rate loan to have been LESS than my 6.2%. I know that the variable rates were less at the time AND I had even bought my fixed rate DOWN to 6.2%. So, they were not showing any ‘intro rate’ that would have made sense for the other two loans, nor did it really match what I recalled as the ‘standard’ variable rates that were competing for my loan at the time.

    So, Mike, you are making the same point that I was in my much earlier comment on this thread.

  5. To Concerned and to Fred Smith

    The example I can share is a trust prospectus on the SEC website that reports 4 “limited document” loans for a total of $1,642,226.60.

    I noticed that the math works out this way:

    1 loan ($412,500.00)
    less 6 monthly payments($9,086.34)
    +tax stamps($1,237.50)
    +recording fee($50.00)
    +courier fee($25.00)
    (I have documentation of all that I just listed above)

    Now: add 3 “extra” $412,500 loans ($1,237,500.00)

    =$1,642,226.20

    LISTED on SEC website as $1,642,226.60

    (the difference is only 40 cents.)

    By the way, I used the figure of the 6 mos of mortgage payments due to the fact that the 1st payment was due on Jan 1st, an S-3 form was filed with SEC in June (after 6 payments would have been made) cut-off for trust was Sept 1st, closing date for trust was Sept 30th.So I think the 6 months of payments would be an accurate figure as far as prospectus was written.

    I have other examples, as well.

    I might be connecting dots that are not there–but I would sure appreciate an objective opinion.

  6. Ian and Mike,

    Would you look at my earlier comment on this post dated January 23, 2011 at 7:12 am.

    Isn’t it a little strange to see the mortgage amount of 660K show up as the highest dollar mortgage in Group 1 and then another pair of mortgages are in Group 2 and Group 3 for that EXACT same amount?

    For the Group 1 loans it was the most expensive, I think it was also the case in both Group 2 and 3 also, so it was at the outer edge of the Bell curve. For all three to have that same loan amount in that same trust group of loans, just looks strange to me.

  7. Mike- sounds like you may be on to something- if Fred Smith doesn’t reply, get the info to Neil or someone else- every minute counts in war.

  8. To Fred Smith,

    I believe that I might have stumbled on to a way to demonstrate that (and how) a loan for one house was sold into a trust as three or four houses. The trust’s prospectus filed with the SEC, along with the closing documents from a particular loan are necessary–I have the closing documents for one such situation, if you would like to examine them.

    I do not know how to contact you–would you be able to contact me using livinglies as an intermediary?

  9. I believe that the real process of MERS is to allow magic. Bank A made the loan. Bank A then sells the loan to bank B. Bank B sells it to Bank C and so on until bank G finally owns it when default occurs. Normally, every time the loan was sold, an assignment would have to be recorded showing the transfer of ownership. Since MERS makes its living off of dodging those transactions and underlying filing fees and costs (attorneys & title companies, etc) there is no paper trail that bank G owns the loan. And, like magic, when the default occurs, MERS manufactures the necessary documents to show that bank A is still the owner and can therefore legally proceed with foreclosure. In some instances, there might have been legitimate assignments from bank A thru bank C, but thereafter MERS was involved and nothing shows bank G is the current owner. So MERS will manufacture documents to show that bank C is the owner and able to foreclose. It’s all about being able to produce documents that will stand up in court to facilitate foreclosure that match the paper trail… even when the paper trail stops and the loan keeps on going.

  10. Multiple loan pool sale is because of multiple modifications on the same loan.

    Look — if prior loan pool was not paid off by borrower (via refinance) as it was supposed to be — there is a default by borrower. This is not speculation – this occurred. Second default comes in when default loan to prior (false) default loan was never paid off – and now new SPV pool also recognizes as a default — reject. Third default comes in – when you actually default — but to whom?? that is the question. And, many falsely placed in default — and they do not even know it.

    Believe government is onto this – and insurance fraud — but — they take a long time to get there – and who will they go after?? Too many fraudsters to acknowledge — a problem.

    In meantime, Obama is still not doing anything. Just wants to replace us — with a new home buyer — that is, if he just does not think about too much — hopefully, all will just go away.

  11. to msoliman- “…why would they book a 25k profit rather than 2.5million goodwill(sic)”. This was the first mention of goodwill in the whole lengthy rebuttal. I don’t know how you got there. Please explain. On the whole multiple sales of loans, from an oversimplification viewpoint, there don’t appear to be any other explanations for this fraudulent mess. Your explanations are all from a perfect world accounting viewpoint, where the SEC is going to carefully examine every 10k filing for every one of over 100,000 loan pools, note each of the 60 million mortgages which have defaulted, see if any 3rd party insurance has been paid out on the defaulted obligations, and then check to make sure that the defaulted mortgage has been removed. This isn’t going to happen. I haven’t read of any mortgage originator being taken to task for improperly handled mortgage transactions. So this is not germane to the struggle. It IS germane to the illegality of it all, but of no immediate import, as the agencies in charge of all these illegalities are, as we all know, doing nothing.

  12. Politician like in Virginia where a bill has been introduced …..to allow and make law changes to the Virginia UCC to allow for BLANK ENDORSEMENTS opening the door to gigantic money laundering machine in the state

    They have done this since the inception of the MBO MBS program. Its for purposes of warehouse lending and the baille agreement.

    Early prepayment and also for accomodating a payoff request for loan sold into trust – (That’s all i can say for now) its for DELETED assets purposes.(see Lehamnn audit by Vulkas DOJ 3-2010).

    I will attest to having provided Citifinancial blank endorsements and blank assignments AFTER ENDORSING OUR PAPER – THE LOANS TO THE BUYER AND SHIPPING COLLATERAL UNDER A BAILEE . Its really to provide the warehouse lender an alternative take out it teh investor rejects the buy or kicks assets and or if tehorginator goes belly up! My hunch is it can also be used as a poison pill removing a MERS loan into a whole loan asset class- NO CAN DO !

    M>Soliman
    expert.witness@;live.com

  13. Fred – You say: I would like the following points regarding MERS to be clear to all: It’s not a PAPERWORK issue – it’s an OWNERSHIP issue.

    M.Soliman – Ownership is correct. It’s a nominee for the beneficiary “the Bank” (see the ABA wire number as evidentiary) that you agreed to upon execution of the note – (actually the deed of trust).

    Fred Whenever we see the word ‘paperwork’ describing the MERS scam, we should know that the correct word is ‘ownership’.

    M.Soliman- MERS is a nominee and holds a nominal interest – what are you saying here?

    Fred ‘Paperwork’ is defined as: written or clerical work, as records or reports, forming a necessary but often a routine and secondary part of some work or job. That is not the issue with MERS. The issue is one of fundamental ownership – which is determined by signed and recorded paper.

    M.Soliman- It is an electronic registration for purposes of divestiture. It’s used to track capitalization of trust common for trust preferred in accounting of good will.

    Fred The most significant and basic nature of the MERS scam has not been discussed. It is, quite simply, that the obfuscator nature of the MERS system allows the originating lender to sell the initial mortgage MORE THAN ONE TIME.

    M.Soliman- My man is on to something here but…NO CIGAR – they did not sell more than one time. It’s called a “ROBUST feature for which constant consolidation of assets and transfer are recorded – to meet the ratios imposed on the TRS for purposes of not exceeding the limitations on ownership and early prepayment that wreak havoc on these REITS and where paper was burning beyond the CPR.

    Fred I will demonstrate the implications with a simple example. Now, it may never be possible to prove that the same mortgages were sold repeatedly. In fact, because of the very nature of MERS, it is likely that it would not be possible to show clear evidence.

    M.Soliman – Hmmmm – Nope . . . Wrong again Charles – Did you forget about the UCC filing _ WTF (where’s the Fed)

    Fred- It may well be the real reason the chain of titles were broken and the ‘paperwork’ has all gone missing.

    M.Soliman – Nope and Nope again – Broken chain of title is from divestitures and that you can pin on MERS but – capitalization arguments? Why the fuss? Have them join you versus be opposed?

    Fred – An example of the situation MERS allows and the financial implications: Consider a pre-MERS/pre-securitization scenario for a real estate loan.

    M.Soliman – There all pre IPOs – 10 years of them – you know that right?

    Fred – Bank A originates a $500,000 loan. The $500,000 is used to pay the seller of the house. In exchange, Bank A will receive monthly payments for the next 30 years at (for example) 6 percent . . . Bank B may pay $525,000 for this loan. The assignment of the loan is done based on the stable, ancient property laws of the state, and Bank A has then made $25,000 profit on this transaction. Bank B then owns the loan and there is no ambiguity.

    M.Soliman –Where is this coming from and can you or counsel cite an authority. Case in point – BofA will sell the assets into a securitization and that is exclusive to the Trust Preferred. The Tru Pref is capitalized by the Common trust shares registered to MERS. GAPP requires the asset be sold and registering a gain on sale for transferring purposes. It would be hard to imagine Bank A being tempted to then sell the exact same loan to Bank C. The reason is that there is very clear evidence at the county recorder’s office that the loan was already sold to Bank B.

    M.Soliman –You , not MERS or anyone else executed the deed of trust and on it is the language granting the successors and assigns going to MERS. There is no requirement for an assignment for the “Term” or the “Life” of the loan.

    Fred – Well, after all the bundling and selling to entities and stuff, it may turn out that, on average, Bank A gets $525,000 for each loan – and so in that way it made the same profit.

    M.Soliman – MERS is not a platform for trading whole loan assets; it’s used to sell loans into a securities registration and that is by Derecognition.

    M.Soliman – Maybe it the Derecognition that has you hung up – – – – in order to capitalize the SPE registrants have to transfer the liabilities, not the loans over to the depositor base. – get it? If they register the sale of the liabilities (which we know the do under SFAS 14 -3 as you would in factoring receivable’s . . . then I can see the dual registration and purposes for it .

    MERS sells the loan more than once argument’s –

    M.Soliman – If that were to happen the UCC would show it on public filing information and for purposes of the filing of the registration or it would be picked up by auditors in a year 10 K .

    M.Soliman – I mean . . . Why would they profit from $25,000 under your theory for a delayed gain on sale if they can generate $2.5 million in good will?

    NG you cleared this ?

    …Peace.
    Expert.witness@live.com

  14. Does ANYone reading this have access to the
    non-public – vrs pulic -Mers’ membership list?
    johngaultwhoam@yahoo.com

  15. Usedkarguy:

    Try the IRS. Who would have ever thought it?

  16. Concerned:
    Yes, there are some duplicate claims being made by ‘lenders’ on the same property. But, if someone in that gang weren’t keeping a secret ledger, there would be a lot, lot more. Did you know that paying the wrong people is not a defense to a negotiable instrument, like a note? Yet, the Mills’ court (Mills brings action but he’s not in foreclosure -Livinglies) decided there is no justiciable issue. So, he is being told he must run the risk of making years of payments to the wrong people and then beg for mercy down the road if someone else comes up with his note. Say what?!

  17. G., they’re headed your way.

  18. Bob, if I showed you HAMP solicitations with 2 different account numbers, would that be proof? Sir, I have them. They’re dated 3 days apart, just like the lock date/close date. It happened multiple times. I didn’t even think about it till the 4th or 5th solicitation. That was MT light bulb moment. Want me to send ’em? I told all this shit to the FBI, DFI, Wi.AG, none of these people get it. Or do they?

  19. Mildred Wilkins,

    How did they get in multiple pools — because they were never removed from prior pool. And, prior pool never got paid off by subsequent refinance, and there were attached derivatives to prior pool — claims to defaults. And, subsequent refinance — sent loan to another pool.

    Not only do I see this — I see messed up records – decade old records — between Fannie/Freddie and bank “pools.” Conflicts. Servicers claiming the creditor is Fannie/Freddie — when the loan stopped being a Fannie/Freddie — many years ago. But, how did it stop being Fannie/Freddie? And, what insurance was involved??

    But – all par for what went on.

  20. John,

    There ARE cases in FL where the same property is involved in two simultaneous foreclosure actions on the part of two different lenders each claiming to have the first position loan.

  21. If this is true, there is either a database in someone’s control of these multiple sales of one note – to avoid multiple default claims, because if true, reason would almost dictate multiple default claims would follow-or- they are scrambling to replace loans or funds to pools “B thru K” when the loans are defaulted, as the defaults occur.
    To my knowledge, only the note holder may use a credit bid at the foreclosure sale. Yet we see B of A, say, make a credit bid, but then the trustee’s deed goes to Wells Fargo. Or – after default (which denies the transferee generally holder in due course status if and since the transferee knew of the default fwiw) , we see an interest transferred after default. That to me might be an example of a note sold multiple times, and for a reason we may never know, the transferee needs the foreclosure sale (and proceeds) on its book just then more so than the transferor.
    Someone should file an interpleader and join the IRS.

  22. I agree that the Mers system has allowed multiple sales of one loan. As either an intended or incidental consequence, numerous entities are taking tax deductions on the same loan.
    When you think about it, given the number of suits filed nationally regarding Mers, it wold have seem easier for them to say okay, and prove the note’s ownership instead of paying milions in attorney fees. They can’t do that, generally, because it does not fit the ‘new’ business model.
    The only question I have remaining is whether or not Mers actively participated in this or was itself an
    unwitting accomplice.

  23. Bob.

    It may seem ‘Hollywood” to you but it is really Wall Street, uptown New York which is the issue. I have been following this issue diligently for more than 8 years (way before the recent disclosures of things which were occuring as far back as 8. 10. 12 years ago). Evidence does not always become apparent at the outset of a problem.

    I am a firm believer that the lenders did, in fact, place many mortgages in multiple trusts. As you pointed out, there is (or does not appear to be) no concrete evidence one can point to at the point. The creation of MERS and the close knit group of bankers and partners who are MERS are not talking, YET.

    On the other hand, one of the reasons I am confident that they have is:

    a. A growing number of consumers who have had
    foreclosure action started against them by
    multiple lenders PLEASE EXPLAIN HOW THAT
    HAPPENED IF THE MORTGAGE WAS NOT
    SOLD MULTIPLE TIMES????

    B. A number of documented cases of MULTIPLE
    wet note originals–FOR THE SAME LOAN???

    C. And I could go on and on with other ‘facts’ which
    point to multiple sales of the underlying
    mortgages.

    And finally, where, exactly, has the billions of dollars in bank bonuses come from? Check overdraft fees? I don’t think so even those are crazy.

    Anyone who has not yet recognized that banksters will do absolutely ANYTHING to get more money has definitely not been paying attention during the past 6 months.

    Got to run.

  24. Multiple modifications – not real refinance – of the same loan. Prior loan stays alive (as a false default)– while new refinance gets earmarked for new SPV — then dumped from there (but still shows up in original mortgage schedule).. Thus, loan shows up in multiple trusts. . In the meantime — lots of commissions made – and insurance fraud.

    Know you will argue Patrick and Bob G. — do not care — up to AGs.

  25. […] Mr. Pennell goes on to give a professional analysis of the Frankenstein (MERS) process.  Which can only be described as completely out of control.  It is of significance to note that the very entities that created and brought forth Frankenstein are governed by the Office of the Comptroller of the Currency.  It is just as important to note that Frankenstein is NOT governed by the Office of the Comptroller of the Currency, nor governed by federal, state or county land recordation laws.   The OCC requires that national banks have “effective risk management procedures and internal controls to conduct the activities safely and soundly.”   It is apparent to everyone except OCC that this is not and has not been the case (i.e. rampant industry standards of notary violations, no personal knowledge, forgery, perjury, etc).  It is also apparent that the national banks are using other entities such as Frankenstein and foreclosure mills such as the Stern Law Firm and Dolan Media (NDEx West) to perpetuate these activities.  Dolan Media specifically states to their investors they are proudly not involved in the robo-signing fiasco (notary violations, no personal knowledge, forgery, etc).  If Mr. Pennell did an analysis of the shoddy work done by Dolan Media he would find that they give Frankenstein a run for its money.  What I want to emphasize though is that  Frankenstein, because of the very nature of its work, is required to have “effective risk management procedures and internal controls to conduct activities safely and soundly.”   But this was the OPPOSITE of the INTENT of the parties when they created this monster in their laboratories.   I can still hear the echos of their diabolical laughter.  As a side note, see Fred Smith explain why Frankenstein (MERS) was involved: https://livinglies.wordpress.com/2011/01/23/fred-smith-explains-why-mers-was-involved-multiple-securi… […]

  26. Excellent article. This is what I have been saying
    all along. The “bonds” were “watered”!
    In the 1920’s, Wall Street was selling “watered”
    stock, ie stock in companies where there was zero
    equity. This caused the 1929 collapse as investors
    panicked and started dumping everything, the good
    as well as the bad.
    In 2008, a similar situation developed when in-
    vestors realized they had been sold “mortgage backed bonds” which contained “phony mortgage Notes”, ie “no equity”. This set off panic selling
    and a collapse of the “securitization” market.
    The bottom line is massive deflation as investors realize they have lost the wealth they thought they had. It was all vapor, smoke and mirrors. The Fed can do quantitative easing, but it is
    a drop in the bucket compared to the amount of
    paper wealth that disappeared.

  27. Perhaps those that want to find “the cash” will research the valuation as applied to all the monetary systems of the planet. Apart from inflation, how would you be able to create 100 Trillion in new value over the last decade or two?
    If you find any option that shows how this was done, please don’t hesitate to show everyone, because we can’t find any excuse except for the multiple sales of assets that can not be traced or confirmed as causing this magnificent performance in equity and valuation. All based on the securitization of any debt there is, packaged and sold to anyone willing to buy. We are in a financial situation beyond the depression of the 1930’s.
    Do let us know, because no one can figure out how the supposed value goes up when the housing prices of every nation have dropped by many trillions, unemployment is rising, commodities are rising and the old accounting rules no longer allow a happy outcome to the plundering.
    The big picture is really big.

  28. I have examined over 4000 documents and I have never found even one case of multiple selling of loans by any of the “big players”.

    CHL Loans in Oakland originated and funded loans, then copied the signed documents and sold to different lenders. No more than 15-20 times did this occur, and the owner is sitting in jail. But, he was just a mortgage banker.

    Taylor Bean Whitaker has allegedly done the same, but there is no proof ot it.

    When Garfield and Smith make these claims that this was done on a wide scale and systematic basis, there is absolutely no evidence to suggest that this was a standard practice in the industry. Only a few cases here and there, by true crooks.

  29. pelucheven

    That’s not what Neil has stated in this post, is it? He gives the example of the bank selling the same notes to different parties. I’m telling you that there is no evidence of this. You’ve shown me none. Neil has shown me none. All I’ve heard is conjecture, speculation and surmise.

    Now do I believe that their is widespread criminality? Yep. And do I believe that on most of these securitized foreclosures that the foreclosing entity lacks standing to do so? Absolutely. Why? Because evidentiary PROOF has been produced in judicial proceedings or in admissions (robosigning, etc.)

    In a foreclosure, the burden of proof is on the plaintiff, not on the defendant. Proof is what has been admitted into evidence. So they have to show up with more than a spreadsheet unless the defendant doesn’t object, and the judge doesn’t exercise his equity powers.

    As for First Magnus Financial, are you suggesting that this is evidence of a systemic, nationwide effort to defraud, intentionally designed as such from the get go as the securitizers’ business model, or are you suggesting that this may be evidence of a Bernie Madoff fraud?

    I don’t think that anything that you have said in your post is in conflict with my original post.

  30. No one is talking about a conspiracy, what we are talking about is the fact that it did happen and that the system is flawed and that the criminal activity was rampant. A conspiracy is too broad when the system was broken from the start.

    The attitude was and is that whatever happens, there are some costs of doing business. It was funny when last week I saw “THE SOCIAL NETWORK ” at home, ther is a scene when the founder of FACEBOOK was faced with the reality of losing it all or pay off the people suing him. He paid off and continued making money. That is the culture here in the USA, morality, justice, legality is out the window, just pay the darn speeding ticket and keep on going. Create the next bubble and some one else’s wallet will pay at the end.

    It is not necessarily a conspiracy, it is the way our business and court systems have been morphing in the last two hundred years.

    Where the states and counties have failed us is the allowing for indiscriminate foreclosures to occur, under the false idea that the banking system will break down and go Bust. They should have instead passed regulation to force the securitizers to file all their transactions at their local level. How can you foreclose on a home if you do not have rights to do so?.

    The push from the banking side has been so strong that over half of the States of the Union decided to allow non-judicial foreclosures. They allowed the kings in their feudal castles change the ownership rights of more than 75% of all Americans. We lost our due process and no one is fighting on the local level to get it back.

    There is really no conspiracy when we by omission, by inaction have been complicit in allowing the current systems to continue. We decided to change congress when the trouble is local.

    Dear Bob G, what evidence to the securitizers have that they truly own our loans other than a spread sheet???

    It goes both ways I guess we have to prove they are all crooks and they have to prove that were all dead beats, but as you well know is not that simple,

    Look for the BK filing of First Magnus Financial, llok for the initial filing and then read the amended BK filing and then look into the action that the US Trustee undertook when they realized there was over a billion dollars missing?????

  31. :et us all think about it for a minute, why would it be important for the creators of this mess to insinst in using blank endorsements?. no county level land records of transfers?, Trusts with no real records of your loan, servicers that refuse to provide information to anyone. Banks that assert without any shame that they are above the law.

    Politician like in Virginia where a bill has been introduced by a legislator that is a board member of a Virginia BAnk to allow and make law changes to the Virginia UCC to allow for BLANK ENDORSEMENTS opening the door to gigantic money laundering machine in the state.

    I will search and post the info so we can all fight these crooks. I am telling you the fight is local not in Washington DC. We already know the people in DC at the Federal and Legislative level are not going to do crap.

    The battle is local in nature and in that sense we do have the advantage if we seize the day.

  32. can anyone here show me evidentiary proof that the multiple selling of notes was a system wide conspiracy? I don’t want to hear about U.S. trustee’s allegations in an adversary proceedings, or motions…i would like to see the proof. period.

  33. This not Hollywood like at all. There are a couple of cases moving in court and several people being investigated for these same practices. In particular there is a lending entity called Bean, Whitaker or something to that effect that did in fact double dip their loan offerings. The media put it out there but no one went really deep. I believe that it has been posted in ZERO HEDGE, MARKET TICKER, and even here in Livinglies about a year ago.

    In Particular iit is very interesting how the US Trustee in the BAnkruptcy for First MAgnus in Arizona, sued the owners and executives of this criminal bunch for over a billion dollars in missing money in their BK filing and for fraud. I am not updated as to the latest in this case, but the interesting thing is that the First Magnus and others BK filings show the practice of pre-selling of the loan packages and the use of other peoples money to table fund their loans. Check the original and their amended BK filings it is all public record.

    That is the reason all of these entities have to back tract, reconstruct their non existent paper trail. In most cases doing an action to quiet title against the alleged lender on the note, most likely now defunct or with no interest in the home would be sufficient to clear up the first hurdle on your battle, this is what the UTAH case was all about.

    They abused the system. they created a mess, who said we cannot use the Frankenstein they created to fight them back!!!!

    The ownership of your loan is in question from day one, even before it got to the table since the alleged originators, MERS, and the rest gad created a very complex criminal system a pyramid scheme of gigantic proportions.

    Fannie and Freddie got burned because they became the buyers at the end of the line and were unable to recruit other victims. the Creators of the pyramid are still collecting the profits.

    Can you guess who they are????

  34. BTW, in the CWABS where my loan supposedly got to, the loans are not identified by anything more than loan amounts and interest rates in the official PSA documents I have found. Now my loan is supposedly the largest loan in the fixed rate group, per the information that is available. Yet this exact particular amount also is show as existing in the two other groups of adjustable rate loans in that same trust. The number is not some nice multiple of 50K or 25K, it instead is a stand-out in the numbers yet an identical loan amount shows up as fixed rate (group 1). adjustable rate (group 2) and again in adjustable rate (group 3).

    Does anyone else think they may have ‘cloned’ this loan within the SAME trust, providing false docs for the other 2 ‘versions’? Remember this is CountryWide we are talking about where we seem to be hearing that ‘anything goes’ with Angelo at the helm at the time. With the trustee obviously not checking the loan documents ( as can be shown since the assignments were not done), what prevents THAT triple entry of the same loan from also having been done?

  35. From what I have read, once they had set their scheme with the securitizations and the CDO swapping and CDOs-squared, there was pressure to keep finding new loans that was ever increasing. This would have provided ever-increasing pressure on Joe at that desk at GS to have ‘borrowed’ more and more loans from other ‘deals’.

    It would be interesting to add up all the ‘securitized loans’ in all the supposed ‘trusts’ and see if there is a huge discrepancy vs the total that was initially recorded across this country in all the county recorder’s offices.

    If they did this to the scale that they may have, even a crude calculation may show that there is a huge discrepancy. Of course, given that not ALL mortgages were securitized (a few loans are still held by the original ‘lender’ or they were private party loans), this calculation may not be feasible. Then, there is also the aspect were trusts had dwindling numbers of loans still active and the remaining loans were ‘re-securitized’ into new trusts, possibly with loans from other similar dwindling trusts and new loan mixed together.

    I wonder how many times THAT happened while the original trust was not dissolved? Or even ‘resecuritizing’ a particular loan into multiple newer trusts?

    This would be quite a challenge to find that shapshot in time to see if the numbers don’t add up.

  36. Bob G’s comment makes much more sense. If the same loan was sold multiple times, where did the cash go? Would all these mortgage banker outfits have had to file bankruptcy if they were making “infinity” profit margins?

  37. […] This post was mentioned on Twitter by Dr. David B. Starkey and Teri Sherwood, Financial Wellness. Financial Wellness said: Reader Has Stumbled onto the Real Reason for the “MERS Paperwork Issue”…The Loans were used for Multiple Collate… http://bit.ly/h6WJIT […]

  38. AFAIK , MERS does not have audit trail capability so we will never know .. however it seems far more likely that Joe at a desk at GS needs 23 more loans to finish out an offering and he “borrows” some loan numbers from 3 or 4 other existing offerings to make his deadline knowing that he is officially “oversubscribed” and he can take off for a long weekend at Martha’s Vineyard.

  39. Sorry, but this is too Hollywood for me. Think about this one for a minute, People. Have you ever worked in a company? Supposing you came up with this idea. How would you present it to your boss? to executive staff? to the board? Would you just walk in there and say “Hey, check this out…here’s how we can make a $550,000 PROFIT on every $500,000 loan that we originate. All we have to do is ….”

    Hmmmm.

    Here’s a more likely explanation for those not residing in Conspiracyville. Mortgage securitization was created to sell tons of mortgage loans to institutional investors. In order to do this, it needed to be done electronically just like common stocks. So a central repository/clearing house needed to be created, and it needed to be electronic in order to handle the volume efficiently. Thus, MERS was born. Was it set up so that it could avoid multiple transfer and recording fees? Probably that too was a consideration. As long as the housing markets kept appreciating and the economy kept humming along, everything worked out just fine. But the structures were overly complex, and if stressed enough, their weaknesses showed up and they started to come apart at the seams. Because so many people were responsible for all the individual components of this Rube Goldberg contraption, no one person could figure out how to put Humpty Dumpty back together again.

    So what folks on the inside of these machines gone awry decided to do, was to try and plug each leak or short in the system as they occurred, on an ad hoc basis. Now there was a real incentive to conduct themselves as they have. Whereas you couldn’t go into your boss in the above scenario and tell him of your scheme to sell the same loan multiple times, you could go in to him and suggest ways to keep the ship from sinking, because now everyone is in survivor mode. And who could possibly detect just a “little bit” of fraud, like falsification of documentation. By the time the Big S**t hits the fan, you’ll all be gone anyway, or the lawyers will fix the problem, or the politicians or judges will provide the necessary political, legislative or judicial cover. Like Social Security, you just kick the can down the road for your successors to deal with. And so what if you get a few slaps on the wrist by state AGs or courts?

    In the meantime, you’re still employed and you still get your bonuses and you can always say that you were just following orders like a good little soldier. It was the System, and not any one individual that would be held responsible for the fraud.

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