Servicer’s Advance Payments When Borrower Stops

The following message and article brings up questions that I have been receiving with increasing frequency as homeowners, their forensic analysts and attorney dig further and further. They are following the money and coming up with the fact that servicers are advancing payments to investors when the borrower stops paying. In fact, they advance those payments to investors after the declaration of default and even after the foreclosure is complete. Where do they get the money from?

The answer is that they either get the money from their own pockets or funds they “borrow” from the investment banker that did the underwriting on the mortgage bonds or they are taking money paid on other performing loans and using it to make payments on loans that are not performing. Either way, the payment has been made and the account receivable of the real creditor is not in default. The only way to conclude that it doesn’t make any difference is if you look at all the players in the cloud of so-called “securitization of debt” as one single venture — a view that would raise all kinds of questions as to why and when you can ignore the corporate veil or the existence of a separate entity.

When this gets litigated, and I am sure it will, Judges will probably tend to the easier cloud view. But on appeal, it is likely that the appellate court will look at each transaction, the pleadings and the proof. They will likely conclude that with the account receivable of the alleged creditor being current, there should have been no declaration of default, acceleration, foreclosure or sale of the house. But they will say that the borrower is not off the hook. The Servicer has a separate claim for contribution or unjust enrichment. But such claims are obviously not secured by a pledge of the house as collateral because no such documentation exists.

Which brings me back to the falsification of securitization as cover for a PONZI scheme. If the bankers had played fair, they would have had the notes payable to the REMIC trusts and the mortgages naming the trusts as mortgagees or immediately record assignments of both. They could have disclosed the securitization at closing but they didn’t. If they did, the advances by servicers could have been covered by the documents producing the cloud effect that the banks want to see from the courts.
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From Dan Edstrom, senior mortgage analyst for Livinglies.—

I am not sure if you are aware of a recent article from Martin Andelman. His position on servicer advances of principal and interest is that it has nothing to do with the Borrower and these are just loans. Jim and I talked with him on the phone for a short period of time, but he wasn’t convinced that these payments should be applied to the Borrower (not that we can convince him or have to convince him). But I just read the following article and the light bulb went on again. Martin said the servicer advance is a loan and is to be repaid. Possible, although this isn’t contemplated (that I know of) in UCC 3-602. But now consider the following article that just came out. The advance pays senior tranches in full. By the time the servicer goes to pull the money out of the trust, a lower tranche loses that money (that was paid by other borrowers) and it gets diverted to the servicer for reimbursement. The losing tranche agreed to take these losses. The Borrower did not agree to make a payment to one creditor, give that creditor a discharge, and then take out a new loan with a different creditor and owe that creditor money (the creditor who agreed to lose money). When did I transfer the right to others to open and close credit accounts (or transactions) on my behalf (paying off debt to one party and acquiring debt from another party)?

Investors Warned on Nationstar, Ocwen RMBS Cash Remit Differences
Analysts are warning investors about the impact of different servicing strategies on the cash flow generated by mortgage servicing rights on securitized delinquent loans.

A Moody’s Investors Service analysis of the loss mitigation practices of Nationstar and Ocwen, two of the nation’s largest and fastest-growing servicers, revealed “particularly different advancing rates on delinquent loans,” enable Nationstar to pay more cash from its securitized subprime residential loans than Ocwen.

Findings matter to investors involved in current and future servicing transfers from portfolios acquired by Nationstar and Ocwen as well as to other residential mortgage-backed securities trusts eyeing MSR market deals.

“Ocwen’s recent acquisition of GMAC’s RMBS servicing portfolio is credit negative for that reason, although GMAC’s performing loans will continue to generate strong cash flow,” explained Jiwon Park, a Moody’s analyst who specializes in the MSR market.

Comparatively, Park wrote in a recent report, Nationstar’s scheduled acquisition of certain RMBS loan portfolios from Bank of America Corp. “is likely to have a minimal impact” on affected loans and their securities because “Nationstar has generally remitted” the same amount of cash on these assets as B of A.

The trend persists across the board with subprime RMBS vintages securitized between 2005 and 2010. Data show Nationstar implements higher advancing rates for delinquent loans and consistently pays more cash than Ocwen. Higher cash payments help keep the RMBS credit positive “because they pay down senior bonds with priority and more quickly,” the analyst wrote.

For example, during the first two months of the third quarter of this year, Nationstar’s monthly cash flow remittances from principal and interest collections, net proceeds from short sales and foreclosure liquidations, voluntary prepayments and delinquent loan advances was at 0.82% of the servicer’s outstanding RMBS balance, compared to 0.77% for Ocwen.

Park finds advancing rate differences between the two servicers are significant. During the same time period the amount of cash generated from distressed securities by source, Nationstar paid 0.07% of the balances from delinquent loan advances, compared to only 0.02% paid by Ocwen.

Loss mitigation strategies also influenced the amount of cash remittances leading to higher revenue from Nationstar’s REO property liquidations, while Ocwen is more successful in generating cash from loan modifications.

In the long term, however, even though Ocwen stops generating advances much faster than Nationstar, its much lower cash flow advances on delinquent loans is not expected to have a long-term effect on the relatively large GMAC portfolio, which includes a larger percentage of performing loans.
frequency. As homeowners, their forensic analysis, and lawyers dig further and further Follow the movement of money, they are finding that the so-called real creditor continues to get paid long after the borrower stops paying, and even long after the actual foreclosure. The motivation for this behavior in my opinion is to keep the investors happy, not suing the investment banker and still buying more mortgage bonds.

But the question is what is the effect of these payments? It has been postulated that it changes nothing. I don’t agree. Using generally accepted accounting principles, we find that the the creditor’s receivable account shows no default because they received payment from the Servicer. Since they never receive direct payment from the Borrower, they are satisfied — the amounts payable under the mortgage bond are fully satisfied. And the mortgage bond obligation is based on payments from borrowers plus payments from third party obligors but no where in the PSA or prospectus does it provide that the Servicer has an obligation to continue making payments when the borrower stops.

If the creditor’s account does not show a default then there should be no declaration of default, acceleration, foreclosure and/or eviction — which is why the Banks are doing a two step and moving the goal post around the field on who has the right to initiate a foreclosure. It is also covers up the fact that the Foreclosures are merely a way to conclude the fraudulent PONZI scheme that is mistakenly referred to as securitization.

So does that mean that the debt of the borrower has been extinguished? The answer is yes and no. Yes it satisfies the payment requirement to the creditor on the mortgage. But no, that doesn’t mean that the borrower is off the hook like magic. The Servicer has an action against the borrower for contribution or unjust enrichment. The difference is that the servicer’s claim is not secured with the house because THAT debt has been paid pursuant to the note (readers are reminded that I don’t believe either the note or mortgage are valid instruments in most cases).

When this matter is litigated as I am positive it will be, Judges will want to look at “securitization” of loans as a cloud, and that what goes on in the cloud, doesn’t matter. So my prediction is that at the trial level there will be mostly decisions against the borrower. On appeal, with the issues properly preserved and a good record for the appeals court to see, I think they will be required to look into the cloud and see that if they ignore the existence of separate entities without any pleading or proof as to why the corporate veils should be ignored, they will open the door to a boatload of trail and other moral hazards. Taking the transactions one payment at a time, the payments by the Servicer converts the obligation from payment on a secured note to a liability to the Servicer that is unsecured.

The other question is where do they get the money from if not the borrower making payments? The answer by pure logic is one of two ways — either from payments received from other borrowers or money they have or “borrow” from a very willing investment banker who doesn’t want another investor lawsuit and who wants to sell that investor more mortgage bonds.
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From Dan Edstrom, senior mortgage analyst for livinglies.—

I am not sure if you are aware of a recent article from Martin Andelman. His position on servicer advances of principal and interest is that it has nothing to do with the Borrower and these are just loans. Jim and I talked with him on the phone for a short period of time, but he wasn’t convinced that these payments should be applied to the Borrower (not that we can convince him or have to convince him). But I just read the following article and the light bulb went on again. Martin said the servicer advance is a loan and is to be repaid. Possible, although this isn’t contemplated (that I know of) in UCC 3-602. But now consider the following article that just came out. The advance pays senior tranches in full. By the time the servicer goes to pull the money out of the trust, a lower tranche loses that money (that was paid by other borrowers) and it gets diverted to the servicer for reimbursement. The losing tranche agreed to take these losses. The Borrower did not agree to make a payment to one creditor, give that creditor a discharge, and then take out a new loan with a different creditor and owe that creditor money (the creditor who agreed to lose money). When did I transfer the right to others to open and close credit accounts (or transactions) on my behalf (paying off debt to one party and acquiring debt from another party)?

Investors Warned on Nationstar, Ocwen RMBS Cash Remit Differences
Analysts are warning investors about the impact of different servicing strategies on the cash flow generated by mortgage servicing rights on securitized delinquent loans.

A Moody’s Investors Service analysis of the loss mitigation practices of Nationstar and Ocwen, two of the nation’s largest and fastest-growing servicers, revealed “particularly different advancing rates on delinquent loans,” enable Nationstar to pay more cash from its securitized subprime residential loans than Ocwen.

Findings matter to investors involved in current and future servicing transfers from portfolios acquired by Nationstar and Ocwen as well as to other residential mortgage-backed securities trusts eyeing MSR market deals.

“Ocwen’s recent acquisition of GMAC’s RMBS servicing portfolio is credit negative for that reason, although GMAC’s performing loans will continue to generate strong cash flow,” explained Jiwon Park, a Moody’s analyst who specializes in the MSR market.

Comparatively, Park wrote in a recent report, Nationstar’s scheduled acquisition of certain RMBS loan portfolios from Bank of America Corp. “is likely to have a minimal impact” on affected loans and their securities because “Nationstar has generally remitted” the same amount of cash on these assets as B of A.

The trend persists across the board with subprime RMBS vintages securitized between 2005 and 2010. Data show Nationstar implements higher advancing rates for delinquent loans and consistently pays more cash than Ocwen. Higher cash payments help keep the RMBS credit positive “because they pay down senior bonds with priority and more quickly,” the analyst wrote.

For example, during the first two months of the third quarter of this year, Nationstar’s monthly cash flow remittances from principal and interest collections, net proceeds from short sales and foreclosure liquidations, voluntary prepayments and delinquent loan advances was at 0.82% of the servicer’s outstanding RMBS balance, compared to 0.77% for Ocwen.

Park finds advancing rate differences between the two servicers are significant. During the same time period the amount of cash generated from distressed securities by source, Nationstar paid 0.07% of the balances from delinquent loan advances, compared to only 0.02% paid by Ocwen.

Loss mitigation strategies also influenced the amount of cash remittances leading to higher revenue from Nationstar’s REO property liquidations, while Ocwen is more successful in generating cash from loan modifications.

In the long term, however, even though Ocwen stops generating advances much faster than Nationstar, its much lower cash flow advances on delinquent loans is not expected to have a long-term effect on the relatively large GMAC portfolio, which includes a larger percentage of performing loans.

19 Responses

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  2. US Bank and SN Servicing has submitted Forged documents in our federal bankruptcy case too and we will never stop perusing them in court for damages. We are also asking our Federal judge to prosecute their current attorney out of Jacksonville Florida who continued to defend this case knowing that forged document are before a federal court. All the offending parties at SN Servicing and their attorneys are committing a serious crime against our country. We have filed a formal complaint with the FBI and the US attorney general and many great Judges all across this nation are finally stopping them from this kind of fraud on American families. US Bank and SN servicing and their attorneys are also violating a serious consent order that was to protect the people from these crimes but they could care less. Please feel free to have your clients join a class action suit so that we can end their behavior with a multi billion dollar punitive damage suit. Join us, call Ray Shelton in Florida at 352 274 8467

  3. ask yourself…why is it that they capitalized the names of the defendants/borrowers? Are they a separate entity / corporation used as investors for them to generate more business and to make the portfolio look healthy?

    Or for them to be able to make decisions for these newly created entities in further investments or secularization? After all, if they created these companies ( using Caps only in their names) they can make whatever decisions they can, right?

    So they file foreclosure docs in that ‘company’s ‘ name which is spelt same as the borrower’s only the borrower’s name is written in standard format.

    Also, at what point in time do they collect from the insurance companies for so called defaulted loans/mortgages?

    They are certainly not using their own money as they are addicted to OPM. And since it is the borrower’s signature that created the note therefore the credit on the books…

  4. US Government will get their BILLIONS back on mass fraudulent lending, but the homeowners will get screwed by the bank bullies while the US governments watches on the sidelines… http://en.wikipedia.org/wiki/Hypocrisy

    Hypocrisy is the state of falsely claiming to possess characteristics that one lacks.[1] Hypocrisy involves the deception of others and is thus a kind of lie.[
    Hypocrisy is not simply failing to practice those virtues that one preaches.

    http://www.bloomberg.com/news/2011-09-03/jpmorgan-bofa-among-17-banks-sued-by-fhfa-over-196-billion-in-securities.html

    BofA, JPMorgan Among 17 Banks Sued by U.S. for $196 Billion
    By Bob Van Voris & Patricia Hurtado – Sep 3, 2011 9:30 AM CT

    Bank of America Corp. and JPMorgan Chase & Co. (JPM) were among 17 banks sued by the U.S. to recoup $196 billion spent on mortgage-backed securities bought by Fannie Mae and Freddie Mac.

    The Federal Housing Finance Agency, on behalf of Fannie Mae and Freddie Mac, filed 17 lawsuits yesterday in New York state and federal courts and in federal court in Connecticut. The FHFA accuses the banks of misleading Fannie Mae and Freddie Mac about the soundness of the mortgages underlying the securities.

    Bank of America Corp. is one 17 banks being sued by the Federal Housing Finance Agency on behalf of Fannie Mae and Freddie Mac for $196 billion. Photographer: Chris Keane/Bloomberg

    “The loans had different and more risky characteristics than the descriptions contained in the marketing and sales materials provided to the enterprises for those securities,” the FHFA said in a statement.

    FHFA is seeking to rescind the transactions plus other damages, including civil penalties and punitive damages in cases alleging misconduct.

    In addition to JPMorgan and Bank of America, the agency filed complaints in federal court in Manhattan yesterday against Citigroup Inc. (C), Goldman Sachs Group Inc. (GS), Merrill Lynch & Co., Barclays Plc (BARC), Nomura Holdings Ltd., HSBC Holdings Plc (HSBA), Societe Generale SA, Credit Suisse Group AG (CSGN), Deutsche Bank AG (DBK) and First Horizon National Corp. (FHN)

    The FHFA sued Ally Financial Inc., Countrywide Financial Corp., General Electric Co. (GE) and Morgan Stanley in state court in Manhattan, according to the agency. It sued Royal Bank of Scotland Group Plc (RBS) in federal court in Connecticut.

    Fannie and Freddie

    Fannie Mae and Freddie Mac have operated under U.S. conservatorship since 2008, when they were seized amid subprime mortgage losses that pushed them toward insolvency.

    The FHFA said in its filings that Fannie Mae and Freddie Mac bought $6 billion in mortgage-backed securities from Bank of America; $24.8 billion from Merrill Lynch, which Bank of America took over in 2008, and $26.6 billion from Countrywide, which Bank of America acquired the same year.

    The FHFA claims Fannie Mae and Freddie Mac bought $33 billion in securities from JPMorgan and $30.4 billion from Royal Bank of Scotland. According to the complaints, Fannie Mae and Freddie Mac also bought $14.2 billion from Deutsche Bank, $14.1 billion from Credit Suisse, $11.1 billion from Goldman Sachs, $10.6 billion from Morgan Stanley, $6.2 billion from HSBC, $6 billion from Ally, $4.9 billion from Barclays, $3.5 billion from Citigroup, $2 billion from Nomura, $1.3 billion from Societe Generale (GLE), $883 million from First Horizon and $549 million from GE.

    UBS Suit

    The FHFA sued UBS AG, Switzerland’s biggest bank, in July over $4.5 billion in residential mortgage-backed securities sold to Fannie Mae and Freddie Mac, claiming the bank misstated the risks of the investments.

    “The claims brought by the FHFA are unfounded,” said Frank Kelly, a spokesman for Frankfurt-based Deutsche Bank. “Fannie Mae and Freddie Mac are the epitome of a sophisticated investor.”

    Ally, based in Detroit, said in a statement that it believes FHFA’s claims are meritless and the company intends to defend its position.

    Fannie Mae and Freddie Mac “acknowledged that their losses in the mortgaged-backed securities market were due to the unprecedented downturn in housing prices and other economic factors,” said Larry DiRita, a spokesman for Charlotte, North Carolina-based Bank of America.

    Kim Cherry of Memphis, Tennessee-based First Horizon said the company would defend itself.

    Knew the Risks

    The firms claimed to understand the risks, and continued buying, even after their regulator said they lacked adequate risk-management capabilities to do so, DiRita said.

    Company representatives who declined to comment on the suits yesterday included Danielle Romero-Apsilos of New York- based Citigroup, Kerrie Cohen of London-based Barclays, Kristin Lemkau of JPMorgan in New York and Russell Wilkerson of Fairfield, Connecticut-based GE.

    Mark Lake of New York-based Morgan Stanley (MS), Jonathan Hodgkinson of Tokyo-based Nomura, Michael DuVally, of Goldman Sachs in New York, Steven Vames, of Zurich-based Credit Suisse, Neil Brazil of London-based HSBC, and Jim Galvin of Paris-based Societe Generale, also declined to comment.

    Edinburgh-based Royal Bank of Scotland Plc will defend the claims. “We believe we have substantial and credible legal and factual defences to these claims and will defend them vigorously,” the bank said in an e-mailed statement.

    Some of the complaints described mortgages that were already performing worse than investors were told at the time securitizations were sold. Disclosures by some firms overstated home values or misrepresented the number of homes occupied by borrowers, according to the FHFA.

    ‘Under Water’

    An instrument underwritten by an affiliate of Merrill Lynch was reported to have no loans larger than the value of the house, known as the loan-to-value ratio. In reality, about 20.7 percent of the mortgages had an LTV ratio above 100 percent, meaning they were already under-secured or “under water” from the start, according to the FHFA’s complaint. Some pools packaged by GE or its affiliates were said to have no loans with an LTV over 100 percent, when about 13 percent did, according to another suit.

    In the complaint against Goldman Sachs, the FHFA claimed the bank securitized many mortgages that failed to meet underwriting standards even after outside firms it hired reported “high percentages of defective or at least questionable loans.”

    “Goldman simply ignored and did not disclose the red flags,” the FHFA claimed.

    The cases are Federal Housing Finance Agency v. Bank of America Corp. (BAC), 11-CV-6195; FHFA v. Barclays Bank Plc., 11-CV- 6190; FHFA v. Citigroup, 11-CV-6196; FHFA v. Credit Suisse Holdings (USA) Inc., 11-CV-6200; FHFA v. Deutsche Bank AG, 11- CV-6192; FHFA v. First Horizon National Corp., 11-CV-6193; FHFA v. Goldman, Sachs & Co., 11-CV-6198; FHFA v. HSBC North America Holdings Inc., 11-CV-6189; FHFA v. JPMorgan Chase & Co., 11-CV- 6188; FHFA v. Merrill Lynch & Co., 11-CV-6202; FHFA v. Nomura Holding America Inc., 11-CV-6201; FHFA v. SG Americas Inc., 11- CV-6203, U.S. District Court, Southern District of New York (Manhattan).

    Also: FHFA v. Ally Financial Inc.; FHFA v. Countrywide Financial Corp.; FHFA v. General Electric Co.; FHFA v. Morgan Stanley, New York State Supreme Court, New York County (Manhattan).

    And: FHFA v. Royal Bank of Scotland, 11-CV-1383, U.S. District Court, District of Connecticut (New Haven).

    To contact the reporters on this story: Bob Van Voris in New York at rvanvoris@bloomberg.net; Patricia Hurtado in New York at pathurtado@bloomberg.net

    To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.

    http://www.foxbusiness.com/news/2013/07/19/us-appeals-court-will-not-intervene-in-fhfa-lawsuits-vs-banks/

    U.S. appeals court will not intervene in FHFA lawsuits vs. banks

    By Nate Raymond
    Published July 19, 2013
    Reuters

    NEW YORK – Fourteen major banks sued by the Federal Housing Finance Agency over soured mortgage investments have lost a bid to have a U.S. appeals court intervene in their cases based on what they called a judge’s “gravely prejudicial” rulings.

    In a brief order on Friday, the 2nd U.S. Circuit Court of Appeals in New York denied the banks’ petition, saying they had not demonstrated they “lack an adequate, alternative means of obtaining the relief they seek.”

    The banks had jointly in March filed what is called a mandamus petition, complaining that U.S. District Judge Denise Cote in Manhattan had systematically deprived them of evidence needed to fight the FHFA’s lawsuits.

    The banks, which include UBS AG , JPMorgan Chase & Co and Bank of America Corp , also said the judge had issued rulings that sought to force them to settle.

    The banks asked the 2nd Circuit to reverse rulings by Cote and allow them to gain more access to information about Fannie Mae and Freddie Mac.

    The FHFA regulates Fannie and Freddie after the two mortgage finance companies were placed into federal conservatorship at the height of the 2008 financial crisis.

    The filing, unusual in its targeted critique of a federal judge, was a sign of how serious the litigation had become for the banks.

    The FHFA sued 18 banks in 2011, accusing them of violating securities laws by misleading Fannie and Freddie about $200 billion in mortgage-backed securities they purchased.

    Wells Fargo
    http://www.reuters.com/article/2013/09/30/us-wellsfargo-freddiemac-mortgage-settle-idUSBRE98T19920130930?feedType=RSS&feedName=businessNews

    (Reuters) – Wells Fargo & Co said on Monday it will pay $780 million in cash to Freddie Mac to resolve substantially all repurchase liabilities on home loans sold to the government-controlled mortgage company prior to 2009.

    The largest U.S. mortgage lender said the settlement was reached on September 27 and totaled $869 million before adjusting for credits related to prior loan repurchases.

    Wells Fargo announced the settlement five days after Citigroup Inc agreed to pay Freddie Mac $395 million to settle similar claims over roughly 3.7 million mortgages sold from 2000 to 2012.

    Citigroup is the third-largest U.S. bank by assets, while Wells Fargo ranks fourth.

    Wells Fargo said the cost of its agreement is covered by existing reserves.

    On August 7, the San Francisco-based lender estimated a probable $2.2 billion loss over claims it breached representations and warranties in the sale of mortgage loans.

    It is unclear how much of the latest settlement related to Wachovia Corp, which Wells Fargo bought at the end of 2008.

    Freddie Mac and larger rival Fannie Mae, which both received federal bailouts in 2008, have pushed banks to buy back mortgages that soured during the nation’s housing downturn.

    Banks can be forced to buy back loans if the representations and warranties over how well the loans were underwritten, and whether borrowers could afford them, prove false.

    Citibank
    http://www.reuters.com/article/2013/09/25/us-citigroup-freddiemac-mortgage-settlem-idUSBRE98O15D20130925

    C.N) has reached a settlement with a federal agency that had accused the bank of misleading Fannie Mae (FNMA.OB) and Freddie Mac (FMCC.OB) into buying $3.5 billion of mortgage-backed securities.

    The settlement with the Federal Housing Finance Agency was disclosed in a filing on Tuesday in U.S. District Court in Manhattan, where a series of related cases by the agency against Wall Street banks are pending.

    The filing did not disclose the terms of the deal. FHFA spokeswoman Stefanie Johnson said the settlement was “satisfactory” but declined to say how much Citi would pay.

    FHFA is active in settlement discussions with other banks that were subjects of these lawsuits, she said.

    Danielle Romero-Apsilos, a spokeswoman for Citigroup, declined to discuss the terms of the settlement but said the bank was “pleased to put this matter behind us.”

    The accord marks the second so far out of 18 securities fraud cases the FHFA filed against banks in 2011 over more than $200 billion in mortgage-backed securities sold to Fannie and Freddie.

    The FHGA settled a separate lawsuit in January, in which it had accused General Electric Co (GE.N) of misleading Freddie Mac into buying $549 million worth of securities. Terms of that deal were also confidential.

    The FHFA’s settlement with Citigroup followed a major setback for the banks when the 2nd U.S. Circuit Court of Appeals refused to reverse a ruling allowing a similar case against UBS to move forward.

    The ruling upheld a May 2012 decision by U.S. District Judge Denise Cote rejecting UBS’s argument the FHFA waited too long before suing the bank. The appellate court’s reasoning extended to the 14 cases before Cote, including Citigroup’s.

    The case is Federal Housing Finance Agency v. Citigroup Inc., et al, U.S. District Court, Southern District of New York, No. 11-06196.

    Morgan Stanley
    http://www.reuters.com/article/2013/09/24/us-morganstanley-creditunion-lawsuit-idUSBRE98N02E20130924

    JPM Chase
    http://www.reuters.com/article/2013/09/25/us-jpmorgan-probes-idUSBRE98O12O20130925

    http://www.bloomberg.com/news/2013-08-27/fhfa-said-to-seek-6-billion-minimum-in-jpmorgan-talks.html

    http://deadlyclear.files.wordpress.com/2013/08/fhfa_v_jp_morgan.pdf

    Bank of America
    http://www.usatoday.com/story/money/business/2013/01/07/bank-of-america-fannie-mae-mortgage-claims/1813335/

    Bank of America said Monday it will pay $10 billion to federal mortgage issuer Fannie Mae to settle allegations that mortgages were improperly handled during the financial crisis.

    The Charlotte-based bank will pay $3.6 billion in cash related to how it sold and distributed certain residential mortgage loans.

    Bank of America (BAC) will also repurchase $6.75 billion worth of residential mortgage loans it and its Countrywide Financial unit sold to Fannie Mae, about 30,000 loans, from January 2000 through December 2008.

    Homeowners only receive a several hundred dollars for servicing frauds
    http://www.usatoday.com/story/money/2013/01/07/banks-settle-federal-foreclosure-case/1813731/

    Ten major U.S. banks and mortgage companies will pay $8.5 billion to settle complaints that they improperly foreclosed on some homeowners, federal regulators announced Monday.

    The settlement package includes $3.3 billion in direct payments to eligible owners and $5.2 billion in loan modifications, forgiveness of deficiency judgments and other assistance, according to announcements by the Federal Reserve and the Office of the Comptroller of the Currency (OCC).

    Q AND A: How foreclosure settlement affects borrowers

    The OCC says the direct payments will be the highest compensation to homeowners so far as a result of lenders’ actions during the foreclosure crisis.

    STORY: Bank of America settles with Fannie Mae for $10 billion

    Eligible homeowners who should have been allowed to stay in their homes will receive compensation ranging from hundreds of dollars to as high as $125,000, depending on the type of possible mortgage servicing error.

    More than 3.8 million borrowers whose home loans at these 10 banks were foreclosed on in 2009 and 2010 will receive some compensation in a timely manner, regulators said.

    A payment agent will be appointed to administer payments. The agent is expected to contact eligible borrowers by the end of March with payment details, regulators said. Borrowers will not have to take any further action.

    The settlement includes Bank of America, Citigroup, Wells Fargo, JPMorgan Chase, MetLife Bank, PNC, Sovereign, Sun Trust, U.S. Bank and Aurora. The financial firms have operated under what is known as enforcement actions since April 2011. Federal regulators ordered the enforcement actions after they found evidence the banks mishandled paperwork or improperly sped up foreclosures by bypassing required procedures.

    To determine compensation amounts, the 10 banks will assign each borrower to one of 11 categories of potential harm, with the highest being active duty service members who were improperly foreclosed upon. Regulators will spot-check their decisions.

    Compensation levels for each of the categories are now being set by regulators.

    Every borrower will receive the same compensation as every other borrower in that category, whether or not they were actually harmed, the OCC said.

    Almost 500,000 borrowers had requested independent foreclosure reviews of their cases under a previous settlement agreement between the banks and regulators. They will get a little more than people who did not request reviews, according to the OCC. The broader and faster repayment framework announced Monday will replace those reviews.

    Four other banks — HSBC, Ally, EverBank and One West — are still in negotiations, according to the OCC.

    Comptroller of the Currency Thomas Curry acknowledged in a statement Monday that the settlement represents a shift in the regulators’ original enforcement strategy. But he said “it has become clear that carrying the process through to its conclusion would divert money away from the impacted homeowners and also needlessly delay the dispensation of compensation to affected borrowers.”

    “Our new course of action will get more money to more people more quickly, and it will speed recovery in the nation’s housing markets,” added Curry.

    Although “any movement toward more compensation for homeowners is a step in the right direction,” this agreement is “flawed,” says Alys Cohen, a staff attorney for the National Consumer Law Center.

    The size of the settlement “is wholly inadequate in light of the scale of the harm,” she added. “If the (independent foreclosure) reviews had been done right the first time, banks would have been on the hook to pay far more to homeowners.”

  5. Here you go, Neil (from Anon):

    1) Focus on subprime refinance – can extend from there. Almost all of these REMICs were subprime. And, almost all the subprime were refinances (new purchases came later but not to extent of refinances). Subprime refinances were NOT valid mortgage refinances. Neil uses the word “debt” — that is a correct word.

    SUBPRIME REFINANCES WERE CHARGED OFF GSE LOANS TO WHICH COLLECTION RIGHTS WERE SOLD TO THIRD PARTIES.

    They were loans removed from qualified GSE pass-throughs. These charged-off loans could NOT– by accounting or law — be “refinanced” — BUT, that is what a “subprime refinance” did. IT REFINANCED CHARGED OFF DEBT. Wrongly presented to borrower as a refinance, when in fact —- there can be no “refinance” on charged-off GSE debt. That is what subprime refinance was all about. Modification/restructuring of DEFAULT DEBT. No receivables involved — there are no receivables for collection rights. This is income — not receivables — a different part of accounting statements. This is why the subprime REMICs did not have to be funded. Neil always looking for the funding. No funding necessary on collection rights. NONE (except for any cash-out).

    2) Correct to bring up the revocable trust. Someone OWNS the trust — for the benefit of pass-through recipients. But, ownership of trust itself — and any rights should they exist to legal documents are NOT passed through. Only CURRENT cash is passed through. The trust is/was owned by the Depositor — who is subsidiary of the bank that purchased the “loans” (actually collection rights). Sometimes this is not shown by a REMIC — but is evident in undisclosed “corridor” agreements.

    3) Comment as to PSA and who “holds the strings” (claims Master Servicer) — is only partly correct. Remember, VALID securitization is a removable of receivables from balance sheet. As discussed above, there are no receivables in COLLECTION RIGHTS (subprime refinances). So PSA is bogus to begin with. But, assume the PSA is valid, for arguments sake. Then, in that case, receivables had to be removed from a balance sheet — someone’s balance sheet. Need to examine the Prospectus along with the PSA. PSA alone is not sufficient. This is because the Prospectus explains that “receivables” are converted to securities (the REMIC trust) — and who are the security tranches sold to by removal of so-called receivables to off-balance sheet REMIC?? The security underwriters. Thus, all receivables, if they are assumed to exist, are first sold to the security underwriter parent corporation (only one with a balance sheet), and then converted to securities sold to parent corporation’s security underwriter subsidiary (parent corp also owns the Depositor — who owns the trust). The strings?? Parent company of the security underwriter and Depositor. Master Servicer does hold the strings once default occurs. A default has no current cash pass-through unless the Servicer advances all payments to the trust. Thus, either Master Servicer advances, or default loan is removed from the trust. At removal, Master Servicer continues to service for derivative contract holders (derivatives not securities but, rather, a contract — a contract for purchase of collection rights to the default).

    4) Who is servicer servicing for when default occurs? Of course, there was already default when the subprime “refinance” was originated. Except now there is no longer any current cash pass-through. So, what distressed debt buyer did the parent corporation (to security underwriter) sell the distressed debt collection rights to?? This is not a securities investor. 1) Derivatives are not securities 2) Collection rights are not securities. Is it an investor??? Yes , a distressed debt buyer investor. BIG difference between securities investor and distressed debt investor. Neil just never got this. VERY HARMFUL to not understand this. Master Servicer will not disclose distressed debt “investor” — they do not have to as by deregulation, there is no public disclosure. Have to make courts understand this. And, have to begin with the note is NOT a valid note. (also — government Private/Public Investment Program (PPIP) aided in disposal of collection rights to private entities in the program).

    5) Agree — trustees do not even know their name is being used in litigation. OCC has warned trustees of this. Trustees should be suing Master Servicers.

    6) We do not know who the creditor is — the distressed debt buyer is concealed by the Master Servicer. Some cases are now going forward with the distressed debt buyer disclosed. But, these cases claim the note is valid. Impossible to have a named distressed debt buyer with a valid note. Again, simple accounting – note is charged off — in fact, note was charged-off BEFORE the subprime refinance. All that transfers is assignment of collection rights. No different from credit card debt (footnote 35 to TARP Oversight Report).

    7) NO RECEIVABLES. There were never any receivables for subprime refinance. NO FUNDING necessary — which is why the bogus REMICs were not funded. NO FUNDING.

    This is all strictly related to subprime refinances. But, if you cannot understand what subprime refinances were — you cannot begin to understand the process.

  6. True, Poppy true. I dont mind if servicers are paying on my note…..securitization could have done good it functioned how it was supposto, but it’s not. I do mind it was sold in the first place though. It was nice knowing we had a LOCAL place to go if there was a problem and you did not have to play phone games. Then we find out they went bk and had assigned the loan ppsshhh!
    Wish me luck! I have round 2 of msj in 2 weeks. I’ll have to report back whether 14 months of this life wrenching SHIT paid off or not. argh.

  7. You should not have to prove your loan was securitized, it is on them…the judges need to get remedial legal training. The onus is on them to prove they own, have an interest in or a loss from anything you did or didn’t do. Period! And if the servicer is paying anyone on your “supposed” note LOL…then you are not in default, simple.

  8. oh yeah, and this: I think…
    551.501  General fraud. It is unlawful for a person, in connection with the offer, sale, or purchase of a security, directly or indirectly, to do any of the following:
    (1) To employ a device, scheme, or artifice to defraud.
    (2) To make an untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading.
    551.501(3) (3) To engage in an act, practice, or course of business that operates or would operate as a fraud or deceit upon another person.

  9. Simple enough. Despite a previous post “how do I prove my loan was securitized…YOU DON’T” ……
    If your loan is swimming about in some pool – consider your mortgage drown. Right?
    How basic is that, I love it. No cloud,.. a Judge can understand that and it’s SIMPLE unlike all this other mumbo jumbo that has created that big cloud of confusion making it hard to rule.
    ……if your note has that lovely little endorsement and was issued as an MBS – any obligation you had to whomever sold it, the servicer…whomever…is NULL. Jump for joy,eh? They took your loan and in order to make money from it sold it and only services it for the benefit of the holder investors.
    So…..who you really actually owe? ….The investors, ok.
    I have a question then, …..it is general knowledge the intention was to get a loan to buy a house.Well, you got the house. And meee oh my we can’t let all these homeowners get away scoch free…..but in all reality it is undeniably uncontested and easily proven your home is collateral for these securities….and unless that holder of the securities comes after you……there never was any other contract made. Period. Not involving you anyway. Basic fraud. If you can get the Judge to see that servicer used your home as collateral for their own obligation, you can use the chapters of securities, no?? Not negotiable instruments rules, securities rules. Where you are going to find something of the likes of this : “A debtor that has sold an account, chattel paper, payment intangible, or promissory note does not retain a legal or equitable interest in the collateral sold.”
    baghta bing, baghta boom, right?

  10. At NO point did our contract include the “fractional sales”, or conversion of bonds of our notes!

    WE never made these contracts, nor are we responsible to pay them. Bondholders have no rights of foreclosure. And fractional sales, whatever. We will never find the lender, I do not care what the accounting says, that’s all falsified too.

    Whatever contracts they have made with our signatures is FRAUD at the highest level. Obtaining goods or services under false pretenses IS a crime. I am certain the signatures on these documents are counterfeit…at this point I sign nothing.

    As I respect Andleman’s work and Edstrom, I have to wonder where this conversation is going?

  11. Per recorded documents and according to the PSA the wrong party, the Servicer (PNC) assigns into Trust  5 years after closing date of Trust. Since PNC is a sub-servicer for the Trust..”Rali 2006-QS14″ and Deutsche Bank as trustee and the assignment of loan into Trust is considered void, then what gives PNC any right to collect or make payments to the Trust? If they make payments to a Voided Trust how can they hold the borrower liable. The borrower made no agreemnts for the sevicer to act in that way. Wouldn’t it be true that the sevicer is acting beyond their scope of duty? After 2 QWR’s and finding out that I never signed a HUD-1, 3 days to recind, I then rescinded this loan after uncovering that this loan is included in GMAC’s bankruptcy. I filed the rescission with the bankruptcy court, got a claim # and waiting to be heard. I told the court that I object to Deutsche using this loan in the bankruptcy proceeding as Deutsche has no standing and it was never properly transferred making it void. I found out that this loan has 2 different pool #’s, backdating and assignments out of order. From the start the recordings had the investors loan # for the trust and I at no time was notified that I was participating in such a cover up. Any feedback?

    Neil Larkins 541-884-3055

    ________________________________

  12. Neil said: “So does that mean that the debt of the borrower has been extinguished? The answer is yes and no. Yes it satisfies the payment requirement to the creditor on the mortgage. But no, that doesn’t mean that the borrower is off the hook like magic. The Servicer has an action against the borrower for contribution or unjust enrichment.”

    I completely disagree. No borrower agreed to have a servicer continue making payments to investors on the borrower’s behalf. That’s not in any of the mortgage documents. The continued payments from the servicer to the investor is completely voluntary on the part of the servicer and therefore, any money paid by the servicer to the investor after the borrower’s “default” is not owed by the borrower to the servicer.

    In legal parlance, we might say that when a servicer sustains a loss by advancing money to investors after a borrower stops paying, the borrower is not the proximate cause of that loss. I’m not a lawyer. Not legal advice.

  13. As usual, we have more fraud on the fraud. Remember, the parasites are killing the host. The host is us. Once the golden goose no longer can produce anything, the whole thing blows up. Start preparing.

  14. Tuesday, October 1, 2013
    BIG MEETING TODAY…. OBAMA…& WALL STREET BIG WIGS
    JUST REC.
    The chief executives of large banks including
    Goldman Sachs Group Inc. (GS) and JPMorgan
    Chase & Co. (JPM) will meet with President Barack
    Obama today as Wall Street urges Congress to end
    the budget stalemate in Washington.

    The White House visit, confirmed by three people familiar with the schedule, was set up by the Financial Services Forum, a trade group representing the CEOs of the 19 largest banking and insurance firms. The executives are also set to meet with Treasury Secretary Jacob J.
    Lew and several lawmakers.

    http://www.bloomberg.com/news/2013-09-30/wall-street-leaders-to-meet-with-obama-as-budget-crisis-looms.html

    I love it when they talk about “people familiar with… whatever”. Strange way of verifying one’s information… before putting it in print. That’s the American press for you. And obviously, Bloomberg is no stranger to it either.

  15. All the banks are broke… because they lent money that they never had. Theft from the taxpayer. Need to send all the politicians to prison for these abuses, etc., etc.

    I love that guy. He calls them crooks and everything else. I really love him!!!

  16. The only parties that are allowed to lend money for the house loan are home mortgage lender who are regulated under the Fair Housing Act. So that gives us the originating home mortgage lender or home mortgage lender that purchase the loan debt.

    So I wondering where these other parties come into play asserting that they own these loans where they are a Trust or not because that Trust cannot act as the lender, as it is not a “Lender” authorized to lend. Here the reason why a Trust or holder of the Notes are cannot be the “holder in due course” under the the contracts because they other parties are not regulated for the purpose of lending monies to consumers and cannot offer the services that a “Lender” can and they also are not authorized to collect the home mortgage loan and cannot have another in the business of collecting these payments, stand in the capacity.

    Ginnie Mae is the ultimate example of how one cannot claim ownership but cannot either lend, collect or foreclose because they are not a “Lender” and are not listed in the local land recording offices as the “holder in due course” anywhere in this country as.

    Neil party get it but you keep wanting to go back to where the money came from, however trying to prove who funded what to originate the loan as it matter now and is easy to proof that who is foreclosing does not have a financial interest in the loans.

    If you take it from known fact in every single Ginnie Mae loan placed into their pool that first the loans must be titled at the local land recorder in the name of the party that extended monies, then under the Ginnie Mae rule the Notes must have a signed blank endorsement and relinquish to Ginnie Mae as the underlying collateral. However as Ginnie Mae is not a lender and is the reason they allowed the servicer to stand in as the “lien holder” and have them submit to the court as the owner of the loan, is something that cannot be done. You cannot go to the court claiming that the Note is saying that the homeowner owes you monies when there no reference on the Note and no money trial were you purchase the debt.

    Take IndyMac and Washington Mutual to start and those loan foreclosed after the banks were seized exposes the Ponzi scheme that is Ginnie Mae. Just in the last few days you got Citi and Wells Fargo being fined because of loans sold by them to Freddie and I am sure Fannie will follow, and some sort of JPMorgan offer from the other banks are forthcoming.

    Stop all the dithering as $11 billion recovery is already on the table to make this all go away, and I would think that some offer of monies will soon have to include foreclosed homeowner to have them sign some sort of no litigation and be done with this mess, so that it cut out you other attorney coming to the party late!

  17. I’ve run across many insurance companies tied to the PSA and REMIC docs. Out of 37 businesses/legal entities tied to 1 trust/REMIC, over 50% of them were insurance companies. When questioned, especially the insurance companies that are in bankruptcy, they avoid disclosing the type of policies and monies payed. I’m guessing Pool Insurance or some other type of default insurance is funding these payments.

  18. And “servicer” that’s a rich term..catch-all these days. Sure everyone in the game is a servicer. A servicer of what? Debt collectors service an account, then there are the servicers for the trust, LOL…when we go into the court, can we define which is which? And does it matter? Sure, it does. The note is a UCC issue, where the debt collectors belong in state jurisdictions.

    We cannot believe what is in the accounting…Jeez

    My $.02

  19. So, what we are saying here is the money is owed?

    The “conversion” doesn’t matter, the lack of a valid trust – securitization status doesn’t matter, nor does the seizure of some of the loans, the debt buying of the loans, etc…so, the lender is being paid by the servicer for the loans, depending on what tranche the note is in. Hogwash!

    Bond holders do not have a legal right to foreclose, nor does any National Association…they cannot lend money. Not buying any of it…

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