US bank is popping up as the substitute Plaintiff in cases I have where BOA claimed to be the trustee of the REMIC Trust by virtue of being a “successor by merger.” Now I see them popping up where Chase was the Plaintiff. In all cases the bank originally filed under an assumed name by renting the name of someone else or by claiming to own the loan themselves. Now they are under the administration and under the coordination of what I believe to be the Chicago law firm that coordinated the first burst of Aurora strawmen when Aurora itself was a strawman for Lehman Brothers. The object I suspect is centralization of all the trustee positions into US Bank.
The next logical step would be bankruptcy to end of the claims for breach of fiduciary duty. But that option won’t work because of the amount of assets and income US Bank is claiming now. So the only thing left for them to do is dilute the liability into virtually nothing. And the only way to do that is package up the income streams and, as you might have guessed, securitize those packages and sell the securitized packages with insurance and indemnification — the same way they layered over the sale of the trustee positions from BOA. The object I can tell you from experience is to make it so complex that they create a grey area in the law or rather the appearance of a gray area just like they are doing successfully with the mortgages and the Foreclosures. They are nothing if not consistent.
There is, so far, one chink in the armor that I have detected or maybe two. The first is that the PSA does not generally give the Trustee of the REMIC Trust the power or even the right to inquire about Foreclosures although that hasn’t stopped US bank from claiming to be the Plaintiff in foreclosure actions. The second is the issue of whether the sale of the trustee’s position is allowed under the governing law (New York usually) since it is contrary to the express terms of provisions in the PSA. Those provisions identify the trustee and allow only for succession by merger, which is why the banks were all claiming that. Under New York law if any trust transaction violates the terms of the trust (PSA) then the transaction is void, not voidable.
The question of law that will be the battleground is whether homeowners have standing to challenge that sale and whether the courts are going to take a disliking to the sale by the trustee of its duties and revenue. As I explained yesterday, such a precedent will cause uncertainty and chaos in the marketplace not only with trusts. It will also be used to commoditize other things that we take for granted are not for sale.
All of this relates to an earlier post I made about the Pope’s comment about the idolatry of money. His point is well taken. Instead of actions being taken that are acceptable under moral standards or legal standards, these banks have us thinking that somehow the world will be better if we put a metric or value on everything and anything, thus raising moral hazard as a goal rather than a limit on human behavior. And you might find them arguing that none of it matters because the trustee has no powers anyway. This would be a foolish argument that might invite the ire of the judiciary.
The bottom line is that they are trying to undermine the whole standing issue and the relevance of ownership of the loan. Under the standards being set by the banks if you can find any debtor then anyone can collect from the debtor if they get to him first. In short, this is nuts.
Filed under: foreclosure