WITHOUT CONFUSION AND OBFUSCATION, COMBINED WITH STONEWALLING, THERE WOULD BE NO FORECLOSURE OF ANY DEBT SUBJECT TO CLAIMS OF SECURITIZATION —- NEIL GARFIELD, WWW.LIVINGLIES.ME
For further information please call 954-495-9867 and 520-405-1688
Hat tip to Carol Molloy who sent me the affidavit
Reynaldo Reyes, AVP of Deutsch Bank said to a borrower, in a taped interview, that the whole scheme was “counter-intuitive.” In plain language that means that nothing is what it appears to be. And THAT in turn means that disclosures” were deceptive or “counter-intuitive.” And THAT means that the disclosures at closing were also “counter-intuitive” or deceptive. Reyes in a sworn affidavit drafted many times and edited by various top level attorneys for the banks has submitted an affidavit on behalf of Deutsch Bank but which will be used by Banks to try to legitimize their deceptive tactics. Again, to put it simply, they were lying to everyone — investors, borrowers, regulators, law enforcement, Congress, and the President.
Witness the following paragraph from Reyes’ affidavit. Here he says in the affidavit in Paragraph 1, that the Trustees serve the Trust. But then he takes it all back by saying that the Servicers perform all the functions of administering the loans — not on behalf of the Trustee, but rather on behalf of the Trust. THAT can only mean that the named Trustee, is not the Trustee. It means that the power of administering the Trust assets is with the servicers. Does that mean the servicers should be sued for wrongful foreclosures? Then why is the Trust named or the Trustee named?
So the beginning of the PSA, which designates a Trustee, is merely window dressing to give the impression that Deutsch Bank is the Trustee with all the powers of a Trustee, when in fact, the servicer is the one who performs most or all of the functions of a Trustee. But they do so giving the impression that they must go back to the Trustee or the “investor” when in fact they assert the power to do everything. In their circular reasoning, they could say to the court that they must get approval from the investor and then leave the court room. Then they speak for the investors, according to the servicers. So now they come back to the homeowner or homeowner’s counsel and say the application for modification or settlement has been declined. Whether that assertion turns out to be true after analysis in court is another story.
This is contrary to the position taken by U.S. Bank and Deutsch Bank and BONY Mellon in foreclosure cases where they sue for foreclosure in their own name as Trustee for the REMIC Trust. It also accounts for why they sometimes sue as Trustees for the certificate holders, and sometimes even get away with saying they are trustees only for the certificates delivered to the investors. This of course makes no sense, since they are neither holding nor asserting ownership over the certificates.
Paragraph 7: No entity services loans on behalf of the trustees. The trustees and the loan services that are appointed by the the PSA’s each perform their designated functions on behalf of the trusts. In other words, loan servicers to service mortgage loans that have been pooled and sold into a securitization trust are performing services on behalf of the trusts, not on behalf of the trustees.
Then we get to Paragraph 10 which admits that the Trustee has neither any accounts nor any information or business records of its own. According to this paragraph 10, the Trustee receives loan level data from the servicers “to facilitate certain payments to bondholders.” But wait here comes the language that takes all THAT away: “However, for a number of trusts” [unspecified, but probably all of them] “a party other than the Trustee handles those payments responsibilities.” And then the rest is taken away by his statement that “With respect to the Trusts for which the Trustees serve as a Trustee but not as securities administrators, the Trustee do not receive loan level data.”
Get it? Just like the PSA, Reyes’ affidavit says one thing and then takes it all away in the next breath. The fact is that in virtually no case is the Trustee the securities administrator. And that, Reyes, says means that the Trustee neither gets loan level data, nor does it make payments to the bondholders. “Other parties” perform those functions. Who? The servicer who is according to Reyes the party with the actual powers of the Trustee. So why is Deutsch claiming to be a Trustee.
The answer is very simple — MONEY. The sellers of mortgage bonds pay Deutsch to rent their name to underwriters to make it appear as though an independent fiduciary is handling the money, the purchase or origination of loans, and the enforcement or modification of loans. This is meant to deceive the investors into a false sense of complacency. The same is true for borrowers, although at this point “complacency” would hardly be the word.
Everyone believed the wording at the beginning of the PSA and practically nobody read the PSA from end to end to see that the beginning was sales material and the end was a hodgepodge of obfuscation to make it difficult if not impossible to determine the identity of the players or what they were doing. This analysis can certainly NOT be done without reference to the underlying transaction in which we see who actually sent money to originate the loans, from whom they received the money etc.
The fact is that that while most people think the Trusts acquired the loans by sale of the loans into the trust, the evidence shows that practically none of them were sold to the Trust. The only logical conclusion from the facts at hand is that the investors’ money was pooled in an entirely different scheme while hiding behind claims of securitization.
The investors money was used directly, without their knowledge or consent, to fund origination of loans like the toxic Pick a Pay, reverse amortization, payment increase cap (usually 7.5%) that results in what appears to be affordable payments, but also results in uncontrolled liability.
A $139,000 loan that I recently analyzed, indicates the eventual liability could be nearly $4 million — all at the end of 30 years of payments, resulting in an undisclosed hidden balloon payment in the 13th payment and every payment thereafter which thanks to the miracles of compounding interest and an adjustable rate that could go as high as over 12% APR process an obligation that looks affordable but is infinitely not affordable. The interest alone on the new principal (original balance + deferred interest on negative amortization loan) could exceed $24,000 per month on a $139,000 loan.
Then you get to paragraph 11: Here the affidavit produces more obfuscation by referring to the Master Servicer who might (or might not) be responsible for performing any duties. But in the PSA you see the ultimate authority for virtually everything lies with the Master Servicer, who also turns out to be the the underwriter and seller of mortgage bonds. And since we now know that the Trustee had neither trust accounts nor any control or responsibility for the accounts, THAT makes it impossible for the Trustee to have received any proceeds from the sale of bonds issued by the Trust.
Since a Trust cannot operate except through the Trustee by law (see New York law and the law of your state for more information) it is an inevitable conclusion that there were no accounts established for the Trust in the manner expected by the investors who bought the mortgage bonds. And since there was no money in the Trust, the Trust could not have originate or purchased any loan documents, regardless of whether or not there was in fact an underlying loan transaction at the base of the chain relied upon by these parties when they foreclose.
Then Reyes gets to the meat of why he submitted the affidavit. BONY Mellon did the same thing by a lawsuit and so have hundreds of investors, insurers, guarantors, holders of loss mitigation hedge contracts, whose cases have been quietly settled. Reyes states that “the Trustee would not be in the best position to address further inquiries by the Court concerning any possible ‘irregularity in the handling of foreclosure proceedings.’” So to put it simply, Reyes is disclaiming any role in foreclosures and trying to distance Deutsch bank from wrongful foreclosures [i.e. most or nearly all of them] despite its APPARENT AUTHORITY.
Examination of the PSA reveals deep within its pages, prohibitions and restrictions against either the Trustee or the bond purchasers (“trust beneficiaries”) from knowing or even inquiring about anything involving the business of the trust, which we already know never existed because the trust never received its IPO (bond sale) money. This is why servicers assert control over the settlement and modification process. This is why they say the investor declined the modification or settlement because they never contacted the investor or the trust or the Trustee.
The truth is that the servicers assert, in the final analysis, the right to speak for the investors even thought they have a patent CONFLICT OF INTEREST RESULTING FROM SERVICER ADVANCES. A true servicer would be required to mitigate the damages and minimize the losses. Servicers have no interest in doing that because they can make a ton of money for having advanced the principal and interest payment to the creditors from an account that contained the investors money and that would count, as stated in the PSA, as payment in full to the creditor — so the creditor could not declare a default against the servicer.
And THAT is why these foreclosures are pushed through, among other reasons, [avoiding workouts, modifications and settlements] to wit: the foreclosures proceed even though the creditors (investors) are being paid right through the date of foreclosure. The reason is the banks want to “recover” those “advances” (paid from money stolen from the investors) not from the borrower and not from the creditors, who have already been paid, but through a claim against the final liquidation of the property to a third party “innocent” purchaser. BY controlling the foreclosure process, the servicer gets paid a lot of money and protects the banks against claims for refunds and damages arising out of the improper loan practices, loan processing by the servicer, and wrongful foreclosures.
So far the servicers have fooled the courts into thinking that their claim to recover servicer advances is somehow secured. It isn’t. In order to do that the court would be required to issue a declaratory judgment specifying the breakup of the mortgage lien on a continual basis for each servicer advance or find that the total advanced by the servicer from the underwriter’s controlled slush fund, is subject to an equitable mortgage lien. Equitable liens are not accepted in virtually any court because ti would require the buyer of property to make exhaustive investigation into matters that a re not contained on the face of the note or mortgage.
PRACTICE NOTE FOR LAWYERS:
Reyes is saying that only the servicer can enforce. And he is saying that when the servicer acts, it does so for trust NOT THE TRUSTEE. So the Trustee, according to him is not a proper party to bring the action. The inference corroborates what I have been saying all along. It is that the investors are the real parties in interest and the servicer is acting in a representative capacity — IF IT IS THE TRUSTEE NAMED IN THE TRUST INSTRUMENT (THE PSA).