Assignee stands in the shoes of the assignor: It must prove the loan

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This article ( and any other article on this blog) is no substitute for getting advice from an attorney licensed to practice in the jurisdiction in which the subject property or transaction is located.

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see http://www.lowndes-law.com/news-center/1797-two-layers-protection-lenders-need-know-about-floridas-holder-due

There is a difference between alleging you are the holder with rights to enforce and proving it. If the bank, trustee or servicer alleges that it has the right to enforce then they will survive a motion to dismiss. But if the borrower denies that allegation is true, the burden of proof falls on the party making the allegation — the bank, trustee, servicer etc. The mistake made by Judges and lawyers is that they don’t make the distinction between pleading and proof. As a result you get decisions that include multiple rulings that prevent the borrower from conducting adequate discovery and allow the party bringing the foreclosure action to skate by because “it has already been established” that they are a holder with rights to enforce. That being the case the courts further compromise the verdict and judgment by over-ruling objections from the borrower on grounds of relevance.

One of the key points I have been making for 8 years is that the party bringing the foreclosure essentially never says that it is a holder in due course. In fact, we have had cases where opposing counsel expressly denies that the Plaintiff is a holder in due course. That is particularly remarkable where the Plaintiff is, for example, Citimortgage, which maintains an ambiguous status, admitting that it is a servicer but not revealing the creditor or the basis on which they rely in alleging that they are the servicer.

The importance of holder vs holder in due course cannot be over-stated. And if the loan was alleged to have been transferred while the loan was already declared in default, there can’t be a holder or holder in due course because the UCC does not apply those terms to anything but a negotiable instrument which by definition must not be in default at the time of transfer. Otherwise it is not a negotiable instrument and the allegations and proof go the the issue of ownership of the debt.

It is interesting that the banks and servicers, etc. do not allege status as holder in due course. In many cases they have back-dated the assignment or endorsement to before the alleged default. Where the Plaintiff is a trust, all they would need to show is what is in the trust instrument (PSA): purchase in good faith without knowledge of borrower’s defenses. That would be the end of almost every case — the borrower is liable to a holder in due course and may bring claims only against the intermediaries or originator in damages. The foreclosure would be completed in record time and that would be the end of it, except for borrower’s claims for damages against parties other than the Plaintiff who proved they were a holder in due course — i.e., proof of purchase for valuable consideration without knowledge of the borrower’s defenses and in good faith.

The problem with court decisions over the last 10 years is that they treat the alleged “holder” as though they were a holder in due course without any allegation or proof that the foreclosing party purchased the loan, in good faith, without knowledge of borrower’s defenses. A holder is not better than the party before they were an alleged holder. And THAT party is no better than the party before and so on.The only exception to this is where the FDIC involved in certain types of take-overs.

Eventually you get to the origination of the loan. THAT loan contract must be proven by a holder in order to prevail in foreclosure. And as every first year law student knows there is no contract without offer, acceptance and consideration. If the originator did not fund the loan there is no contract and the closing violated Reg Z, which calls such transactions predatory per se (which in turn means that the foreclosing party presumptively has unclean hands and is not entitled to any equitable remedy much less foreclosure).

If an alleged holder did not actually purchase the loan, then they don’t own it. It really is that simple. If they don’t own it then they must allege and prove the basis of their allegation that they possess the right to enforce. That also requires a contract with offer, acceptance and consideration. The existence of assignment does not prove that such a transaction took place but it might be admitted in evidence as evidence that such a transaction took place. On the other hand it might not be admitted in evidence if there are defects relating the instrument to the proof of the matter asserted.

Even if admitted, the assignment is not dispositive. Upon cross examination, the witness will probably know nothing about any transaction in which ownership or the rights to enforce were transferred or conveyed. And it is at that point where Judges and lawyers commit error.  The assignment may then be struck from the record as lacking any foundation. This is not just a matter of hearsay. It is a question of how can the trier of fact rely upon an instrument (assignment) when there is nobody to testify that the transaction actually occurred? It is the same problem with the note executed at “closing.” How can the loan contract be completed if the payee on the note didn’t loan any money?

In the article cited above, the author makes the point easily:

As an assignee typically “stands in the shoes” of his assignor,7 without  the holder in due course doctrine and its federal counterpart, these allegations may defeat the purchaser’s action or make it much more difficult  and costly to pursue, especially given that the purchaser took no part in the these “bad acts,” and that the people who did take part (the  management and employees of the failed bank) may be difficult to reach and may have little incentive to cooperate with the purchaser. [e.s.]

most of these difficulties are eliminated by the powerful effect of the holder in due course doctrine as it can clear the way for the  purchaser to recover, even if there may have been prior “bad acts” of the failed bank, as the purchaser will acquire the loan free and clear of  most defenses—the so-called “personal defenses”— that the borrower could have asserted against the failed bank.8 The holder in due course  doctrine, when applicable, enables the purchaser to avoid liability for many of these “personal defenses” which may have been valid defenses to  an action brought by the failed bank, but do not impede the ability of a holder in due course to enforce the borrower’s obligation to repay the  loan.9 Generally speaking, these defenses are all defenses that would be available in a breach of contract action10 except for the “real defenses,” all of which involve either the original execution of the promissory note or its subsequent discharge in bankruptcy.11 These defenses  cannot be avoided, even by a holder in due course. Fortunately, any “bad acts” of the failed bank which may have occurred during the course of  the loan will hardly ever form the basis for a “real defense,” and thus can likely be avoided by a holder in due course.

THE RULE IN FLORIDA
In Florida, the holder in due course doctrine is now codified in statute,12 although it first began to develop in the English common-law as early  as the late 1600s and early 1700s and was codified in that country by the Bills of Exchange Act in 1882.13 The doctrine first became codified in  the United States in the early 1900s as states adopted the Uniform Negotiable Instruments Law, which was later supplanted by the Uniform  Commercial Code, which governs today.14

In order to be a holder in due course under current Florida law, a purchaser of a negotiable  instrument must generally satisfy three conditions. Specifically, the purchaser must have: (i) acquired an instrument that does not bear any  apparent evidence of forgery, alteration, or any other reason to call its authenticity into question;15 (ii) paid value for the instrument;16 and (iii)  acquired the instrument in good faith, without notice that it is overdue, dishonored, contains an unauthorized or altered signature, and without  notice of any claim to the instrument.17 If these three conditions are met, the purchaser will generally qualify as a holder in due course and  take the instrument free all “personal defenses” that the borrower could have asserted against the prior lender.

94 Responses

  1. Fwiw, before we leave the topic, I’ve said I had heard that only seasoned loans were eligible for securitization. Because I can see no need for a reserve fund to handle ANYthing about loans which have been sold unless warranties were involved* (and taken the inherent risks they pose with them), it only makes sense that the banksters did what I’ve thought – took the insurance to avoid the seasoning requirement in an unlawful, self-prescribed remedy to avoid the seasoning requirement. But even that leads to more questions – like what was their insurable interest and who was the named beneficiary of that insurance which mk is calling a “swap” (about which I know right next to zilch)? I haven’t been able to confirm the seasoning requirement; all my old search turned up was WF’s arguments against it. These loans SHOULD be seasoned for numerous reasons prior to securitization.

    *not about the quality of the loans, but about payments. There’s plain English for this stuff; we just haven’t heard it yet imo, not in any manner the majority of us can understand.

  2. @ ALL ,

    No justice yet ,, just relief from a fight I could not win due to blocked evidence.. the Appeal may have won but likely not… I consider it to be a strategic withdrawal allowing me to consolidate and redirect my attack… The party with whom the agreement was made will find out when the time comes that I am following Sun Tzu’s admonition to attack where the enemy isn’t prepared. That the basis for a mod , the original note , is an illusion.

    I’m counting the days to 21 … then Neils latest post Rescission Enforcement comes into play. I find it amusing that every mod agreement I have read has a clause where unconditionally the underlying note/contract become effective immediately in case of a breach giving us the power to control which contract we want… we just have to breach if we want to revert….

  3. Congrats Niedermayer there’s hope!

  4. Neidermeyer
    that has to be very satisfying that you got your justice
    Congratulations to you and your family im so jazzed for you. 🙏

  5. @ Neidermeyer,

    Was your loan part of the recent 34 billion settlement levied against HSBC?

    Inquiring minds need to know: mikekeane@optonline.net

    Again congrats.

  6. @ Neidermeyer,

    Congratulations!

    I hope you cut them- long, deep and continuous.

    Insofar as, capital reserve requirements: I concur; insurance companies need reserves to prove liquidity vis-a-vis insurance policies.

    My contention is: AIG was targeted to own MORTGAGES specifically because, as an insurance company, mortgage reserve requirements were non-existent.

    My multiple copies of “The Big Short”, Michael Lewis are out on loan as are my multiple copies of “The Web of Debt”, Ellen Hodgson Brown.

    Each book will provide an elaboration of the sleight-of-hand the banks employed to circumvent the capital reserves, if memory serves.

  7. @ Michael Keane ,

    I can’t speak for shadowcat but Jade Helm looks to me like the FedGov is “grooming” the people to be familiar with the “look and feel” of military in the streets.

    I know it was just one division at AIG that took the business ,, prior to 2002ish it was a tiny overlooked department ,, and the policies written were thought to be such a low risk that they were thought of as “free money” … they didn’t want the hassle of subrogation…to their thinking it wasn’t worth it because the insured (WAMU , BofA , etc.) were all good guys and their friends.. besides who wants to work onesie and twosie claims?

    Insurers do indeed have reserve requirements and have to prove liquidity,, this business line required little reserves because of projections of payouts based on prior years and was dwarfed by the rest of AIG… it was overlooked. It wasn’t til 2007 that the dam burst ,, AIG paid out $11.7B in claims that year,, prior to that it was all gravy.

    I just settled my case ,, can’t disclose anything specific here … but the big takeaway is that I am out from under a court system that was stacked mightily against me … and that my “Settlement and Release” was apparently written by someone unfamiliar with the case , not knowing about the evidence I was thwarted in submitting… I had to give up fighting all the parties I needed to escape from , the fakers… and because they didn’t understand the details and that my main target was a party never on any court document in my case …

    My TILA target is my actual/true lender, the puppet-master to my pretender, and I have a federal court case where they admitted that they were the underwriter and source of funds for all the notes in my trust,,, where they paid out BIG because of their “substandard” underwriting.. I’ve got them ,, the pressure is off me… and I have the hammer of the GODS! TILA WITH A UNANIMOUS SCOTUS and a party that has admitted all… My God are they going to be screwed.

    My wifes happy , I’m happy , I’m feeling pretty good. This is goodbye for now…

  8. My understanding is the house of cards was propped up as long as there were no insurance claims. In that sense insurance companies and investors aren’t victims like these fake settlements make them out to be. As Michael is saying the end game is destruction of middle class when the insurance plug was conveniently pulled as needless war was winding down w presidentiCal election. We have broken chains and clouded titles all over the place to keep them from stealing our real property. I wasn’t aware of this as I’ve kept asking “lender” why they wouldn’t cash in their title insurance for full principal on broken chain etc. Either no response or they deflected to property insurance!

  9. @ Hammertime,

    the “quadrillion” is the amount owed in “Notional Derivatives” to the international financial markets.

    The “Notion” is: “We The Bankers can defraud the middle class out of their homes, and place bets to the tune of 682 Trillion Dollars, they won’t be able to stop us.”.

  10. What kills me is that this like everything before put together on steroids. But there’s A basic disconnect. Just the $15 trillion Wall St got in ’08 alone makes no sense. And someone mentioned hundreds of trillions? DavidB has studies talking quadrillion or some crazy number like that. Goes back to great Robin Williams interview where he was asked about Wall St and he starts acting like a junkie snorting. And we’re trying to talk sense and numbers w these guys? I think I calculated that 5 mil homeowners would have gotten 3 million bucks each. Let’s do that but keep it in our hands, no courts or other bs!

  11. @ johngault,

    In New Jersey, we have a criminal imbecile for our governor.

    He took billions in grant money and has withheld those funds from the victims since “SuperStormSandy” robbed them of their homes.

    “SuperStormSandy”, “SufferingSuccotashSylvester”.

    Through the use of semantics, Governor Christie denied the insurances due by denying the use of the word “Hurricane” and replacing it with “SuperStorm”.

    In so doing, he protected the insurance filth and further victimized the homeowners.

    Earlier today, in reference to AIG, you wrote:

    How did banksters (or anyone who didn’t own the loans) manage to be the bens of regulated insurance?

    Did AIG take what was merely BETS?

    The answer is “No” on both counts.

    The derivatives are characterized as “Swaps”, not actual insurance policies. I think Michael Lewis was the first to point out, in, “The Big Short”, that this exercise in semantics has allowed some to avoid prosecution.

    Oh, and for the record, the DTC and the DTCC refuse to disclose what is going on in the derivatives market.

    So… I will ask you: “doesn’t that make it an unregulated market”?

    In answer to your second question: I believe AIG was used, due to its formidable financial clout, to purchase actual portfolios of actual loans and, I believe they did so in order to aid the banks to shirk their capital reserve requirement.

    A question I have pondered for some time is:

    “Could it be true, that, because AIG is an insurance conglomeration, the chain of title to every mortgage in the country is now broken because, under their watch, they failed to understand an actual physical transfer needed to take place in the presence of actual, clearly defined consideration”?

    Another question then becomes:

    “Once the fraudsters unloaded their baggage on the unsuspecting insurance companies, is it likely they then went about counterfeiting their ownership to those titles of the underlying collateral, in order to capitalize on the revenue streams inherent to the loans AIG failed to transfer”?

    I feel the answer is : Yes.

  12. @MichaelK I wasn’t aware of that bit if our history thx David Black on board has an amazing history going back to S&L crisis as a whistleblower and his family goes way back. We’ve had long conversations about all this. He’s battling his health but he’s still fighting. We’ve gotten to some basic truths in his case and hopefully can be part if a United effort.

  13. @ JohnG yes it doesn’t make any sense but the fake “free marketers” wI’ll say see it’s all good now. Being in this crazy bubble in CA it’s tempting to just play along but my basic faith in country even God was shaken. I hung on and I believe that’s what’s truly at stake as Mike has said. We have people suffering even dying in their homes and in the streets needlessly. It’s blood money unless we make it right. I’m trying to find that balance of my own case and how we hold the real bastards accountable and stop the cancer affecting All of us. They try to beat us down to make it seem impossible and that’s where we gotta step back and focus on simple truths and basic principles. Blame Mike for my soap boxing lol!

  14. @ Shadowcat,

    I showed you mine.

    I wonder what you think Jade Helm is about?

  15. @ Hammertime,

    There is a reason Andrew Jackson is on the $20.00 bill.

    He defied the central banker of his day, Google Nicholas Biddle and the second central bank.

    As a Populist President, most would say, “our first”, he endured the misinformation directed against him by the banking elites and even survived, at least, one attempt on his life; the pistol refused to fire and Jackson put his would-be assassin down, mano-a-mano.

    Good Stuff.

    The point is: this country has been here before and it is incumbent upon us to defy and disrupt what is clearly an attack against our national Sovereignty.

    First, they used our currency to defraud us into decades of proxy war and now they are engaged in impoverishing the middle class through fraudulent claims to the titles to our houses.

    The fraud is so blatant because that is their standard M.O.: to hide in plain sight.

  16. @ johngault,

    Forgive me if I appear rude in my answer. It was not my intention.

    When I said you are “overthinking it”, I meant:

    Each time a bank wrote a loan, prior to Graham, Leach, Blighley, they had to set actual money aside, on the shelf, in the vault, as per regulation, of at least, 8 %.

    Should they have liabilities outstanding, in the absence of this reserve, there would be consequences.

    The same did not hold true for insurance companies: they could make purchase-upon-purchase and, in so doing, they suffered no limitation of capital (ie, the money set aside as reserve).

    So… the bankers, if successful in their subprime scheme, and, denied an ability to shirk the reserve, would soon outdistance their ability to underwrite more “loans” (because the bulk of their capital, would, perforce, be sitting on their vault shelves, earmarked as set there in order to defray any loan restructuring should the fed move to a lower rate).

    When you consider the amounts involved, as someone once said, “pretty soon, you are talking about real money”.

    Frankly, I am flattered you think I am more, or, at least as “sophisticated” as you.

    You hit the nail on the head in your 6th, or so, paragraph, “… a refinance … diminishes one’s anticipated return… “.

    A refinance, typically, by its very nature, comes at an unexpected time and usually during a re-adjustment, to the detriment of the banks, of the prime rate; therefore, numbers of high-interest loans are restructured and thereafter, low-interest loans take their place (a double-whammy, if you will).

  17. Hammertime, as mk say, we can dream. I dream of all the money the banksters, the same ones who participated in AIG’s downfall, made on AIG stock. Under a dollar – now at $60.50.
    On October 2, 2006, it was trading at 67.35. Many people lost a sh$t-pile of money. Can you imagine the pile of dough MADE on that spread by those with patient money or some other stock ploy – under 1.00 to 60 bucks? Some people had to have known AIG would get bailed and propped up….could’ve anticipated it, could’ve manipulated it even. Pity it wasn’t the middle class. Don’t forget to add these record profits to the banksters’ portfolios. What kind of (*&!*&! grabs someone’s life savings, a lot of someone’s?? The nail gun is too good for them!
    MERS HAS TO GO – Refuse to sign a Mers mortgage

  18. Yes David globalization is not our friend. Im a democrat but can’t tell difference between Obama, Clintons, Bushe’s back to Reagan.

    Sen. Bernie Sanders cracked the door open on trillions that went to banks while we were being blamed as deadbeats. As third party he could be someone to rally around.

  19. Michael keane, thanks for your response. But, many of us don’t have your sophistication:

    “You are over-thinking it”.

    I am?

    “AIG was used specifically, because, as an insurance company, THEY HAD NO CAPITAL RESERVE REQUIREMENT.
    Mortgage companies, on the other hand, have a regulatory requirement to set aside a percentage of the loan issued, usually 8 %, against the day the loan is REFINANCED.”

    You mean first of all the reserve to cover exactly WHAT in the event of a refinance? (I do understad that refi by a borrower carries a risk of less return for an investor.) But I’m sorry, I can’t see what aig was used for in reference to that reserve. The banksters took insurance on exactly what (which you say, I think, alleviates their eserve problem and abetted the lack of seasoning of the loans…what obligation did they take insurance on (from a regulated insurance co)? If refinances and defaults are known and accepted risks by the trust bens, what else was there to insure, what risk was there created by a lack of reserve? Or are you saying the banksters were allowed to take insurance in lieu of having reserves, and even if so, for what did they need the reserves when refi and default risks went with the territory (except to the extent of any guarantees as to default, like FNMA’s?)

    The reserve requirement was designed as a buffer to defray the refinance cost to the originating bank.

    What cost? They borrowed the money (unless they embezzled the pension funds’), likely, at X and sold it at Y to the consumer. Then they sold the loan, and unless the potential refi consideration were part of the strike price for the loan to the loan buyer, the originator incurred no loss (I mean I doubt ABC took less than he had in mind for a loan simply because the risk of refi existed). How they moved these loans from A to D and the prices paid at each alleged sale imo is a whole ‘nother story given that the cost of money changes by the second and thus impacts sales prices of loans. As you likely know, “par” is what is in constant flux. Imo, there is NO way to move notes from A to D in the allotted time, let alone amass them, bundle, determine strike prices, and get the money at each alleged sale. They could use promises to pay, but still, the notes had to move physically, did they not? They could even sell forward, but still there are untold difficulties moving that many notes that many times in such a limited time frame.

    (For anyone who doesn’t know, a refinance, that is, paying off a loan early, diminishes one’s anticipated return. The amt of refinances is only somewhat predicatable, not a lot I would think because it depends on a number of things, mostly current note rates v available loan rates, i..e., if an existing loan portfolio has loans in it at an average of 7% and rates go to 5, many loans will be refinanced.)

    “After the Graham, Leach, Blighley Act, once Glass-Steagall was destroyed, both political parties and the regulatory agencies dismissed the reserve requirement and the time the originating banks had to hold onto the loan before it was sold off to unsuspecting third parties.”

    By the second part of that, I take it to mean they did away with the seasoning requirement in selling loans to secn trusts. Jerks and dupes! The other day, I referenced WF’s actual arguments against
    the seasoning requirement, which I took as all bs and further felt that anyone relying on those arguments was “insincere” in having the seasoning requirement in the first place…..another dog and pony show. (For those who don’t know, a seasoning requirement is to ascertain (as best as possible) that the payments will actually be made on a loan for at least a while; the loan must be ‘seasoned’ with x payments made prior to sale). I personally believe they took that insurance to avoid the seasoning requirement, but who ended up benefitting? Remember, AIG had to waive subrogation, meaning AIG could not recover its insurance losses from anyone, including the loan owner and the borrower. As a reminder, if you get in an accident that was someone else’s fault, an insurance company will be subrogated to get back whatever they had to pay out – say medical costs. But not so AIG – they took that insurance or bets without the right to recover any loss (for which their former shareholders must still ‘hold a grudge’. (But I still don’t understand the reserve requirement in the absence of a guarantee to the loan buyers.Why would they need reserves when they sold all the loans?)

  20. @ Shadowcat,

    I believe that, when you use fraud to foreclose on active-duty soldiers engaged in combat missions, you should be executed with a nail gun.

    Of course, a nail gun is usually employed to nail “studs”; as the victim was a Wall Street Banker, this is probably the reason why it took fifteen tries to hit the mark.

    I also believe central bankers should familiarize themselves with the lyrics from “Jump you F@$&ers”, by Gene Burnett, even if they are aided in their inability to defy gravity by those dedicated to disposing of the trash.

    Of course, it may also be true that the banking elites are disposing of the witnesses against them, but I prefer to think our special forces are cleaning house.

    Insofar as Jade Helm: I have no idea.

    I do, however, fantasize now-and-again, the federal presence will be utilized once the Bushes are pruned and brought into account as war criminals.

    After all, I can dream, can’t I?

    And, it seems likely the militias will support the first family of war crimes, and, that will likely result in streams of the misinformed coming to Texas to aid their idols.

    Of course, some reading this will instantly vilify me and then claim I am a democrat… No such thing… I am instead, fed up with both puppets of the international central banking fraud.

  21. Michael, Shadow completely agree. We’re now in the pretender mender phase Garfield likes to say and i have a front row seat in my case. The way MERS was legitimized though was because of efficiency and that paper records were archaic. They got caught w their tax “savings” but now they pay taxes and pay supposedly giant settlements that amount to a giant bribe. These same bastards are pushing through a national database for the boom down the road it seems. A key imo is to show how corrupt the data is as well as the financial flow that could never have happened with a legitimate information system or a strong paper trail. All foreclosures might need to be scratched but we gotta get over the too big to fail fear card they use while they continue with their manufactured disasters to salvage our home/community wealth as a whole and focus on real businesses, neighborhoods and good jobs.

  22. GO’S BACK TO 1981, WOW REALLY. HUM

  23. D) Act of 1968 spun Fannie Mae into a federally sponsored quasigovernmental
    corporation,109 the new “quasi-governmental”110 Fannie Mae
    had a new power: issuing GSE MBS. Section 1719(d) of the HUD Act
    provides Fannie Mae with this power:

    (d) To provide a greater degree of liquidity to the mortgage
    investment market and an additional means of financing its
    operations under this section

    , the corporation is authorized to
    set aside any mortgages held by it under this section, and,
    upon approval of the Secretary of the Treasury, to issue and
    sell securities based upon the mortgages so set aside.

    Securities issued under this subsection may be in the form of
    debt obligations or trust certificates of beneficial interest, or
    both. Securities issued under this subsection shall have such
    maturities and bear such rate or rates of interest as may be
    determined by the corporation with the approval of the
    Secretary of the Treasury.111
    Thus, Fannie Mae could purchase “mortgages from banks, thrifts,
    insurance companies and mortgage banking companies, [package them into
    pools], and sell[] securities issued in its own name backed by these
    mortgage pools.”112 In 1981, Fannie Mae issued its first GSE MBS.113 By

  24. I have the schedules of What MERS Corp Members colluded and sold .
    D

    No way to pay 680 + trillion in derivative lossees.

    Make New Friends… Silver and Gold.

  25. Private MBS under 250 are not rerequired to register with the SEC and thereby skirt the regulations.

    Frigging Right! No Oversight!

  26. @johngault, Hammertime,

    The Mers, I believe, is the phony gambling parlor that is not unlike the one that was created in the movie, “The Sting”.

    The fraudsters populated the phony gambling parlor (the MERS) with “Senior Vice-Presidents” who used their $25.00 rubber stamps to counterfeit the titles to the “loans”.

    (In fact, in order to gain SVP status, it is now proven, as a matter-of-fact, that anyone wishing to participate in this fraud merely had to pay $25.00 and they were then given an actual “MERS SVP”, stamp that was, actually made out of rubber).

    The derivatives are unreported and unregulated, as I said.

    I believe the MERS was used by the participants to this fraud to track the revenue streams once the “loans” were described as in default.

    By now, unless you live under a rock, these revenue streams have been described as “Tranches”; Michael Lewis, in “The Big Short” describes these tranches as different floors in a vertical tower. Neil Barofsky, in “Bailout” describes these tranches as “pitchers and glasses of beer”.

    Anyway, some have said the “loans” have been “dematerialized (copied to disc)” and then “re-hypothecated (copied, ie counterfeited an infinite number of times)”.

    In fact, I said it:

    Counterfeit Fortunes for Criminal Fraudsters and the Wicked Switch of Wall Street
    Petition by Michael Keane

    (Strangely, someone named Stephen Biel has managed to change the name of my petition on the “moveon.org” website and I have yet to get to the bottom of how or why).

    In the meantime, this is why, contrary to the laws that govern the trusts, non-performing loans are being claimed as entered into the trusts long after the trust had been closed…

    THE BANKERS ARE COLLECTING ON THEIR BETS, ISSUED THROUGH THE MERS IN ORDER TO REDEEM THEIR INSOLVENCY THAT THEY CREATED WHILE ENGAGED IN SUBPRIME LENDING.

    Of course, this is also why the DTC and DTCC refuse to reveal any of these derivatives bets and I also feel it is the reason Senator Menendez was targeted by these filth due to his stated intention to get to the bottom of derivatives trading.

  27. Yup keep it simple the fraud is right in front of us. Someone else mentioned counter party risk and lo and behold the bogus documentation on supposed verification of debt refers to fha and va that doesn’t apply unless u go back 10 yrs. And who is cc’d counter party risk management. Unfriggin believable.

  28. 79. In holding that the demand notes in question were securities, the Court observed that
    demand notes are not like any of the enumerated categories of instrument and thus fell back upon
    the traditional factors set forth in SEC v. W. J. Howey Co., 328 U.S. 293 (1946): “[t]he Co-Op sold
    the notes in an effort to raise capital for its general business operations, and purchasers bought them
    in order to earn a profit;” there was “a plan of distribution, the Co-Op offered the notes over an
    extended period to its 23,000 members, as well as to nonmembers, and more than 1,600 people held
    notes when the Co-Op filed for bankruptcy;” further “advertisements for the notes here
    characterized them as ‘investments’;” and finally, “there were no risk-reducing factor to suggest that
    these instruments are not in fact securities. . . the notes are uncollateralized and uninsured.” Reves,
    494 U.S. at 61.
    2009] IN DEFENSE OF PRIVATE-LABELMORTGATE-BACKED SECURITIES 841
    mortgage.80 The subsequent pooling and selling of participation interests in
    the mortgage convert the note into a security subject to federal law because
    it is fundamentally an investment vehicle.81 In Zolfaghari v.
    Sheikholeslami,82 the Fourth Circuit overturned the lower court’s finding
    that private-label MBS were not securities, stating:
    A note secured by a mortgage on a single home is typically
    not a security because the return on investment therefrom is
    not derived from the entrepreneurial or managerial efforts of
    others. However, participation interests in a managed pool of
    mortgage notes are securities . . . . Such interests in
    amalgamated mortgage notes are securities because any
    profits realized are derived from the managerial efforts of
    those who run the pool and make such decisions as
    determining which mortgages shall be in the pool, how the
    individual notes will be serviced and managed, and other fund
    decisions.83
    Likewise, a mortgage pass-through is a security. For example:
    [A] two-year note an insurance company receives for its $10
    million loan to a corporation is almost certainly not a security.
    But, if the insurance company then causes the $10 million
    note to be divided into 10,000 notes each of $1,000 face value
    which are sold to the public, those 10,000 notes are just as
    certainly securities. Indeed, the $10 million note would be a
    security when owned by the insurance company if the
    insurance company had, at the time the insurance company
    was irrevocably committed to make the loan, intended to
    distribute the 10,000 notes to the public.84
    Thus, to answer the question first posed: are private-label MBS really
    80. LORE, supra note 67, at 4–3.
    81. Id. at 4–10.
    82. 943 F.2d 451 (4th Cir. 1991).
    83. Id. at 455 (citations omitted).
    84. ARNOLD S. JACOBS, 5BLITIGATION AND PRACTICE UNDER RULE 10B-5 § 38.03[dd][ii] at 2-
    386 (release # 26, 6/1991), cited in Realtek Indus., Inc. v. Nomura Secs., 939 F. Supp. 572, 580–81
    (N.D. Ohio 1996). The Realtek court notes:
    Interestingly, at least two courts have held that under certain circumstances, a
    fractional undivided equity interest in a pool of mortgages—which is what the
    participation certificates were intended to be—is not a security for purposes of
    Section 10(b)/Rule 10b-5 claims. . . . Without question, however, the leading legal
    experts concur that mortgage-backed “securitized” instruments sold as investments
    should be regarded as “securities,” which fall under the protection of the federal
    securities acts.
    Realtek Indus., 939 F. Supp. at 581 n.6 (citations omitted).
    842 FLORIDA LAW REVIEW [Vol. 61
    securities? Yes, because they are more than notes secured by mortgage;
    they are a participation interest in the cash flows from a pool of such notes,
    the profitability of which is made possible by the efforts of others.85

  29. It seems… The U.S. without the Federal Reserve has reluctly entering into new trade and currency agreements.

    The Federal Reserve blew off Congress demands for audit.

  30. Michael… You seem well informed.
    Do you think Jade Helm is in preparation for an upcoming financial collapse?

  31. @ johngault,

    I also meant to say:

    The “Bets” (derivatives) are currently beyond any regulation or reporting to the public.

    The two agencies designed to report and regulate are the DTC and DTCC.

    Each agency is owned and operated by the private banking cartel that also owns and operates the intentionally mislabeled “Federal Reserve”.

    So… We The People either believe we should fold the tent on our form of government and thereby abandon altogether the rule of law, or…

    Force an accounting and reckoning with those who are bent upon fraudulently manipulating our currency for the past one hundred years…

    Of course, it is a lot more sexy to go to the caves with mental defectives like Glenn Beck, armed to the teeth and prepared to meet the dystopian, zombie Apocalypse…

    You have my blessing… if you need me, I will be on my boat fishing.

  32. @ johngault,

    Sorry just got back. The short answer is: “You are over-thinking it”.

    AIG was used specifically, because, as an insurance company, THEY HAD NO CAPITAL RESERVE REQUIREMENT.

    Mortgage companies, on the other hand, have a regulatory requirement to set aside a percentage of the loan issued, usually 8 %, against the day the loan is REFINANCED.

    AGAIN: REFINANCED.

    The reserve requirement was designed as a buffer to defray the refinance cost to the originating bank. (ironically, a refinance, not unlike a foreclosure, also denies revenue to the HDC on the debt; of course We all now realize there are no true HDCs and the foreclosures are predicated upon stripping pension plans (investors) and borrowers alike.

    After the Graham, Leach, Blighley Act, once Glass-Steagall was destroyed, both political parties and the regulatory agencies dismissed the reserve requirement and the time the originating banks had to hold onto the loan before it was sold off to unsuspecting third parties.

    Make NO MISTAKE: Wall Street, in collusion with those in government bent on protecting the fallacious “Federal Reserve” and the other cancerous blights that are central banking: the IMF and World Bank, have created a deliberate “Boom-and-Bust Cycle”.

    the Boom : Subprime Lending.
    the Bust : Counterfeit titles, derivatives bets and disposal of the evidence through fraudclosure.

    The banks are presently doing a brisk business in cleaning titles through “in-house” divisions dedicated specifically to that task.

  33. So they used my retirement to fund loans they set up to fail?
    If the loans are performing… Who looses the 10 to 1 bet?
    Me.. The taxpayer?
    And if the loan defaults who takes the losses?
    Me….the wanna be retiree?

    Who Profits either way?

    Four letters….FEMA
    As Mrs wanna be President puts it…….
    Attitude Adjustments for Americans

    Jade Helm

  34. Read Carefully!

    “They are trying to foreclose and bankrupt the Estate”!

    Why?
    You already know the answer….
    They misrepresented the contract as an inducement to sign.

    Shove it down their throats.

  35. 5 year shorts
    False defaults every 5 years?

  36. And it’s not every 30:yrs it will be 7-10 this time around for the next economic disaster bets they’ll be cashing in on. In my neck of the woods we’re fighting gentrification. My property went from $300k underwater in ’10 supposedly to +200k possibly. How the he’ll does that happen? i put together info that shows same pattern throughout CA and other states. That we’re all still underwater and foreclosure is inevitable is another bias we need to destroyed along with there is no crisis. So in CA we ha’ve gentrification and speculation like the good old days in WA we have seniors, veterans targeted, the NJ hot spot and anything goes in FL and the south. But everybody is still a chearleader for their red/blue team.

  37. Actually John Gault thanks for post on Michael Keane

  38. Michael Keane u nailed it! The example of fantasy fooddball is perfect. The note, appraisals etc are important in our individual cases but just the tip of the iceberg. MERS is key as well but not a matter of their authority etc that takes us back to the court trap. It’s the fraud we need to show w facts. A guy posts on MERS and shows they have their own rules on closing they don’t follow. Their own rules are corrupted along w our corrupted property records and their own corrupted data. In case they actually MADE UP a record to claim tbey complied with city that city so far has allowed them to get away with so far and I’m dealing w in court along w fraudulent sale on 11th or 16th chase’s replacement thug couldn’t get right.

    Trespass and Judge Keane story also hit home. After mayor, council along w ag were singing kumbaya on settlements I mentioned unlawful foreclosure in my case and hearing officer went off on me as wanting a bailout! And city had no money a variation on phony debt crisis most Americans eat up and have fits over while banks rob us blind.

    When I brought up mayor’s efforts to different hearing officer his answer was “that’s nice” and I was denied MY RENTAL INCOME that would have allowed me to defend my home, take care of my parents and survive.

    Now the city wants me to go back to first hearing officer who is supposedly negotiating for homeowners!

    FBI etc has ignored complaints but now may be the time after felony on LIBOR?

  39. Somebody tell me I am Wrong. Please!

    One half of Irrevocable Living Estate
    Who ….. Never Mind…
    Reverse that.

    Many Unconventional Blessings to All

  40. What you don’t know can’t hurt you…. Right?

  41. Michael keane said:

    “Right now, the banks are doing precisely that, “COUNTERFEITING AN OWNERSHIP INTEREST TO THE TITLES TO OUR PROPERTIES.

    THEY ARE DOING SO IN ORDER TO PLACE BETS AGAINST THE MARGIN… INSURANCE “SWAPS”, AKA “DERIVATIVES”.

    The banks are counterfeiting their ownership of title and then placing bets the borrowers will default.

    This type of “bet” against the margin is called a “short sale”.
    When the person placing the bet doesn’t own the underlying collateral (the title to your house, for example), the “bet” is called a “NAKED SHORT SALE”.

    In other words, the bank has “no skin” in the game.”

    I’m still ‘troubled’ by AIG’s participation in this. Since you’re on this ‘part’ of the deal, maybe you can explain further…? As a regulated insurer, wouldn’t it be true that AIG could only insure ownership interests (v ‘naked short sales’)? If that’s true, than how did they insure banksters who had sold the loans already (or then did after insuring)? How did banksters (or anyone who didn’t own the loans) manage to be the bens of regulated insurance?

    Did AIG take what was merely BETS?

    Did the bankster withhold the loans in order to (falsely) claim ownership interest with AIG? Why did AIG put right-your-own-insurance terminals in lender offices (when those loans were headed to secn trusts or at least their sale was a given)?
    If the loans were sufficiently identified in the PSA, then the loans were bought and sold by way of that agreement, were they not?. “All” that was missing was the delivery. In the meantime, in that state, imo no one had the right to enforce, the banksters didn’t have an insurable interest (having alienated theirs by sale), and the trusts had (merely) security interests pursuant to article 9 by way of the purchase and sale agreement (and the payment for the loans).

    Since the PSA’s are purchase and sale agreements (and stand as evidence of those sales to the extent the loans are identified sufficiently), what’s up with a “mers” assignment at this date or ever?
    They’ve already been sold (disregarding arguendo NG’s position)

    Mers, unless there’s something monstrous we don’t know about, has no authority or right to ‘assign’ a note (even if mers were in possession of the note)*, esp one which has already been sold to the transferee pursuant to a prior agreement, the psa. (As thee ben,
    Mers WOULD need to assign the coll instrument, but even that only works if mers were not obligated to assign the coll instrument to each new note owner – if any – along the way). Was mers made thee ben to make the sale incomplete, somehow giving the banksters an insurable interest (AIG) or did AIG just take bets for parties with no insurable interest? Is there another possibility?

    *if I get poss of Rhonda’s note, imo I yet have no right to sell it to anyone, at least not these notes because my possession, by virtue of the language in the notes, doesn’t give me the right to payment. I also didn’t take it by transfer even if I have it by negotiation. “mers” has possession of nothing – their claim has been to poss by their straw officer, generally the servicer’s employee, and that’s when Hultman didn’t hand out alleged corporate resolutions to the likes of employees
    of LPS (for instance), whose deserved consignment to the ether is apparently over, and they’re back in business, just like mers, with no ramifications whatsoever for all the robo-signing done by them in mers’ name, about which I’m still incredulous and can’t imagine why everyone else isn’t if not.

    if NG is right, it’s a real cluster-X: the investors money was used to fund loans, the trusts (entities) themselves had no money to buy loans, then or now, and the trusts with no nuthin in them are being now assigned the loans (incl the biggie, the note, by a party who has no right to sell and assign the note that we know of) for whatever can be garnered by lawful remedy against the note makers as if the trusts had bought the loans when they can’t have if the funds of the individuals (in pension funds, etc) were used to fund them.

    A lender may assign a loan to anyone it wants, it’s true imo (but he can’t pretend there is current consideration being paid when that’s a lie).** But if one is no longer the lender (in my theory, not NG’s, for clarity), he has nothing to assign now, certainly no note which he sold years ago to the trust to which he’s claiming to now assign. He doesn’t need to assign the right and interest, already having done that essentially in the psa – he needs to deliver and not pretend it’s for money when the money was already paid.
    He sold it and delivered it or he didn’t. If he did the former, he had no insurable interest, at least not with a regulated insurer like AIG (to my knowledge). If the psa, with its times certain for performance just like the law governing these trusts, is not a purchase and sale agreement (then what is it?), the trusts sure can’t take the loans now in violation of the psa and the law governing the trusts. The current assignments (read attempts at assignment) unquestionably demonstrate the transfers are current events. Not ONE such assignment exists prior to the borrower’s default. So it’s mine while he’s paying and yours when he’s not? Is there another way to see this?

    **the consideration cited in these assignments isn’t itself necessarily cited as a current event (it’s possible it could, arguendo, refer to prior payment), but there’s NO doubt the alleged assgmt itself is, and further, that the assignments are being executed as if in mers own right.

    This isn’t working. We have to argue the language in the note for enforcement, and as long as mers is in the act and the actors execute these bogus assignments and ny trust law is ignored, what the hell is our ammo?
    We’re not allowed to mediate with the party who apparently is going to eat it after the banksters either took bets or pretended ownership. Last I knew, no one or at least few had any principle reduction after the banksters took millions and millions of dollars to keep us in our homes (that WAS the purpose of hamp, etc., right?). We made deals (and ones the banksters were legally charged with seeing we didn’t make). okay. The $ hit the fan, mostly by the banksters bs, not our avarice – theirs. Then they got paid to keep us in our homes where possible and they didn’t do it. They lie, cheat, and steal and are undermining the law of this country. Hultman is a Benedict Arnold in my book.
    Who really got bailed out – AIG, and thus all the banksters who either pretended to own the loans or made bets with a supposedly regulated insurer (AIG was licensed to take bets?! That’s actually a question)
    I see I’ve gone on my anti mers crusade, but we’re toast imo as long as it’s around. I really would appreciate michael keane’s, or anyone’s, take on my questions.

    MERS HAS TO GO – Refuse to sign a Mers mortgage

  42. go and down loan this , good reading and info…..

    ARTICLES
    IN DEFENSE OF PRIVATE-LABEL MORTGAGE-BACKED
    SECURITIES
    Brent J. Horton*

    I. INTRODUCTION ………………………………………………………………..828
    II. MORTGAGE SECURITIZATION …………………………………………….835
    A. Types of Private-Label MBS ………………………………………..835
    B. Are Private-Label MBS Really Securities? …………………….838
    C. Why Securitize Mortgages?………………………………………….842
    III. THE DEVELOPMENT OF GSEMBS …………………………………….843
    IV. THE DEVELOPMENT OF PRIVATE-LABEL MBS …………………….846
    A. Secondary Mortgage Market Enhancement
    Act of 1984………………………………………………………………..848
    1. Allowing Forward Trading of Private-Label
    MBS…………………………………………………………………….849
    2. Exempting Private-Label MBS from State
    Blue Sky Laws ………………………………………………………853
    3. Allowing National Banks to Invest in Private-Label
    MBS…………………………………………………………………….854
    B. Rule 415 Shelf Registration………………………………………….856
    C. REMIC Provisions of the Tax Reform Act of 1986 ………….857
    V. GOVERNMENT INTERFERENCE WITH PRIVATE-LABEL MBS …..859
    A. GSEs Relegate Private-Label MBS Issuers to
    Securitizing Risky Mortgages……………………………………….859
    1. Payment-to-Income and Loan-to-Value Ratios ………….861
    2. Jumbo Mortgages…………………………………………………..862
    B. Impact of the Community Reinvestment Act……………………863
    VI. A CASE STUDY: GMACMORTGAGE…………………………………..865
    A. The Impact of SMMEA and REMIC on GMAC……………….865
    B. The Impact of CRA on GMAC………………………………………867
    C. The Fall of GMAC………………………………………………………868
    D. The Impact of Mark-To-Market…………………………………….871
    E. Systemic Financial Meltdown ………………………………………872
    * Assistant Professor of Legal & Ethical Studies, Fordham University; Corporate LL.M.,
    New York University College of Law; J.D., Syracuse University College of Law. Thank you Kelley
    and all my colleagues at Fordham University for their help and support.
    828 FLORIDA LAW REVIEW [Vol. 61
    VII. WHERE DO WE GO FROM HERE? ……………………………………….874
    A. Rolling Back the Privatization of MBS ………………………….874
    B. Legislating Aversion to Risk—A Risky Proposition…………876
    C. The Way Forward……………………………………………………….879
    VIII. CONCLUSION ………………………………………………………………….881
    ABSTRACT
    The House Financial Services Committee recently concluded that lack
    of regulation of private-label mortgage-backed securities (MBS) is to
    blame for the unsustainable housing bubble that peaked in mid-2006—and
    consequentially, the economic crisis that ensued when the bubble burst. It
    is true that the Secondary Mortgage Market Enhancement Act of 1984
    largely exempted private-label MBS from securities regulation, however,
    this Article concludes that lack of regulation of private-label MBS did not
    cause the unsustainable housing bubble and resulting economic crisis. On
    the contrary, government interference caused the unsustainable housing
    bubble and resulting economic crisis through government sponsored
    entities competing in the MBS marketplace coupled with federal housing
    policy, particularly the Community Reinvestment Act, which encouraged
    banks to take undue risk.
    I. INTRODUCTION
    In the middle of the sixteenth century, the tulip arrived in Western
    Europe.1 Detailing the flower’s rise to notoriety, Charles MacKay writes:
    The tulip—so named, it is said, from a Turkish word,
    signifying a turban—was introduced into western Europe
    about the middle of the sixteenth century. Conrad Gesner,
    who claims the merit of having brought it into repute,—little
    dreaming of the commotion it was shortly afterwards to make
    in the world,—says that he first saw it in the year 1559, in a
    garden at Augsburg, belonging to the learned Counsellor
    Herwart, a man very famous in his day for his collection of
    rare exotics. The bulbs were sent to this gentleman by a friend
    at Constantinople, where the flower had long been a favourite.
    In the course of ten or eleven years after this period, tulips
    were much sought after by the wealthy, especially in Holland
    and Germany. Rich people at Amsterdam sent for the bulbs
    direct to Constantinople, and paid the most extravagant prices
    for them.2
    1. CHARLES MACKAY, EXTRAORDINARY POPULAR DELUSIONS AND THE MADNESS OF CROWDS
    92 (Three Rivers Press 1980) (1841).
    2. Id.
    2009] IN DEFENSE OF PRIVATE-LABELMORTGATE-BACKED SECURITIES 829
    As the demand for tulips increased so too did their price.3 And as the
    price increased, “[r]ich people no longer bought the flowers to keep them
    in their gardens, but to sell them again at cent per cent profit.”4 Early
    investors got rich, and tulips became like “golden bait” hung out before the
    people.5 The rich, the middle class, the poor—they all thought that the
    passion for tulips would last forever and that investing in tulip bulbs could
    only result in positive cash returns:
    Nobles, citizens, farmers, mechanics, seamen, footmen, maidservants,
    even chimney-sweeps and old clotheswomen,
    dabbled in tulips. People of all grades converted their property
    into cash, and invested it in flowers. Houses and lands were
    offered for sale at ruinously low prices, or assigned in
    payment of bargains made at the tulip-mart. Foreigners
    became smitten with the same frenzy, and money poured into
    Holland from all directions.6
    At the height of the tulip price bubble, a Semper Augustus bulb sold for
    5,500 florins, the equivalent of more than 172 fat swine.7 Eventually, the
    more prudent realized that the extraordinary prices could not last, and that
    the bubble must eventually burst.8 “It was seen that somebody must lose
    fearfully in the end.”9 “[T]his [conviction] spread, [tulip] prices fell, and
    never rose again.”10 Entire fortunes were lost—traded away for a few tulip
    bulbs which now no person would buy.11
    3. Id. at 94.
    4. Id. at 98. A market for the sale of tulip futures was established on the Stock Exchange of
    Amsterdam. Id. at 97. The Dutch are credited with having the first modern financial system,
    including a securities market. See Christian C. Day, Paper Conspiracies and the End of All Good
    Order Perceptions and Speculation in Early Capital Markets, 1 ENTREPRENEURIAL.BUS. L.J. 283,
    285–86 (2006).
    5. MACKAY, supra note 1, at 97.
    6. Id. at 97–98.
    7. Id. at 94–95. To put the price in context, four fat oxen were worth 480 florins, eight fat
    swine were worth 240 florins, twelve fat sheep were worth 120 florins, two hogsheads of wine were
    worth 70 florins, four tons of beer were worth 32 florins, two tons of butter were worth 192 florins,
    1,000 pounds of cheese were worth 120 florins, a complete bed was worth 100 florins, a suit of
    clothes was worth 80 florins, and a silver drinking cup was worth 60 florins. Id. at 95.
    8. Id. at 98.
    9. Id.
    10. Id.
    11. Id.; see Theresa A. Gabaldon, John Law, with a Tulip, in the South Seas: Gambling and
    the Regulation of Euphoric Market Transactions, 26 J. CORP. L. 225, 229 (2001) (“[T]he price
    bubble grew and grew and grew some more, eventually bursting and paupering many of those left
    holding a position in the relevant ‘asset.’”). But it should be noted that some scholars believe that
    the pricing of tulips in the seventeenth century was a rational response to their rarity, and that the
    price swings reported by MacKay are greatly overstated. Day, supra note 4, at 288–89 (arguing that
    “[l]ittle economic dislocation resulted from tulip speculation . . . [and that t]he surviving morality
    tales stem from the Dutch government’s campaign against such speculation.”); Peter M. Garber,
    830 FLORIDA LAW REVIEW [Vol. 61
    Economists cite the tulip bubble as the first example of a price bubble,12
    “a financial hysteria in which something . . . is subject to wild price
    escalation, eventually culminating in a total collapse of prices wiping out
    those unfortunate enough to have bought at, or held to, the end of the
    game.”13 Though the tulip was the first bubble, it would not be the last.14 In
    recent years, the United States witnessed the emergence of yet another
    price bubble—this time in housing.15 Constantly increasing prices meant
    that homes “came to be purchased only for resale after their price had
    risen.”16 What distinguished this recent housing bubble from earlier price
    bubbles was that lenders used mortgage securitization to pool mortgages
    they originated into private-label mortgage-backed securities (MBS).17
    Lenders packaged these mortgages into a pool, and offered coupons that
    entitled each holder (an investor) to a share in the cash flows from the
    underlying mortgages (payments of principal and interest by the
    borrowers).18 The proceeds of the sale were then used to originate more
    mortgages, perpetuating the cycle and further inflating the housing
    bubble.19
    The availability of easy credit for home purchasers made possible by
    the added liquidity fueled the housing bubble by increasing demand and
    consequently increasing housing prices. But these purchasers—many of
    whom agreed to adjustable rate mortgages (ARMs) or mortgages with low
    teaser rates that expired—soon found themselves unable to make
    payments.20 When the resulting foreclosures flooded the market, the
    Tulipmania, 97 J. POL. ECON. 535, 558 (1989) (“[T]he bulb speculation was not obvious madness,
    at least for most of the 1634–37 ‘mania.’”).
    12. See Steven L. Schwarcz, Protecting Financial Markets: Lessons from the Subprime
    Mortgage Meltdown, 93 MINN. L. REV. 373, 382 (2008) (comparing the tulip bubble to the recent
    housing bubble).
    13. Arthur Allen Leff, The Leff Dictionary of Law: A Fragment, 94 YALE L.J. 1855, 2216
    (1985).
    14. The tulip bubble was followed by the South Sea bubble and the Florida land bubble to
    name just a couple examples. Id.
    15. See Alan Greenspan, Editorial, The Roots of the Mortgage Crisis, WALL ST. J., Dec. 12,
    2007, at A19 (likening the housing bubble to the tulip bubble).
    16. ROBERT S. MCELVAINE, THE GREAT DEPRESSION 44 (1984). His words describing the
    irrational risk-taking in the run-up to the Great Depression apply equally well today.
    17. MARK ZANDI, FINANCIAL SHOCK 41–43 (2009).
    18. David Abelman, The Secondary Mortgage Market Enhancement Act, 14 REAL EST. L.J.
    136, 136–37 (1985).
    19. Id. at 137.
    20. Nick Timiraos, Banks and Investors Face ‘Jumbo’ Threat, WALL ST. J., Jan. 28, 2009, at
    C1 (stating that the current subprime delinquency rate exceeds 17%). Payments adjusting upward
    could be due to adjustable rate mortgages (ARMs) or a balloon payment at the end of the loan. See
    NATIONAL CREDIT UNION ADMINISTRATION,STATEMENT ON SUBPRIME MORTGAGE LENDING 1 (2007),
    available at http://www.ncua.gov/letters/2007/CU/St-SubprimeMortgageLending.pdf. These nontraditional
    mortgages are the result of the Alternative Mortgage Transactions Parity Act (AMTPA).
    Pub. L.

  43. 11 U.S. Code § 741 – Definitions for this subchapter

    Current through Pub. L. 114-19. (See Public Laws for the current Congress.)

    US Code

    Notes

    prev | next

    In this subchapter—

    (1) “Commission” means Securities and Exchange Commission;

    (2) “customer” includes—
    (A) entity with whom a person deals as principal or agent and that has a claim against such person on account of a security received, acquired, or held by such person in the ordinary course of such person’s business as a stockbroker, from or for the securities account or accounts of such entity—
    (i) for safekeeping;

    (ii) with a view to sale;

    (iii) to cover a consummated sale;

    (iv) pursuant to a purchase;

    (v) as collateral under a security agreement; or

    (vi) for the purpose of effecting registration of transfer; and

    (B) entity that has a claim against a person arising out of—
    (i) a sale or conversion of a security received, acquired, or held as specified in subparagraph (A) of this paragraph; or

    (ii) a deposit of cash, a security, or other property with such person for the purpose of purchasing or selling a security;

    (3) “customer name security” means security—
    (A) held for the account of a customer on the date of the filing of the petition by or on behalf of the debtor;

    (B) registered in such customer’s name on such date or in the process of being so registered under instructions from the debtor; and

    (C) not in a form transferable by delivery on such date;

    (4) “customer property” means cash, security, or other property, and proceeds of such cash, security, or property, received, acquired, or held by or for the account of the debtor, from or for the securities account of a customer—
    (A) including—
    (i) property that was unlawfully converted from and that is the lawful property of the estate;

    (ii) a security held as property of the debtor to the extent such security is necessary to meet a net equity claim of a customer based on a security of the same class and series of an issuer;

    (iii) resources provided through the use or realization of a customer’s debit cash balance or a debit item includible in the Formula for Determination of Reserve Requirement for Brokers and Dealers as promulgated by the Commission under the Securities Exchange Act of 1934; and

    (iv) other property of the debtor that any applicable law, rule, or regulation requires to be set aside or held for the benefit of a customer, unless including such property as customer property would not significantly increase customer property; but

    (B) not including—
    (i) a customer name security delivered to or reclaimed by a customer under section 751 of this title; or

    (ii) property to the extent that a customer does not have a claim against the debtor based on such property;

    (5) “margin payment” means payment or deposit of cash, a security, or other property, that is commonly known to the securities trade as original margin, initial margin, maintenance margin, or variation margin, or as a mark-to-market payment, or that secures an obligation of a participant in a securities clearing agency;

    (6) “net equity” means, with respect to all accounts of a customer that such customer has in the same capacity—
    (A)
    (i) aggregate dollar balance that would remain in such accounts after the liquidation, by sale or purchase, at the time of the filing of the petition, of all securities positions in all such accounts, except any customer name securities of such customer; minus

    (ii) any claim of the debtor against such customer in such capacity that would have been owing immediately after such liquidation; plus

    (B) any payment by such customer to the trustee, within 60 days after notice under section 342 of this title, of any business related claim of the debtor against such customer in such capacity;

    (7) “securities contract”—
    (A) means—
    (i) a contract for the purchase, sale, or loan of a security, a certificate of deposit, a mortgage loan, any interest in a mortgage loan, a group or index of securities, certificates of deposit, or mortgage loans or interests therein (including an interest therein or based on the value thereof), or option on any of the foregoing, including an option to purchase or sell any such security, certificate of deposit, mortgage loan, interest, group or index, or option, and including any repurchase or reverse repurchase transaction on any such security, certificate of deposit, mortgage loan, interest, group or index, or option (whether or not such repurchase or reverse repurchase transaction is a “repurchase agreement”, as defined in section 101);

    (ii) any option entered into on a national securities exchange relating to foreign currencies;

    (iii) the guarantee (including by novation) by or to any securities clearing agency of a settlement of cash, securities, certificates of deposit, mortgage loans or interests therein, group or index of securities, or mortgage loans or interests therein (including any interest therein or based on the value thereof), or option on any of the foregoing, including an option to purchase or sell any such security, certificate of deposit, mortgage loan, interest, group or index, or option (whether or not such settlement is in connection with any agreement or transaction referred to in clauses (i) through (xi));

    (iv) any margin loan;

    (v) any extension of credit for the clearance or settlement of securities transactions;

    (vi) any loan transaction coupled with a securities collar transaction, any prepaid forward securities transaction, or any total return swap transaction coupled with a securities sale transaction;

    (vii) any other agreement or transaction that is similar to an agreement or transaction referred to in this subparagraph;

    (viii) any combination of the agreements or transactions referred to in this subparagraph;

    (ix) any option to enter into any agreement or transaction referred to in this subparagraph;

    (x) a master agreement that provides for an agreement or transaction referred to in clause (i), (ii), (iii), (iv), (v), (vi), (vii), (viii), or (ix), together with all supplements to any such master agreement, without regard to whether the master agreement provides for an agreement or transaction that is not a securities contract under this subparagraph, except that such master agreement shall be considered to be a securities contract under this subparagraph only with respect to each agreement or transaction under such master agreement that is referred to in clause (i), (ii), (iii), (iv), (v), (vi), (vii), (viii), or (ix); or

    (xi) any security agreement or arrangement or other credit enhancement related to any agreement or transaction referred to in this subparagraph, including any guarantee or reimbursement obligation by or to a stockbroker, securities clearing agency, financial institution, or financial participant in connection with any agreement or transaction referred to in this subparagraph, but not to exceed the damages in connection with any such agreement or transaction, measured in accordance with section 562; and

    (B) does not include any purchase, sale, or repurchase obligation under a participation in a commercial mortgage loan;

    (8) “settlement payment” means a preliminary settlement payment, a partial settlement payment, an interim settlement payment, a settlement payment on account, a final settlement payment, or any other similar payment commonly used in the securities trade; and

    (9) “SIPC” means Securities Investor Protection Corporation.

  44. The accounting treatment of fees associated with loans
    that will be securitized should be in accordance with FAS 91, “Accounting
    for Nonrefundable Fees and Costs Associated with Originating or Acquiring
    Loans and Initial Direct Costs of Leases” and FAS 65, “Accounting for Certain
    Mortgage Banking Enterprises.” In accordance with these statements’
    standards for pools of loans that are held for sale, the loan origination fees
    and direct loan origination costs should be deferred and recognized in
    income when the loans are sold.
    4 At the time of this writing there are a number of pending regulations that affect capital
    (servicing assets, recourse, small business recourse, etc.). The reader should refer to 12 CFR 3
    and “Instructions for the Consolidated Reports of Condition and Income” for definitive capital
    regulations and guidance.
    Asset Securitization 5 6 Comptroller’s Handbook
    Risk-Based Capital4
    Asset Sales without Recourse
    Securitization can have important implications for a bank’s risk-based capital
    requirement. (For a more complete discussion of OCC risk-based capital
    requirements, see the “Capital and Dividends” section of the Comptroller’s
    Handbook.) If asset sales meet the “sale” requirements of FAS 125 and the
    assets are sold without recourse, the risk-based capital standards do not
    require the seller to maintain capital for the assets securitized. The primary
    attraction of securitization for bank issuers (notwithstanding the wealth of
    liquidity inherent in selling loans quickly and efficiently for cash) is the ability
    to avoid capital requirements while realizing considerable financial benefits
    (e.g., servicing fees, excess servicing income, and origination fees). Several
    of the “pure play” or monoline banks have off-balance-sheet, securitized
    assets that are several times larger than their on-balance-sheet loan amounts.
    Although the risk-based capital standards are heavily weighted toward credit
    risk, a bank’s capital base must also be available to absorb losses from other
    types of risk, such as funding source concentrations, operations, and liquidity
    risk. For this reason, it is prudent for banks to evaluate all of the exposures
    associated with securitizing assets, especially revolving assets such as credit
    cards and home equity lines of credit for which the bank retains a close
    association with the borrower even after a specific receivable balance has
    been sold.
    Using models or other methods of analysis, a bank should

  45. In “The Web Of Debt”, by Ellen Hodgson Brown, she tells the story of “StockGate”. The attorney for the Plaintiff was C. Austin Burrell, if memory serves.

    The Plaintiff was “Overstock.com”, again, if memory serves.

    There was a website, “The Faulking Truth” that detailed the comings-and-goings of the case, again, if memory serves.

    Overstock.com was complaining that their stock was being manipulated beyond their control because PEOPLE THAT DIDN’T OWN THEIR STOCK were faking an ownership interest and then making bets against the margins.

    In other words, artificially inflating and deflating the price of the stock.
    In other words, “COUNTERFEITING” AN OWNERSHIP INTEREST…

    Gee… I wonder where readers of this blog may have heard that before…?

    Oh… that’s right …

    Right now, the banks are doing precisely that, “COUNTERFEITING AN OWNERSHIP INTEREST TO THE TITLES TO OUR PROPERTIES.

    THEY ARE DOING SO IN ORDER TO PLACE BETS AGAINST THE MARGIN… INSURANCE “SWAPS”, AKA “DERIVATIVES”.

    The banks are counterfeiting their ownership of title and then placing bets the borrowers will default.

    This type of “bet” against the margin is called a “short sale”.
    When the person placing the bet doesn’t own the underlying collateral (the title to your house, for example), the “bet” is called a “NAKED SHORT SALE”.

    In other words, the bank has “no skin” in the game.

    A good example of this behavior takes place every Sunday during football season…

    When… people that don’t own the underlying asset (the team) place “short sale Bets” that the team will lose.

    In “The Web of Debt”, there is a story where one guy decided to plumb the depths of this behavior by taking every single share of his company and placing those shares, physically, in his sock drawer.

    Despite owning his company outright, with all the shares to it placed physically in his sock drawer, he then watched while people “BETTING ON THE MARGINS” COUNTERFEITED THEIR OWNERSHIP TO THE SHARES IN HIS SOCK DRAWER and artificially traded those shares …

    Thereby manipulating the price of his company beyond his control…
    “NAKED SHORT SALES”.

    The NAKED SHORT SALES TAKEN AGAINST YOUR PROPERTIES AND THOSE OF EVERY OTHER “BORROWER” ON THE PLANET ARE IN EXCESS
    OF 682 TRILLION DOLLARS.

    The criminality and corruption rampant in our country, now We The People are the CAPTIVES OF WALL STREET, is, frankly, beyond my poor ability to describe.

    In fact, the market itself is now manipulated by the banks on a daily basis through the “Plunge Protection Team” and the “CRMG- Counter-Party Risk Management Group”- Hillary Clinton is aware of each and has said as much on Sunday Talk Shows…

    Not that I am endorsing HillBillory as they are part of the problem.

    Instead, every reader of this blog, and those among the millions criminally defrauded by these freaks, should force prospective candidates of every political office to openly declare their support of the Constitution AFTER THEY HAVE OPENLY DECLARED THEIR WILLINGNESS TO PROSECUTE WALL STREET.

    End the Fed; thereafter, return the central bank as a PUBLIC UTILITY THAT ENRICHES PUBLIC COFFERS- NOT PRIVATE POCLKETS.

    RENOUNCE THE FRAUD THAT IS THE PRIVATELY-OWNED, INTERNATIONAL, CENTRAL BANKING CARTEL (FEDERAL RESERVE, IMF, WORLD BANK).

    NOWHERE IN THE CONSTITUTION DOES IT SAY: “A PRIVATELY-OWNED INTERNATIONAL BANKING CARTEL MAY HOLD THE ELECTORATE OF THE US HOSTAGE TO 100 YEARS OF CRIMINAL COUNTERFEITING BASED ON CURRENCY MANIPULATION AND FRAUD.

    Re-issue the “Greenback”, as JFK was fixing to do and then pro-rate those “Greenback Dollars” while the insolvent “FED NOTES” are systematically collected and repudiated across-the-globe.

    JAIL THE BANKERS. DESTROY THEM UTTERLY.

    After all, any truthful examination of their books will prove they have already destroyed themselves and GOOD RIDDANCE.

    Their only chance is through corruption and fraudulent claims to title once fraudclosure enables them to capitalize on their international derivatives scam.

    Counterfeiting and the investigation of it are the province of the secret service. The people that created this country clearly saw it as an existential threat (Ben Franklin, as possibly a best example), and it has always been the weapon of choice for the English Banking System (google the causes of “Shay’s Rebellion, for example).

    Some may remember it is the English that are the authors and most prolific agents of “Tyranny”, not only here in what was once colonial America, but across-the-globe, as well (Rhodesia, now, South Afrika, is perhaps a best recent example, although Ireland, and the English exploitation of it will surely stand the test as well.)

    It is the job of the IRS to investigate the insolvency of the central bank and they should be “re-tasked” in order to perform that function. Thereafter, the IRS should be employed to investigate the “Corporatocracy” and the fact they have stripped American jobs and then sold the proceeds of their deceit into accounts throughout the Carribean Islands.

    We The People In Foreclosure, or, perhaps better, We The Foreclosure People ( WTFP, WTF People) are the heirs to a system that was deployed to protect our collective interests centuries ago. We need only rebel and unmask the present-day corruption and Tyranny of those who will ultimately be repudiated in the long run.

    It is likely our patriotism will manifest one foreclosure at a time…
    In the meantime, plant more acorns… it would be a terrible shame We might run out of trees to hang this filth from when the day presents itself.

  46. And yes its public record and yes i have proof

  47. Etolle
    Like the post re mill lawyers, and yes im dealing with one in Particular he widthdrew after no response another council stepped in, big hitters, over a year no response and then just poof! Widthdraws, i answered with caselaw why a professional lawyer doesnt just ” widthdraw” after a long line of operating outside of the law and manipulating state, bk, and state appellate Court. Onward.

  48. Elex- thanks for the info.
    But a loan is already an asset on a bank’s balance sheet. Can you explain further? Id appreciate it, or just point me to a link.

  49. Opinion based on what I read here often.
    you reach so high to want to arrest a CEO of a bank, or a man elected by a minority of the people living on turtle island, cause the majority of registered may have or have not voted, and only those people are re presented by the one they voted to speak for them.
    Some want to just hang anybody holding an office, put politicians in the hot seat even if they didn’t vote or write a bill that caused harm.

    Just throw them all into some chaos, as long as someone is punished.

    Tell me one politician that went to court claiming to have an enforceable note and causing an eviction.

    Tell me Jamie Dimon used the lawyers on staff and had them file cases in various counties in the state JP Morgan Chase is headquartered.

    They do not even use their staff lawyers for this.
    They know.
    And if you heard of a hold harmless agreement, I’m sure it’s on file in the state the bank is headquartered, Jamie only gets in trouble for what he directly does.

    Everyone things a judge is God.
    A judge can judge wrong and not even hear you, and sign their name on a contract to kick you out of your home, and people run to another judge to get them in trouble, and when another judge doesn’t want to hear it, they want to take it to another judge.

    Then they want someone to arrest people when there is no complaint under penalty of perjury, cause people are waiting on someone else to complain.

    I have opened so many doors by seeing the system.
    I didn’t see it until I was forced to engage with it. Like unwanted sexual encounter, being violated against my will.

    But now that I’ve been up close and personal, it all makes sense.
    It makes sense whether they have power or whether we see power cause t.v. says they have power, and our mom and dad said to do what they say do, and we walk into that building and they wear black and they have a man with a gun that says ‘all rise’ before the judge walks into the room, and everyone rises cause they saw it on Judge Judy and they do what everyone else does.

    No one is asking questions, and everyone is pointing fingers.

    Well having been pulled into their world, where they are public and I had quiet peaceful enjoyment of property and someone said they were ‘interested in it’…not holder, not owner, not claiming to have a note, not claiming to be owed payments, but had an interest in it.

    And a judge helped them take it.
    And I see this same stuff different day
    and we come here and talk about it, but no one has a criminal complaint for someone helping someone steal their home.

    Now a criminal complaint demands an investigation, an indictment, and a trial and sentencing.

    But no.
    Everyone wants to pay for their freedom.
    We are free.
    We don’t need to pay for what is already ours.
    We need to wake up and stop pointing to a business name like Shake the Bell sold me a bad burger or some nonsense.
    Who is shake the bell>
    just like who is State of Florida?
    We need to wake up out of this and start pointing fingers at real stuff.
    See the people, stop seeing the code.

    There are so many that are waking up and pointing fingers and they will roll over each other to save their arzes if we point at them.

    Recently I saw at a conspiracy site a news report about a group of cities that colluded to make money off traffic tickets. You can’t prove collusion but there is a cluster of them that engaged in the same activity.

    Then after that report a judge of all people threw the rest under the bus saying he quit cause he didn’t want to be forced to deal with traffic tickets.

    Excuse me? He was hearing cases he knew were created in fraud.
    How many of those judgments did he sign that made that city money before he so called quit to save his arze, if he really quit for that reason.

    We are going after them.
    we have stripped them of their immunity cause they are not immune if they commit a crime.
    We have named names, and we are not seeing their veil anymore, we are looking past the curtain.

    They are employees working for a corporation, not a god.
    There are people who press charges against a prosecutor or a DA or anyone who violates a law.

    Then we have people who say,
    someone needs to do something.

    Uh, it’s you that needs to do it.
    Yes, it’s scary to stand up and walk but you should try it sometime.
    I have never felt freer than when I filed a criminal complaint on a living man or woman who has done something to me while actlng like they are doing their job, and their job does not give them permission to hurt me.

    If I had a contract, yep compel me to perform.
    If I don’t, then you are breaking the law to make me perform.
    Without a complaint, no one is going to do anything.
    Without a complain you have done nothing just like they have done nothing cause just like your signature creates the money, your complaint creates the remedy.

    We have power.
    We just don’t use it.
    Or do we give it away.

    Their system believes that any generation that frees itself, if they wait three more generations the people will have allowed their self to be oppressed again because they want someone else to stand for them, re present them, do for them, womb to tomb.

    I know nothing, and only have opinions, no advice, not even legal.
    It’s all fiction.
    Trespass Unwanted, Creator, Corporeal, Life, Free, People, Independent, State, In Jure Proprio, Jure Divino

  50. @Ian – A loan is regulated under one set of rules – the UCC and GAAP. When a loan is converted into an asset, it comes under a different set of rules – FASB. To distinguish the same obligation under two sets of rules required two different identifying numbers. A loan and an asset cannot have the same number, because during securitization and unwinding from securitization both ids are needed to establish cross-reference.

  51. We need investigations into everything at this point. Even Forbes said there’s a cancer. Judges would hit the cases directly but we need a moratorium on all foreclosures since banks are pleading guilty to felonies on top of all the non enforcement. First step is stop being invisible as a group but revolution talk just helps their internet crazies attacks lawyers and judges eat up.

    They’re manipulating everything. NJ is a good example being a hot spot. We have to start putting politicians and the Jamie Dimons on the hot seat.

  52. Anyone dealt with a mill attorney lately? Or should I ask….in the last ten years?

    STANDARDS FOR IMPOSING LAWYER SANCTIONS

    2005 by the American Bar Association

    In addition to duties owed to clients, the lawyer also owes duties to the general public. Members of the public are entitled to be able to trust lawyers to protect their property, liberty, and their lives. The community expects lawyers to exhibit the highest standards of honesty and integrity, and lawyers have a duty not to engage in conduct involving dishonesty, fraud, or interference with the administration of justice.

    ****************

    Lawyers must always operate within the bounds of the law, and cannot create or use false evidence, or engage in any other illegal or improper conduct.

    ****************

    Disbarment is generally appropriate when a lawyer, with the intent to
    deceive the court, makes a false statement, submits a false document, or improperly withholds material information, and causes serious or potentially serious injury to a party, or causes a significant or potentially significant adverse effect on the legal proceeding.

    Bwahahahaha…..Bwahahhahhawahahwahwhahh

    Sanction a bankster minion? Oh shit, I just spewed all over my monitor…..

    It’s past time for a revolution.

  53. DwightNJ,
    I opinion that, Judges are guilty of collusion, where if proven their immunity would be stripped and DOJ can finally do something with a name.
    Can’t arrest a building and where would you out it if you could.

    I know no thing,
    Trespass Unwanted, Creator

  54. Dbellanger- where specifically is it stated that once a mortgage is securitized it is no longer a mortgage.
    Have heard this for years. Makes sense. Cant be both at the same time. But where is this stated? Thx

  55. The judges are guilty of dishonorable conduct ranging from holding a personal bias against homeowners …to legislating from the bench by deliberately twisting laws in collusion with other judges in order to allow the banks, servicers to prevail in faulty foreclosures …to blatant disregard for the judicial code of conduct and cannons that they are sworn to … The problem is so severe and out of control, that we need a full investigation and hearings conducted to reveal the full extent of the judicial corruption. We need new guidelines and special rules to be implemented due to the depth of the corruption of judges in these foreclosure cases … All caselaw relating to prior foreclosures would need to be reviewed in light of the corruption that created that case law

  56. Which goes to the calhbor analysis of banks claim of no harm done, duty since regular bank business.

  57. Lots of good info on these cases and posts alone. We’re experiencing bias and prejudice on the one hand and real mistakes by homeowners and their lawyers. As DBlack on board likes to say it’s the fog of war being waged against all of us.

    DBelanger ur note experience w court seems pretty extreme but could help others understand what’s going on along w my situation and others.

    What’s not clear is if you ever saw the wet ink original. Again that’s all u can do if not paid off. If u did refi did u ever receive the wet ink original from payoff if there was one. Not a certified copy but the actual physical piece of paper you signed and should have valid endorsements.

    Then again we can be going down the rabbit hole again although on your appeal u might have to but ur still in the fight.

    If in CA I would think you have plenty on lack of reliable evidence, valid transactions. Even on settlements if WF?

    Even rescission may be a possibility but again as Garfield advises make them admit things and focus.

    My 2 cents not legal advice.

    It would be good to break our cases down in right forum and focus w good tools.

    Some people from board, Facebook are on the same page if anyone wants to get in touch here.
    bit.ly/Si8EL5

  58. Non traditional mortgages alright.

  59. LETS GET DIRTY,

    Statement of Sheila C. Bair, Chairman, Federal Deposit Insurance Corporation on FDIC Oversight: Examining and Evaluating the Role of the Regulator during the Financial Crisis and Today before the House Subcommittee on Financial Institutions and Consumer Credit; 2128 Rayburn House Office Building
    May 26, 2011,

    WHAT SHE SAID SHOULD BE USED IN ALL COURT CASES. IT SAYS IT ALL. HUM. WHAT WAS THAT? OH

    Nontraditional Mortgage Product !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!,

    SO ALL COURT SHOULD NOT BE GOING BY TRADITIONAL MORTGAGE LAWS. PERIOD…………………………………………

    Financial Institution Letters

    Interagency Guidance
    Guidance on Nontraditional Mortgage Product Risks, and Addendum to Credit Risk Management Guidance for Home Equity Lending FIL-89-2006
    October 5, 2006

    The mortgage servicing documentation problems that were uncovered last year are yet another example of the implications of lax underwriting standards and misaligned incentives in the mortgage industry.

    ” Since the servicers of securitized mortgages do not own the mortgages, they lack economic incentives to mitigate losses through effective loan restructuring”

    Many of the structured finance activities that generated the largest losses were complex and opaque transactions undertaken at the intersection of the lightly regulated shadow banking system and the more heavily regulated traditional banking system. For instance, private-label MBSs were originated through mortgage companies and brokers as well as portions of the banking industry. The MBSs were subject to minimum securities disclosure rules that are not designed to evaluate loan underwriting quality. Moreover, those rules did not allow sufficient time or require sufficient information for investors and creditors to perform their own due diligence either initially or during the term of the securitization. For banks, once these loans were securitized, they were off the balance sheet and no longer on the radar of many banks and bank regulators.

  60. ONCE SECURITIZED ITS A SECURITY. IT IS NO LONGER A MORTGAGE OR NOTE. PERIOD. THATS THE LAW.

    Accounting
    Under GAAP, the applicable accounting guidance for asset transfers in a
    securitization transaction is FAS 125. Although primarily concerned with
    Asset Securitization 5 0 Comptroller’s Handbook
    differentiating sales from financing treatment, FAS 125 also describes how to
    properly account for servicing assets and other liabilities in securitization
    transactions. FAS 125 applies to all types of securitized assets, including auto
    loans, mortgages, credit card loans, and small business loans. FAS 125
    replaced previous accounting guidance including FAS 77, “Reporting by
    Transferor for Transfers of Receivables with Recourse,” FAS 122, “Accounting
    for Mortgage Servicing Rights,” and various guidance issued by FASB’s
    Emerging Issues Task Force.
    Generally, the accounting treatment for an asset transfer under FAS 125 is
    determined by whether legal control over the financial assets changes.
    Specifically, a securitization transaction will qualify for “sales” treatment (i.e.,
    removal from the seller’s reported financial statements) if the transaction
    meets the following conditions:
    • The transferred assets are isolated from the seller (that is, they are
    beyond the reach of the seller and its creditors, even in bankruptcy or
    other receivership);
    • The buyer can pledge or exchange the transferred assets, or the buyer is
    a qualifying special-purpose entity and the holders of the beneficial
    interests in that entity have the right to pledge or exchange those
    interests; and
    • The seller does not retain effective control over the transferred assets
    through an agreement that
    – Both entitles and obligates it to repurchase the assets before
    maturity, or
    – Entitles it to repurchase transferred assets that are not readily
    obtainable in the market.
    If the securitization transaction meets the FAS 125 criteria, the seller:
    • Removes all transferred assets from the balance sheet;
    • Recognizes all assets obtained and liabilities incurred in the transaction
    at fair value; and
    • Recognizes in earnings any gain or loss on the sale.
    Comptroller’s Handbook 5 1 Asset Securitization
    Any recourse obligation in a transaction qualifying for sales treatment should
    be recorded as a liability, at fair value, and subtracted from the cash received
    to determine the gain or loss on the transaction. If the “sales treatment”
    criteria are not met, the transferred assets remain on the balance sheet and
    the transaction is accounted for as a secured borrowing (and no gain or loss is
    recognized).
    A Sample Transaction. The adoption of GAAP for regulatory reporting
    purposes and FAS 125 change the accounting for asset sales associated with
    securitization transactions. Certain gains or losses that were deferred under
    previous regulatory accounting practices are now recognized on the sale
    date.
    The following is an example of the accounting entries a seller might make
    when transferring credit card receivables to a master trust:
    The initial sales transaction:
    Principal amount of initial receivables pool: $120,000
    Carrying amount net of specifically allocated
    loss reserve $117,000
    Servicing fee (based on outstanding receivables balance) 2%
    Up-front transaction costs: $ 600
    Seller’s interest: $ 20,000
    Value of servicing asset $ 1,500
    Transaction structure
    Allocated
    % of total Carrying Portion Portion
    Fair Value* Fair Value Amount Sold Retained
    Class A $ 100,000 (117/124.5) $ 93,976 $ 93,976
    Seller’s Interest $ 20,000 (117/124.5) $ 18,795 $ 18,795
    IO Strip** $ 3,000 (117/124.5) $ 2,819 $ 2,819
    Servicing $ 1,500 (117/124.5) $ 1,410 $ 1,410
    Total $124,500 $117,000 $ 93,796 $ 23,024
    *Must be estimated. See guidance under “Estimating Fair Value.”
    **An IO (interest-only) strip is a contractual right to receive some or all of the interest due on an
    interest bearing financial instrument. In a securitization transaction, it refers to the present value of the
    expected future excess spread from the underlying asset pool.
    Asset Securitization 5 2 Comptroller’s Handbook
    The journal entries to record the initial transaction on the books of the bank
    are:
    Debits
    Entry #1. Cash $99,400 ($100,000 – 600)
    IO Strip 2,819
    Servicing Asset 1,410
    Seller’s Certificate 18,795
    Credits
    Net Carrying Amount of Loans $117,000
    Pretax Gain 5,424
    (To record securitization transaction by recognizing assets retained and by removing assets
    sold.)
    FAS 125 requires the seller to record the IO strip at its allocated cost.
    However, since the IO strip is treated like a marketable equity security, it
    must be carried at fair market value throughout its life. Therefore, adjusting
    entries are necessary if the asset’s estimated value changes. The following
    journal entry represents the recognition of an increase in the fair value of the
    asset. (The reverse of this entry would occur if the periodic estimate found
    that the value had declined or been impaired.)
    Entry #2. IO Strip $181
    Equity $181
    (To measure an IO strip categorized as an available-for-sale security at its fair market value as
    required under FAS 115).
    As the bank receives cash associated with excess spread from the trust, the
    effect of the journal entries is to increase cash and reduce the amount of the
    IO strip. In effect, the entry would be:
    Entry #3. Cash $10
    IO Strip $10
    (To recognize cash “excess spread” from the trust.)
    Comptroller’s Handbook 5 3 Asset Securitization
    If the transaction meets the FAS 125 sales criteria, a selling bank should
    recognize the servicing obligation (asset or liability) and any residual interests
    in the securitized loans retained (such as the IO strip and the seller’s
    certificate). The bank should also recognize as assets or liabilities any written
    or purchased options (such as recourse obligations), forward commitments, or
    other derivatives (e.g., commitments to deliver additional receivables during
    the revolving period of a securitization), or any other rights or obligations
    resulting from the transaction.
    Estimating Fair Value. FAS 125 guidance states that the fair value of an asset
    (or liability) is the amount for which it could be bought or sold in a current
    transaction between willing parties — that is, in other than a forced
    liquidation sale. Quoted market prices in active markets are the best
    evidence of fair value and, if available, shall be used as the basis for the
    pricing.
    Unfortunately, it is unlikely that a securitizer will find quoted market prices
    for most of the financial assets and liabilities that arise in a securitization
    transaction. Accordingly, estimation is necessary. FAS 125 says that if
    quoted market prices are not available, the estimate of fair value shall be
    based on the best information available. Such information includes prices for
    similar assets and liabilities and the results of valuation techniques such as:
    • The present value of estimated expected future cash flows using a
    discount rate commensurate with the risks involved;
    • Option-pricing models;
    • Matrix pricing;
    • Option-adjusted spread models; and
    • Fundamental analysis.
    These techniques should include the assumptions about interest rates, default
    rates, prepayment rates, and volatility that other market participants employ
    in estimating value. Estimates of expected future cash flows should be based
    on reasonable and supportable assumptions and projections. All available
    evidence should be considered in developing estimates of expected future
    cash flows. The weight given to the evidence should be commensurate with
    the extent to which the evidence can be verified objectively. If a range is
    Asset Securitization 5 4 Comptroller’s Handbook
    estimated for either the amount or timing of future cash flows, the likelihood
    of possible outcomes should be considered to determine the best estimate.
    Recognition of Servicing. A servicing asset should be recorded if the
    contractual servicing fee more than adequately compensates the servicer.
    (Adequate compensation is the amount of income that would fairly
    compensate a substitute servicer, and includes the profit that would be
    required in the market place.) The value of servicing assets includes the
    contractually specified servicing fees, late charges, and other related fees and
    income, including float.
    A servicing liability should be recorded when the estimated future revenues
    from stated servicing fees, late charges, and other ancillary revenues are not
    expected to adequately compensate the servicer for performing the servicing.
    The recorded value of servicing rights is initially based on the fair value of the
    servicing asset relative to the total fair value of the transferred assets.
    Servicing assets must be amortized in proportion to estimated net servicing
    income and over the period that such income is received. In addition,
    servicing assets must be periodically evaluated and measured for impairment.
    Any impairment losses should be recognized in current period income.
    According to FAS 125, servicing assets should be subsequently measured and
    evaluated for impairment as follows:
    1. Stratify servicing assets based on one or more of their predominant risk
    characteristics. The risk characteristics may include financial asset type,
    size, interest rate, date of origination, term, and geographic location.
    2. Recognize impairment through a valuation allowance for each
    individual stratum. Impairment should be recognized as the amount by
    which the carrying amount of a category of servicing assets exceeds its
    fair value. The fair value of servicing assets that have not been
    recognized should not be used in this evaluation.
    3. Periodically adjust the valuation allowance to reflect changes in
    impairment. However, appreciation in the fair value of a stratum of
    servicing assets over its carrying amount should not be recognized.
    Comptroller’s Handbook 5 5 Asset Securitization
    Treatment of Excess Cash Flows. The right to future income in excess of
    contractually stated servicing fees should be accounted for separately from
    the servicing asset. The right to these cash flows is treated as an interest-only
    strip and accounted for under FAS 115 as either an available-for-sale or
    trading security.
    If IO strips or other receivables or retained interests in securitizations can be
    contractually prepaid or settled in a way that the holder might not
    substantially recover its recorded investment, FAS 125 requires that they be
    measured at fair value and that the treatment be similar to that given
    available-for-sale and trading securities under FAS 115. Accordingly, these
    items are initially recorded at allocated fair value. (Allocating fair value
    refers to apportioning the previous carrying amount of the transferred assets
    between the assets sold and the interests retained by the seller based on their
    relative fair values at the date of transfer. See example entry #1.) These items
    are periodically adjusted to their estimated fair value (example entry #2)
    based on their expected cash flows.
    Recognition of Fees. The accounting treatment of fees associated with loans
    that will be securitized should be in accordance with FAS 91, “Accounting
    for Nonrefundable Fees and Costs Associated with Originating or Acquiring
    Loans and Initial Direct Costs of Leases” and FAS 65, “Accounting for Certain
    Mortgage Banking Enterprises.” In accordance with these statements’
    standards for pools of loans that are held for sale, the loan origination fees
    and direct loan origination costs should be deferred and recognized in
    income when the loans are sold.
    4 At the time of this writing there are a number of pending regulations that affect capital
    (servicing assets, recourse, small business recourse, etc.). The reader should refer to 12 CFR 3
    and “Instructions for the Consolidated Reports of Condition and Income” for definitive capital
    regulations and guidance.
    Asset Securitization 5 6 Comptroller’s Handbook
    Risk-Based Capital4
    Asset Sales without Recourse
    Securitization can have important implications for a bank’s risk-based capital
    requirement. (For a more complete discussion of OCC risk-based capital
    requirements, see the “Capital and Dividends” section of the Comptroller’s
    Handbook.) If asset sales meet the “sale” requirements of FAS 125 and the
    assets are sold without recourse, the risk-based capital standards do not
    require the seller to maintain capital for the assets securitized. The primary
    attraction of securitization for bank issuers (notwithstanding the wealth of
    liquidity inherent in selling loans quickly and efficiently for cash) is the ability
    to avoid capital requirements while realizing considerable financial benefits
    (e.g., servicing fees, excess servicing income, and origination fees). Several
    of the “pure play” or monoline banks have off-balance-sheet, securitized
    assets that are several times larger than their on-balance-sheet loan amounts.
    Although the risk-based capital standards are heavily weighted toward credit
    risk, a bank’s capital base must also be available to absorb losses from other
    types of risk, such as funding source concentrations, operations, and liquidity
    risk. For this reason, it is prudent for banks to evaluate all of the exposures
    associated with securitizing assets, especially revolving assets such as credit
    cards and home equity lines of credit for which the bank retains a close
    association with the borrower even after a specific receivable balance has
    been sold.
    Using models or other methods of analysis, a bank should

  61. Dwight didn’t show how their actions harmed him…didn’t state a claim….no damages.
    Judge had no choice… the FC was not just for the mortgage. … but the real estate taxes too.

    E-T… Attitude gets you nowhere except put to the curb.

  62. Parties to the Transaction
    The securitization process redistributes risk by breaking up the traditional role
    of a bank into a number of specialized roles: originator, servicer, credit
    enhancer, underwriter, trustee, and investor. Banks may be involved in
    several of the roles and often specialize in a particular role or roles to take
    advantage of expertise or economies of scale. The types and levels of risk to
    which a particular bank is exposed will depend on the organization’s role in
    the securitization process.
    With sufficient controls and the necessary infrastructure in place,
    securitization offers several advantages over the traditional bank lending
    model. These benefits, which may increase the soundness and efficiency of
    the credit extension process, can include a more efficient origination process,
    better risk diversification, and improved liquidity. A look at the roles played
    by the primary participants in the securitization process will help to illustrate
    the benefits.
    Asset Securitization 8 Comptroller’s Handbook
    Exhibit 1: Parties Involved in Structuring Asset-Backed Securities
    Borrower. The borrower is responsible for payment on the underlying loans
    and therefore the ultimate performance of the asset-backed security. Because
    borrowers often do not realize that their loans have been sold, the originating
    bank is often able to maintain the customer relationship.
    From a credit risk perspective, securitization has made popular the practice of
    grouping borrowers by letter or categories. At the top of the rating scale, ’A’-
    quality borrowers have relatively pristine credit histories. At the bottom, ’D’-
    quality borrowers usually have severely blemished credit histories. The
    categories are by no means rigid; in fact, credit evaluation problems exist
    because one originator’s ’A’ borrower may be another’s ’A-’ or ’B’ borrower.
    Nevertheless, the terms ’A’ paper and ’B/C’ paper are becoming more and
    more popular.
    Exhibit 2 is an example of generic borrower descriptions used by Duff and
    Phelps Credit Rating Corporation in rating mortgage borrowers. The
    borrowers’ characteristics in the exhibit are generalizations of each category’s
    standards and fluctuate over time; however, the table does provide an
    illustration of general standards in use today. For example, an ‘A’ quality
    Exhibit 2: Borrower Credit Quality Categories
    Generic Borrower
    Credit Quality Recency of Debt to Loan-to-Value
    Description Mortgage Credit Other Credit Bankruptcy Income Ratio Guidelines
    A: Standard agency quality 1 x 30 last 12 months No derogatories 5 yrs. 36% 97%
    A-: Very minor credit 1 x 30 last 12 months Minor derogatories 5 yrs. 42% 90%
    problems 2 x 30 last 24 months explained
    B: Minor to moderate 4 x 30 last 12 months Some prior defaults 3 yrs. 50% 75%
    credit problems 1 x 60 last 24 months
    C: Moderate to serious 6 x 30 last 12 months Significant credit 18 months 55% 70%
    credit problems 1 x 60 & 1 x 90 last problems
    12 months
    D: Demonstrated unwillingness 30-60 constant Severe credit 12 months 60% 65%
    or inability to pay delinquent, 2 x 90 problems
    last 12 months
    (Source: Duff & Phelps)
    Comptroller’s Handbook 9 Asset Securitization
    borrower will typically have an extensive credit history with few if any
    delinquencies, and a fairly strong capacity to service debt. In contrast, a ‘C’
    quality borrower has a poor or limited credit history, numerous instances of
    delinquency, and may even have had a fairly recent bankruptcy. Segmenting
    borrowers by grade allows outside parties such as rating agencies to compare
    performance of a specific company or underwriter more readily with that of
    its peer group.
    Originator. Originators create and often service the assets that are sold or
    used as collateral for asset-backed securities. Originators include captive
    finance companies of the major auto makers, other finance companies,
    commercial banks, thrift institutions, computer companies, airlines,
    manufacturers, insurance companies, and securities firms. The auto finance
    companies dominate the securitization market for automobile loans. Thrifts
    securitize primarily residential mortgages through pass-throughs, paythroughs,
    or mortgage-backed bonds. Commercial banks regularly originate
    and securitize auto loans, credit card receivables, trade receivables, mortgage
    loans, and more recently small business loans. Computer companies,
    airlines, and other commercial companies often use securitization to finance
    receivables generated from sales of their primary products in the normal
    course of business.
    Asset Securitization 1 0 Comptroller’s Handbook
    Servicer. The originator/lender of a pool of securitized assets usually
    continues to service the securitized portfolio. (The only assets with an active
    secondary market for servicing contracts are mortgages.) Servicing includes
    customer service and payment processing for the borrowers in the securitized
    pool and collection actions in accordance with the pooling and servicing
    agreement. Servicing can also include default management and collateral
    liquidation. The servicer is typically compensated with a fixed normal
    servicing fee.
    Servicing a securitized portfolio also includes providing administrative
    support for the benefit of the trustee (who is duty-bound to protect the
    interests of the investors). For example, a servicer prepares monthly
    informational reports, remits collections of payments to the trust, and
    provides the trustee with monthly instructions for the disposition of the trust’s
    assets. Servicing reports are usually prepared monthly, with specific format
    requirements for each performance and administrative report. Reports are
    distributed to the investors, the trustee, the rating agencies, and the credit
    enhancer.
    Trustee. The trustee is a third party retained for a fee to administer the trust
    that holds the underlying assets supporting an asset-backed security. Acting
    in a fiduciary capacity, the trustee is primarily concerned with preserving the
    rights of the investor. The responsibilities of the trustee will vary from issue
    to issue and are delineated in a separate trust agreement. Generally, the
    trustee oversees the disbursement of cash flows as prescribed by the
    indenture or pooling and servicing agreement, and monitors compliance with
    appropriate covenants by other parties to the agreement.
    If problems develop in the transaction, the trustee focuses particular attention
    on the obligations and performance of all parties associated with the security,
    particularly the servicer and the credit enhancer. Throughout the life of the
    transaction the trustee receives periodic financial information from the
    originator/servicer delineating amounts collected, amounts charged off,
    collateral values, etc. The trustee is responsible for reviewing this
    information to ensure that the underlying assets produce adequate cash flow
    to service the securities. The trustee also is responsible for declaring an event
    of default or an amortization event, as well as replacing the servicer if it fails
    to perform in accordance with the required terms.
    Comptroller’s Handbook 1 1 Asset Securitization
    Credit Enhancer. Credit enhancement is a method of protecting investors in
    the event that cash flows from the underlying assets are insufficient to pay the
    interest and principal due for the security in a timely manner. Credit
    enhancement is used to improve the credit rating, and therefore the pricing
    and marketability of the security.
    As a general rule, third-party credit enhancers must have a credit rating at
    least as high as the rating sought for the security. Third-party credit support is
    often provided through a letter of credit or surety bond from a highly rated
    bank or insurance company. Because there are currently few available highly
    rated third-party credit enhancers, internal enhancements such as the
    senior/subordinated structure have become popular for many asset-backed
    deals. In this latter structure, the assets themselves and cash collateral
    accounts provide the credit support. These cash collateral accounts and
    separate, junior classes of securities protect the senior classes by absorbing
    defaults before the senior position’s cash flows are interrupted.
    Rating Agencies. The rating agencies perform a critical role in structured
    finance — evaluating the credit quality of the transactions. Such agencies are
    considered credible because they possess the expertise to evaluate various
    underlying asset types, and because they do not have a financial interest in a
    security’s cost or yield. Ratings are important because investors generally
    accept ratings by the major public rating agencies in lieu of conducting a due
    diligence investigation of the underlying assets and the servicer.
    Most nonmortgage asset-backed securities are rated. The large public issues
    are rated because the investment policies of many corporate investors require
    ratings. Private placements are typically rated because insurance companies
    are a significant investor group, and they use ratings to assess capital reserves
    against their investments. Many regulated investors, such as life insurance
    companies, pension funds, and to some extent commercial banks can
    purchase only limited amounts of securities rated below investment grade.
    The rating agencies review four major areas:
    • Quality of the assets being sold,
    • Abilities and strength of the originator/servicer of the assets,
    Asset Securitization 1 2 Comptroller’s Handbook
    • Soundness of the transaction’s overall structure, and
    • Quality of the credit support.
    From this review, the agencies assess the likelihood that the security will pay
    interest and principal according to the terms of the trust agreement. The
    rating agencies focus solely on the credit risk of an asset-backed security.
    They do not express an opinion on market value risks arising from interest
    rate fluctuations or prepayments, or on the suitability of an investment for a
    particular investor.
    Underwriter. The asset-backed securities underwriter is responsible for
    advising the seller on how to structure the security, and for pricing and
    marketing it to investors. Underwriters are often selected because of their
    relationships with institutional investors and for their advice on the terms and
    pricing required by the market. They are also generally familiar with the
    legal and structural requirements of regulated institutional investors.
    Investors. The largest purchasers of securitized assets are typically pension
    funds, insurance companies, fund managers, and, to a lesser degree,
    commercial banks. The most compelling reason for investing in asset-backed
    securities has been their high rate of return relative to other assets of
    comparable credit risk. The OCC’s investment securities regulations at 12
    CFR 1 allow national banks to invest up to 25 percent of their capital in
    “Type V” securities. By definition, a Type V security:
    C Is marketable,
    C Is rated investment grade,
    C Is fully secured by interests in a pool of loans to numerous obligors and
    in which a national bank could invest directly, and
    C Is not rated as a mortgage-related or Type IV security.
    Structuring the Transaction
    The primary difference between whole loan sales or participations and
    securitized credit pools is the structuring process. Before most loan pools can
    be converted into securities, they must be structured to modify the nature of
    the risks and returns to the final investors. Structuring includes the isolation
    Comptroller’s Handbook 1 3 Asset Securitization
    and distribution of credit risk, usually through credit enhancement
    techniques, and the use of trusts and special purpose entities to address tax
    issues and the management of cash flows.
    Examiners performing a comprehensive review of a specific securitization
    process should read through the pooling and servicing agreement and/or a
    specific series supplement for explicit detail on the structure and design of the
    particular asset-backed security and the responsibilities of each involved
    party. For purposes of this booklet, the following is an overview of the
    structuring process and a description of what the documents usually contain.
    Generally, the structure of a transaction is governed by the terms of the
    pooling and servicing agreement and, for master trusts, each series
    supplement. The pooling and servicing agreement is the primary contractual
    document between the seller/servicer and the trustee. This agreement
    documents the terms of the sale and the responsibilities of the seller/servicer.
    For master trusts, the pooling and servicing agreement, including the related
    series supplement, document the terms of the sale and responsibilities of the
    seller/servicer for a specific issuance. The following section describes the
    four major stages of the structuring process:
    C Segregating the assets from the seller/originator.
    C Creating a special-purpose vehicle to hold the assets and protect
    the various parties’ interests.
    C Adding credit enhancement to improve salability.
    C Issuing interests in the asset pool.
    Segregating the Assets
    Securitization allows investors to evaluate the quality of a security on its own
    (apart from the credit quality of the originator/seller). To accomplish this, the
    seller conveys receivables to a trust for the benefit of certificate holders. For
    revolving-type assets, this conveyance includes the amount of receivables in
    certain designated accounts on a specific cutoff date, plus the option for the
    trust to purchase any new receivables that arise from those designated
    accounts subsequent to the cutoff date. The accounts and receivables are
    subject to eligibility criteria and specific representations and warranties of the
    seller.
    1 The issue of whether provisions for the removal of accounts are in-substance call options
    retained by the seller (which may compromise sales treatment) is under consideration by FASB
    at the time of this writing. A formal FASB interpretation is expected to be issued in exposure
    draft form. Until then, the guidance under Emerging Issues Task Force (EITF) Issue 90-18
    remains in effect.
    Asset Securitization 1 4 Comptroller’s Handbook
    Choosing Accounts — Initial Pool Selection
    The seller designates which accounts’ receivables will be sold to a trust. The
    selection is carried out with an eye to creating a portfolio whose performance
    is not only predictable but also consistent with the target quality of the
    desired security. Step one is determining which accounts will be
    “designated” as those from which receivables may be included in the trust.
    For example, past-due receivables may be left in the eligible pool, but
    accounts that have had a default or write-off may be excluded. Some issuers
    include written-off receivables, allowing the revenue from recoveries to
    become part of the cash flow of the trust. Other selection criteria might
    include data elements such as geographic location, maturity date, size of the
    credit line, or age of the account relationship.
    Step two, asset selection, can either be random, in order to create selections
    that are representative of the total portfolio, or inclusive, so that all qualifying
    receivables are sold. In random selection, the issuer determines how many
    accounts are needed to meet the target value of the security; then the
    accounts are selected randomly (for example, every sixth account is selected
    from the eligible universe).
    Account Additions and Removals
    For trusts with a revolving feature, such as credit cards or home equity lines
    of credit, the seller may be required to designate additional accounts that will
    be assimilated by the trust. This may be required for a variety of reasons, for
    example, when the seller’s interest (the interest in the receivables pool
    retained by the seller subsequent to transfer into the trust) falls below a level
    specified in the pooling and servicing agreement. The seller also typically
    reserves the ability to withdraw some accounts previously designated for the
    trust.1 Rating agencies must often be notified when account additions or
    removals reach certain thresholds. For example, the terms of the rating may
    Comptroller’s Handbook 1 5 Asset Securitization
    require rating agency confirmation that account additions or removals do not
    lower outstanding ratings when additions or removals exceed 15 percent of
    the balance at the beginning of the previous quarter.
    Creating Securitization Vehicles
    Banks usually structure asset-backed securities using “grantor trusts,” “owner
    trusts,” or other “revolving asset trusts,” each of which customarily issues
    different types of securities. In choosing a trust structure, banks seek to ensure
    that the transaction insulates the assets from the reach of the issuer’s creditors
    and that the issuer, securitization vehicle, and investors receive favorable tax
    treatment.
    In a grantor trust, the certificate holders (investors) are treated as beneficial
    owners of the assets sold. The net income from the trust is taxed on a passthrough
    basis as if the certificate holders directly owned the receivables. To
    qualify as a grantor trust, the structure of the deal must be passive — that is,
    the trust cannot engage in profitable activities for the investors, and there
    cannot be “multiple classes” of interest. Grantor trusts are commonly used
    when the underlying assets are installment loans whose interest and principal
    payments are reasonably predictable and fit the desired security structure.
    In an owner trust, the assets are usually subject to a lien of indenture through
    which notes are issued. The beneficial ownership of the owner trust’s assets
    (subject to the lien) is represented by certificates, which may be sold or
    retained by the bank. An owner trust, properly structured, will be treated as a
    partnership under the Internal Revenue Code of 1986. A partnership, like a
    grantor trust, is effectively a pass-through entity under the Internal Revenue
    Code and therefore does not pay federal income tax. Instead, each certificate
    holder (including the special-purpose corporation) must separately take into
    account its allocated share of income, gains, losses, deductions, and credits of
    the trust. Like the grantor trust, the owner trust is expressly limited in its
    activities by its charter, although owner trusts are typically used when the
    cash flows of the assets must be “managed” to create “bond-like” securities.
    Unlike a grantor trust, the owner trust can issue securities in multiple series
    with different maturities, interest rates, and cash flow priorities.
    Asset Securitization 1 6 Comptroller’s Handbook
    Revolving asset trusts may be either stand-alone or master trust structures.
    The stand-alone trust is simply a single group of accounts whose receivables
    are sold to a trust and used as collateral for a single security, although there
    may be several classes within that security. When the issuer intends to issue
    another security, it simply designates a new group of accounts and sells their
    receivables to a separate trust. As the desire for additional flexibility,
    efficiency, and uniformity of collateral performance for various series issued
    by the same originator has increased over time, the stand-alone structure
    evolved into the master trust structure.
    Master trusts allow an issuer to sell a number of securities (and series) at
    different times from the same trust. All of the securities rely on the same pool
    of receivables as collateral. In a master trust, each certificate of each series
    represents an undivided interest in all of the receivables in the trust. This
    structure provides the issuer with much more flexibility, since issuing a new
    series from a master trust costs less and requires less effort than creating a
    new trust for every issue. In addition, credit evaluation of each series in a
    master trust is much easier since the pool of receivables will be larger and
    less susceptible to seasonal or demographic concentrations. Credit cards,
    home equity lines of credit, and other revolving assets are usually best
    packaged in these structures. A revolving asset trust is treated as a “security
    arrangement” and is ignored for tax purposes. (See following discussion
    under “Tax Issues.”)
    Legal Issues
    When banks are sellers of assets, they have two primary legal concerns. They
    seek to ensure that:
    • A security interest in the assets securitized is perfected.
    • The security is structured so as to preclude the FDIC’s voiding of the
    perfected security interest.
    By perfecting security interests, a lender protects the trustee’s property rights
    from third parties who may have retained rights that impair the timely
    payment of debt service on the securities. Typically, a trustee requires a legal
    opinion to the effect that the trust has a first-priority perfected security interest
    in the pledged receivables. In general, filing Uniform Commercial Code
    2 A national bank may not be a “debtor” under the bankruptcy code. See USC 109(b)(2). The
    FDIC may act as receiver or conservator of a failed institution, subject to appointment by the
    appropriate federal banking agency. See 12 USC 1821.
    3 “Statement of Policy regarding Treatment of Security Interests after Appointment of the FDIC as
    Conservator or Receiver.” March 31, 1993, 58 FR 16833.
    Comptroller’s Handbook 1 7 Asset Securitization
    documents (UCC-1) is sufficient for unsecured consumer loan receivables
    such as credit cards. For other types of receivables whose collateral is a
    reliable fall-back repayment source (such as automobile loans and home
    equity lines of credit), additional steps may be required (title amendments,
    mortgage liens, etc.) to perfect the trustee’s security interest in the receivables
    and the underlying collateral.
    If the seller/originator is a bank, the provisions of the U.S. Bankruptcy Code
    (11 USC 1 et seq.) do not apply to its insolvency proceedings. In the case of
    a bank insolvency, the FDIC would act as receiver or conservator of the
    financial institution.2 Although the Federal Deposit Insurance Act does not
    contain an automatic stay provision that would stop the payout of securities
    (as does the bankruptcy code), the FDIC has the power to ask for a judicial
    stay of all payments or the repudiation of any contract. In order to avoid
    inhibiting securitization, however, the FDIC has stated3 that it would not seek
    to void an otherwise legally enforceable and perfected security interest
    provided:
    • The agreement was undertaken in the ordinary course of business, not
    in contemplation of insolvency, and with no intent to hinder, delay, or
    defraud the bank or its creditors;
    • The secured obligation represents a bona fide and arm’s length
    transaction;
    • The secured party or parties are not insiders or affiliates of the bank;
    • The grant of the security interest was made for adequate consideration;
    and
    • The security agreement evidencing the security interest is in writing,
    was duly approved by the board of directors of the bank or its loan
    committee, and remains an official record of the bank.
    Asset Securitization 1 8 Comptroller’s Handbook
    Tax Issues
    Issuers ordinarily choose a structure that will minimize the impact of taxes on
    the security. Federal income tax can be minimized in two principal ways —
    by choosing a vehicle that is not subject to tax or by having the vehicle issue
    “debt” the interest on which is tax deductible (for the vehicle or its owners).
    In a grantor trust, each certificate holder is treated as the owner of a pro rata
    share of the trust’s assets and the trust is ignored for tax purposes. To receive
    the favorable tax treatment, each month the grantor trust must distribute all
    principal and interest received on the assets held by the trust. A grantor trust
    is not an “entity” for federal tax purposes; rather, its beneficiaries are treated
    as holders of a ratable share of its assets (in contrast to partnerships, which
    are treated as entities, even though their income is allocated to the holders of
    the partnership interests). The requirement that the trust be “passive”
    generally makes the grantor trust best suited for longer-term assets such as
    mortgages or automobile receivables.
    An owner trust generally qualifies as a partnership for tax purposes. Because
    the issuer usually retains an interest in the assets or a reserve account, it is
    usually a partner; if so, the transfer of assets to the trust is governed by tax
    provisions on transfers to partnerships. Although the partnership itself would
    generally not be subject to tax, its income (net of deductions for interest paid
    to note holders) would be reportable by the partner certificate holders and the
    issuer. Partnership owner trusts are commonly used in fixed pool
    transactions involving the same kinds of assets that are securitized through
    grantor trusts; assets in owner trusts typically require more management or
    will be issued as more than one class of security.
    The cash flows for shorter-term assets, such as credit cards, require too much
    management for a grantor trust. Although owner trusts are theoretically the
    appropriate vehicle for issuing such assets, in practice revolving asset trusts
    are usually used when the parties structure the transaction for tax purposes as
    a secured loan from the investors to the seller of the receivables. The trust is
    simply a means of securing financing and is ignored for tax purposes. (Such
    treatment — as a “security arrangement” — is like that

    Legal Issues
    When banks are sellers of assets, they have two primary legal concerns. They
    seek to ensure that:
    • A security interest in the assets securitized is perfected.
    • The security is structured so as to preclude the FDIC’s voiding of the
    perfected security interest.
    By perfecting security interests, a lender protects the trustee’s property rights
    from third parties who may have retained rights that impair the timely
    payment of debt service on the securities. Typically, a trustee requires a legal
    opinion to the effect that the trust has a first-priority perfected security interest
    in the pledged receivables. In general, filing Uniform Commercial Code
    2 A national bank may not be a “debtor” under the bankruptcy code. See USC 109(b)(2). The
    FDIC may act as receiver or conservator of a failed institution, subject to appointment by the
    appropriate federal banking agency. See 12 USC 1821.
    3 “Statement of Policy regarding Treatment of Security Interests after Appointment of the FDIC as
    Conservator or Receiver.” March 31, 1993, 58 FR 16833.
    Comptroller’s Handbook 1 7 Asset Securitization
    documents (UCC-1) is sufficient for unsecured consumer loan receivables
    such as credit cards. For other types of receivables whose collateral is a
    reliable fall-back repayment source (such as automobile loans and home
    equity lines of credit), additional steps may be required (title amendments,
    mortgage liens, etc.) to perfect the trustee’s security interest in the receivables
    and the underlying collateral.
    If the seller/originator is a bank, the provisions of the U.S. Bankruptcy Code
    (11 USC 1 et seq.) do not apply to its insolvency proceedings. In the case of
    a bank insolvency, the FDIC would act as receiver or conservator of the
    financial institution.2 Although the Federal Deposit Insurance Act does not
    contain an automatic stay provision that would stop the payout of securities
    (as does the bankruptcy code), the FDIC has the power to ask for a judicial
    stay of all payments or the repudiation of any contract. In order to avoid
    inhibiting securitization, however, the FDIC has stated3 that it would not seek
    to void an otherwise legally enforceable and perfected security interest
    provided:
    • The agreement was undertaken in the ordinary course of business, not
    in contemplation of insolvency, and with no intent to hinder, delay, or
    defraud the bank or its creditors;
    • The secured obligation represents a bona fide and arm’s length
    transaction;
    • The secured party or parties are not insiders or affiliates of the bank;
    • The grant of the security interest was made for adequate consideration;
    and
    • The security agreement evidencing the security interest is in writing,
    was duly approved by the board of directors of the bank or its loan
    committee, and remains an official record of the bank

  63. Asset Securitization 8 Comptroller’s Handbook

    Exhibit 1: Parties Involved in Structuring Asset-Backed Securities
    Borrower. The borrower is responsible for payment on the underlying loans
    and therefore the ultimate performance of the asset-backed security. Because
    borrowers often do not realize that their loans have been sold, the originating
    bank is often able to maintain the customer relationship.

    ALL MUST READ THIS STANDARD OF SECURITY LAWS, THAT THEY MUST DO. AND PUT IT RIGHT IN FRONT OF JUDGE. AS EVIDENTS THAT YOU ARE PART OF ALL PSA.

    SO EVERYONE , PLEASE DO SOMETHING ABOUT IT, GIVE THIS HANDBOOK TO JUDGE , TO SHOW EVEN THE BANKS REGURATORS, AND BOSS. SAID WE ARE PART OF ALL SECURITED MORTGAGE TRUST. NUMBER 1 IN THE CHAIN.

  64. DwightNJ, yes, I’ve read your accounts of how the judge led the kangaroos into your courtroom. I’ve read elexquisitor’s tale of how the appellate court brought up issues that weren’t raised in the lower court. In my own case, the judge had my evidence of obvious robo-signing sealed, without a motion for such from opposition counsel. Why? Because he can. These judges all have one trait in common, they all treat the courtroom as their own little island, bereft of laws that constrain the rest of society.

    We all might as well be on the Rio Grande on that desolate stretch of the Chihuahuan Desert where Judge Roy Bean held court.

    Bean did not allow hung juries or appeals, and jurors, who were chosen from his best bar customers, were expected to buy a drink during every court recess. Bean was known for his unusual rulings. In one case, an Irishman named Paddy O’Rourke shot a Chinese laborer. A mob of 200 angry Irishmen surrounded the courtroom and saloon and threatened to lynch Bean if O’Rourke was not freed. After looking through his law book, Bean ruled that “homicide was the killing of a human being; however, he could find no law against killing a Chinaman”. Bean dismissed the case.

    Some things never change. Replace Chinaman with present day Borrower, and throw the law books away. At least we could have gotten shit-faced when being handed their bought and paid for judgments.

  65. E Tolle. … So in a case like mine, where I challenged the validity of the stamped endorsement made out to “blank” on the note , how does this translate intoa court battle to prove one way or the other whether a fraud was committed? Of course the judge blocks all inquiry into the matter, he just accepts it all as being valid.

    When a defendant denies the allegations and pleads in his answer that he believes the stamp was fraudulently fabricated and added by the servicer in order to make it appear that it is endorsed in blank …the problem is that the judge blocks discovery that would be needed to corroborate the fraud. Pleading that you deny the note is valid should turn the burden back to the servicer to prove up the dates and persons who added the blank endorsement, but we don’t see it happen.

    In my case the originator immediately upon closing endorsed it over to Washington Mutual Bank …

    Years later , Wells Fargo became my servicer, one year before WaMu went out of business … Wells Fargo tells me Fannie Mae owns it ..

    When Wells Fargo filed the foreclosure, they never showed the note or the assignment …finally in 2010 when I challenged their standing, they produced a note that was identical to the origination note, a copy that was printed from a computer screen…no endorsement from WaMu , so I asked the judge how can they claim this note was properly and validly capable of enforcing if it has no endorsement from WaMu? And now WaMu was out of business since 2008 , its now 2010 … The judge saw my point and allowed them time to adjourn so they could fabricate a note with the missing endorsement in blank from WaMu …

    3 months later Wells Fargo showed up in court in 2011 with the note which now had the endorsement in blank added by WaMu …

    I asked the judge how could WaMu add an endorsement in 2011 ?

    Wells Fargo told the judge they did not add it, that it was always on the note, but they had mistakenly certified earlier to the old note …the copy that had no endorsement ..

    I asked the judge to make them prove how, when, where and by whom this was done …because it all mattered … I asserted that they were committing a fraud and asserted the note was fabricated…

    The judge agreed to make them show proof and ordered a plenary hearing , he wanted Wells Fargo employee on the witness stand to testify under oath …. After a year of delays, they dismissed the complaint …they walked away and refused to take part.

    3 years later, in 2014, they re-filed a new foreclosure , using the same note …when I sent the QWR to WF , they sent me a copy of the note in their possession ..again, it had no endorsement from WaMu …

    The same old judge was on the bench, he was allowing this to go to trial on standing , he knew where we left off last time …

    Unfortunately the old judge retired on March 1, 2015 … The new judge who never adjudicated a foreclosure in his life, granted MSJ for the servicer WF on March 20, 2015. (Trial was scheduled for May 1 ) …based on their submission of an affidavit of a WF employee who said she had knowledge of the facts based on her review of business records and that everything related to the default is true.

    The new judge was perplexed , confused and arrogant as I attempted to raise issues of material fact about the fraudulent note … He asked if I did not believe that was the true authentic note ..yes, that is what i believe, it is a fraud ….he asked what i based that on,…but in my pleadings i had stated it all, i struggled to understand what he wanted me to do to prove it was a fraud … In my opposition to MSJ papers I asserted how the endorsement signature was just a rubber stamp and part of the overall stamped in blank stamp , meaning that a wet ink true authentic signature was missing …they had fabricated a rubber stamp by photocopying an old endorsement that was signed in blank …made a new rubber stamp that had the signature built into it … This is a fraud

    The proof is seen by looking at the endorsement, the darker shades and lighter shades that match exactly to the rubber stamp shades ..anyone who has ever used a rubber stamp knows, some areas are darker because of amount of ink and pressure applied … But the actual signature should appear consistant if it was really signed after the stamp w a s applied to the note …. My judge ignored all of this and granted the MSJ …despite the fact that I had denied its validity and asserted a fraud had taken place…. He ignored that WaMu was long out of business when WF produced the endorsed note …the old judge wanted to see how and when they did that in 2011 …

    So now WF skates past this new judge …as he scorns me ..he cant even accept the Supreme Court decision on rescission …this new judge wss an utter disgrace and does not deserve to sit on the bench.

    Now ….will the appeals court judges find any errors ?

  66. The Model Rules of Professional Conduct adopted by the House of Delegates of the American Bar Association on August 2, 1983, forbid a lawyer to counsel or to assist a client in conduct that the lawyer knows is fraudulent. However, judges are quick to trot out McDonald v. Stewart, which found that attorneys acting within the scope of employment are “immune from liability to third persons for actions arising out of that professional relationship.” How convenient. Mills can all but hold the gun and be held innocent of wrong doing.

    I wonder who authored the various pieces of legislation and others equally forgiving to the fraud? Considering that CONgress is comprised of nothing but criminal lawyers, pun intended, one doesn’t have to look too far. Purchased laws abound.

  67. § 3-405. EMPLOYER’S RESPONSIBILITY FOR FRAUDULENT INDORSEMENT BY EMPLOYEE.

    (a) In this section:

    (1) “Employee” includes an independent contractor and employee of an independent contractor retained by the employer.

    (2) “Fraudulent indorsement” means (i) in the case of an instrument payable to the employer, a forged indorsement purporting to be that of the employer, or (ii) in the case of an instrument with respect to which the employer is the issuer, a forged indorsement purporting to be that of the person identified as payee.

    (3) “Responsibility” with respect to instruments means authority (i) to sign or indorse instruments on behalf of the employer, (ii) to process instruments received by the employer for bookkeeping purposes, for deposit to an account, or for other disposition, (iii) to prepare or process instruments for issue in the name of the employer, (iv) to supply information determining the names or addresses of payees of instruments to be issued in the name of the employer, (v) to control the disposition of instruments to be issued in the name of the employer, or (vi) to act otherwise with respect to instruments in a responsible capacity. “Responsibility” does not include authority that merely allows an employee to have access to instruments or blank or incomplete instrument forms that are being stored or transported or are part of incoming or outgoing mail, or similar access.

    (b) For the purpose of determining the rights and liabilities of a person who, in good faith, pays an instrument or takes it for value or for collection, if an employer entrusted an employee with responsibility with respect to the instrument and the employee or a person acting in concert with the employee makes a fraudulent indorsement of the instrument, the indorsement is effective as the indorsement of the person to whom the instrument is payable if it is made in the name of that person. If the person paying the instrument or taking it for value or for collection fails to exercise ordinary care in paying or taking the instrument and that failure substantially contributes to loss resulting from the fraud, the person bearing the loss may recover from the person failing to exercise ordinary care to the extent the failure to exercise ordinary care contributed to the loss.

  68. § 3-203. TRANSFER OF INSTRUMENT; RIGHTS ACQUIRED BY TRANSFER.

    (a) An instrument is transferred when it is delivered by a person other than its issuer for the purpose of giving to the person receiving delivery the right to enforce the instrument.

    (b) Transfer of an instrument, whether or not the transfer is a negotiation, vests in the transferee any right of the transferor to enforce the instrument, including any right as a holder in due course, but the transferee cannot acquire rights of a holder in due course by a transfer, directly or indirectly, from a holder in due course if the transferee engaged in fraud or illegality affecting the instrument.

  69. HAMMERTIME,

    in my closing DOC’S. i have the attorney’s closing instructions. and it states , you will fax over asap after signing mortgage and note to bla bla, and you will certify 3 copy’s of the note, and with original send to us in overnight mailing, to bla bla.

    now think about that for a moment. why would they need 3 certify copy’s of my note, and a original???

    original to feds/tres
    certify copy to funder/ warehouse lender
    certify copy to investors
    certify copy to depositer

    as it does state in warehouse funding agreement, that the note and mortgage is signed over to them, as per agreement.

    so the first in chain would be the warehouse lender, as they funded the loan contract. as in the case i have. and i have the copy of the note , sign over without recourse, to warehouse lender that funded the refi. it is signed and dated as of the same day of closing.

    it isnt a stamp, its has a real signature on it.

    now 10 yrs later, with my qrw’s i have sent, i have them showing a copy of the note note signed, and 1 with a stamp , no dates or signatures. in other words in blank.

    so , thats 3 different copy of the notes. all different. can you tell me what would a judge do with that..

    mine is signed with real signature ,dated, in 2005.

  70. Hello everyone, I have never commented here before but after reading this post I would like to see what some of you have to say about my situation. Any and all input/help is greatly appreciated.
    Time line: Oct.2005 refi/cashout with quick loan funding named as the lender. Mortgage recorded under MERS as nominee for QLF. WE were directed to make payments to option one mortgage then to HSBC.

    Dec.2007 QLF out of business.
    All payments made until April 2010
    July 2012: Assignment of mortgage filed with county recorders office from QLF to HSBC. (How QLF was out of business)
    July 2012 HSBC files Lis Pendis
    May 2014: We get foreclosure case dismissed and file motion to recover legal fees.
    August 2014: Court awards us fees.
    December 2014: HSBC assigns mortgage to Caliber Home Loans.
    January 2015: above assignment filed with county recorders office.

    How if our mortgage has been in default since May 2010 could HSBC assign our mortgage to another company in 2014? According to what I have read, once in default the mortgage is no longer a negotiable instrument??

    I sit here waiting to see if/when Caliber will file a Lis Pendis against us and how do we fight it at that point?

    Thanks again.
    MM

  71. Meant wet ink original. Here’s a good resource on case analysis for CA mainly but has analysis on RESPA etc as well
    calhbor.org

    It’s supposed to be a resource for lawyers funded by settlements. Here’s example of analysis. From May newsletter

    “In examining the question of whether the defendants’ conduct was blameworthy (the fifth factor), the court found it “highly relevant” that the borrower’s ability to protect his interests in the loan modification process is “practically nil” and the bank “holds all the cards.”19
    Citing a strong brief from consumer advocates that described the flaws in the modern mortgage servicing system, the court concluded, “The borrower’s lack of bargaining power coupled with conflicts of interest that exist in the modern loan servicing industry provide a moral imperative that those with the controlling hand be required to exercise reasonable care in their dealings with borrowers seeking a loan modification.”20

  72. johngault, thank for that case law and cites.

  73. I thought you all might find thus interesting
    http://en.m.wikipedia.org/wiki/Federal_judge_salaries_in_the_United_States

  74. DB Right. Focusing on the issue of note typically when you do a QWR servicer sends a “certified” copy of original and claims they only have to provide a wet ink copy when paid in full, correct? Seems you can request to view original if not paid off. Regardless of whatever fraud they committed. If they used original as you say then they wouldn’t be able to provide the original but would have to explain why they can’t. In that case they might use e note approach but still would be fraud. So you would have to have evidence that they actually did use the note as you say it seems in court. Then again could they submit notes to fed claiming they are originals when they aren’t, that’s a whole other possibility on fraud. But w current laws is it fraud to use note to make 30x more loans? So there’s a difference when it’s a refi payoff vs just produce the note approach. When on refi, there was a payoff statement in your closing you were supposed to get the original wet ink copy stamped paid. Just like your endorsed check the bank sends back to you. I have a letter from servicer saying that is so by right and look up Black’s law dictionary. But if there’s a transfer then you have issue of changing hands and who is the active holder and did they buy loan or just servicing rights etc. So again when you make complaints and are sent different VERSIONS of purported certified original copy doesn’t that bring to question reliable evidence or if you were never given the paid note on refi? Isn’t that easier than going into the rabbit hole of Fed etc? I have my paid note from ’04 before these dark ages it’s like an antique. It was serviced by WaMu but servicer 10 years later was still saying loan was WaMu. Now that’s fraud.

  75. hammertime,

    a copy of a note, is not the same as the original blue ink signature, even the feds/ and tres/ would note accept a copy, this is why when the con man at large went to tres/fed with OUR ORIGINAL NOTE TO GIVE TO THEM, FOR THE 30 TIMES VALUE OF THE NOTE AS CREDIT FOR THE BANKS TO USE AS THEY WANTED.

  76. So why do we keep giving lawyers, judges excuses? Basic stuff they’re protecting the banks and the whole system is corrupted. But the house of cards is coming down. It’s all predatory and prejudice against average person. Good into court at ur own risk as WA lawyer said until the place is fumigated.

  77. Truth in Lending Act was passed to prevent unsophisticated consumer from being misled as to total cost of financing. Truth in Lending Act, Section 102, 15 U.S.C. Section 1601. Griggs v. Provident Consumer Discount. 680 F.2d 927, certiorari granted, vacated 103 S.Ct. 400, 459 U.S. 56, 74 L.Ed.2d 225, on remand 699 F.2d 642.

    Purpose of Truth in Lending Act is for customers to be able to make informed decisions. Truth in Lending Act Section 102, 15 U.S.C. Section 1601. Griggs v. Provident Consumer Discount Co. 680 F.2d 927, certiorari granted, vacated 103 S.Ct. 400, 459 U.S. 56, 74 L.Ed,2d 225, on remand 699 F,2d 642,

    Truth in Lending Act is strictly a liability statute liberally construed in favor of consumers. Truth in Lending Act Section 102 et seq., 15 U.S.C. Section 1601 et seq. Brophv v. Chase Manhattan Mortgage Co, 947 F.Supp. 879.

    Truth in Lending Act should be construed liberally to ensure achievement of goal of aiding unsophisticated consumers so that consumers are not easily misled as to total costs of financing. Truth in Lending Act, Sections 102 et seq, 102(a), 105 as amended, I5 U.S.C. Sections 1601 et seq., 1601(a), 1604; Truth in Lending Regulations, Regulation Z, Sections 226.1 et seq., 226.18, 15 U.S.C. Section 1700, Basile v. H&R Block. Jlt(L. 897 F.Supp. 194.

    Truth in Lending Act must be strictly construed and liability imposed for any violation, no matter how technical. Truth in Lending Act Section 102 et seq., as amended, 15 U.S.C. Section 1601 et seq, Abele v. Mid-Penn Consumer Discount. 77 B.R. 460, affirmed S45 F.2d 1009.

    Truth in Lending Act must be liberally construed to effectuate remedial purposes of protecting consumer against inaccurate and unfair credit billing and credit card practices and of promoting intelligent comparison shopping by consumers contemplating the use of credit by full disclosure of terms and conditions of credit card charges, Truth in Lending Act Section 102 et seq, as amended, 15 U.S.C. Section 1601 et seq Lifschitz v. American Exp. Co. 560 F.Supp. 458

    To qualify for protection of Truth in Lending Act [15 U.S.C. Section 1601 et seq.], plaintiff must show that disputed transaction was a consumer credit transaction not a business transaction, Truth b Lending Act, Section 102 et seq., 15 U.S.C. Section 1601 et seq. Quino v. A-I CreditCom. 635 F.Supp. 151

    Requirements of Truth in Lending Act are highly technical, but full compliance is required; even minor violations of Act cannot be ignored, Truth in Lending Act, Section 102 et seq. as amended, 15 U.S.C. Section 1601 et seq.; Truth in Lending Act Regulations, Regulation Z Section 226.1 et seq., 15 U.S.C. foil. Section 1700. Griggs v. Providence Consumer Discount Co. 503 F.Supp. 246, appeal dismissed 672 F2d 903, appeal after remand 680 F.2d 927, certiorari granted, vacated 103 S.Ct, 400, 459 U.S. 56, 74 L.Ed.2d 225, on remand 699 F,2d 642.

    A valid rescission of a “credit sale” contract does not render inoperative the disclosure requirements of the Truth in Lending Act, as creditor’s obligations to make specific disclosures arises prior to consummation of transaction. Truth in Lending Act Section 102 et seq., 15 U.S.C. Section 1601 et seq.; Truth in Lending Regulations, Regulation Z, Sections 226.2(c) 226.8(a), 15 U.S.C., following section 1700. O’Neil c^ 484 F.Supp. 18.

    Under truth in lending regulation providing that disclosure of consumer credit loan shall not be “stated, utilized or placed so as to mislead or confuse” consumer, placement of disclosures is to be considered along with their statement and use. Truth in Lending Regulations, Regulation Z, Section 226.6(c), 15 U.S.C. following section 1700 .Geimuso v. Commercial Bank & Trust Co. 566 F.2d 437.

    Any violation of the Truth in Lending Act, regardless of technical nature, must result in finding of liability against lender. Truth in Lending Regulations, Regulation Z Section 226.1 et seq., 15 U.S.C. Section 1700; Truth in Lending Act Section 130 (a, e), IS U.S.C. Section 1640 (a, e). In Re Steinbrecher. 110 BR. 155, 116 A.L.R. Fed. 881.

    Question of whether lender’s Truth in Lending Act disclosures are inaccurate, misleading or confusing ordinarily will be for fact finder; however, where confusing, misleading and inaccurate character of disputed disclosure is so clear that it cannot reasonably be disputed, summary judgment for plaintiff is appropriate. Truth in Lending Act Section 102 et seq; Truth in Lending Regulations, Regulation Z, Section 226.1 et seq., 15 U.S.C. Section 1700. Griggs v. Provident Consumer Discount Co. 503 F, Supp 246, appeal dismissed 672 F.2d 903, appeal after remand 680 F.2d 927, certiorari granted, vacated 103 S.Ct, 400, 459 U.S. 56, 74 L.Ed.2d 225, on remand 699 E2d 642.

    Pursuant to regulations promulgated under Truth in Lending Act, violator of disclosure requirements is held to standard of strict liability, and therefore, borrower need not show that creditor in fact deceived biro by making substandard disclosures. Truth in Lending Act, Sections 102-186, as amended, 15 U.S.C. Section 1601-1667(e); Truth in Lending Regulations, Regulation Z, Section 226,8(b-d), 15 U.S.C. Section 1700 Soils v. Fidelity Consumer Discount Co., 58 B.R. 983,

    Once a creditor violates the Truth In Lending Act, no matter how technical violation appears, unless one of statutory defenses applies, Court has no discretion in imposing liability. Truth in Lending Act, Sections 102-186 as amended, 15 U.S.C. Section 1601-1667e. Solis v. Fidelity Consumer Discount Co. 58 BR, 983.

    Under the facts at hand the Plaintiff Bank has patently violated the Truth in Lending Act, At all relevant times the Bank misled and attempted to confuse Defendant. The Bank did not provide appropriate disclosure as required by the Truth in Lending Act in a substantive and technical manner.

    “It is not necessary for recession of a contract that the party making the misrepresentation should have known that it was false, but recovery is allowed even though misrepresentation is innocently made, because it would be unjust to allow one who made false representations, even innocently, to retain the fruits of a bargain induced by such representations.” Whipp v. Iverson, 43 Wis 2d 166.

    ***

    “If any part of the consideration for a promise be illegal, or if there are several considerations for an unseverable promise one of which is illegal, the promise, whether written or oral, is wholly void, as it is impossible to say what part or which one of the considerations induced the promise.” Menominee River Co. v. Augustus Spies L & C Co., 147 Wis 559, 572; 132 NW 1122

    “When an instrument [note] lacks an unconditional promise to pay a sum certain at a fixed and determined time, it is only an acknowledgement of the debt and statutory presumptions like the presence of a valuable consideration, are not applicable.”Bader vs. Williams, 61 A 2d 637

    “Any false representation of material facts made with knowledge of falsity and with intent that it shall be acted on by another in entering into contract, and which is so acted upon, constitutes ‘fraud,’ and entitles party deceived to avoid contract or recover damages.” Barnsdall Refining Corn. v. Birnam wood Oil Co., 92 F 2d 817.

    ***

    “In the federal courts, it is well established that a national bank has not power to lend its credit to another by becoming surety, endorser, or guarantor for him.” Farmers and Miners Bank v. Bluefield Nat ‘l Bank, 11 F 2d 83, 271 U.S. 669.

    “A national bank has no power to lend its credit to any person or corporation.” Bowen v. Needles Nat. Bank, 94 F 925, 36 CCA 553, certiorari denied in 20 S.Ct 1024, 176 US 682, 44 LED 637.

    “Mr. Justice Marshall said: The doctrine of ultra vires is a most powerful weapon to keep private corporations within their legitimate spheres and to punish them for violations of their corporate charters, and it probably is not invoked too often. Zinc Carbonate Co. v. First National Bank, 103 Wis 125, 79 NW 229.”American Express Co. v. Citizens State Bank, 194 NW 430.

    “It has been settled beyond controversy that a national bank, under federal law being limited in its powers and capacity, cannot lend its credit by guaranteeing the debts of another. All such contracts entered into by its officers are ultra vires” Howard & Foster Co. v. Citizens Nat’l Bank of Union, 133 SC 202, 130 SE 759(1926).

    “It is not within those statutory powers for a national bank, even though solvent, to lend its credit to another in any of the various ways in which that might be done.” Federal Intermediate Credit Bank v. L ‘Herrison, 33 F 2d 841, 842 (1929).

    “A bank can lend its money, but not its credit.” First Nat ‘I Bank of Tallapoosa v. Monroe, 135 Ga 614, 69 SE 1124, 32 LRA (NS) 550.

    “. . . the bank is allowed to lend money upon personal security; but it must be money that it loans, not its credit.” Seligman v. Charlottesville Nat. Bank, 3 Hughes 647, Fed Case No.12, 642, 1039.

    “The contract is void if it is only in part connected with the illegal transaction and the promise single or entire.” Guardian Agency v. Guardian Mutual. Savings Bank, 227 Wis 550, 279 NW 83.

    “Banking Associations from the very nature of their business are prohibited from lending credit.” St. Louis Savings Bank vs. Parmalee 95 U. S. 557

    This case law was amassed by attorney Malik W. Ahmad (about whom I know little else…just run across his blog now and then).

  78. I don’t want to do business with you.

    Does that join me with you?

    If you have a contract that contains my signature, I am rescinding that signature as the contract is not consummated

    Does that join me with you?

    Trespass Unwanted, Creator, Corporeal

  79. Show me the note can be viewed as “fixable”. The biggie that’s been igno red as with TILA the past 10 yrs has been when “lenders” claim a transfer or reconveyance is same as payoff on refi. Possibly as apply on value received claim on transfer but on refi payoff. That is where they need to deliver paid wet ink note by right. That’s where I would apply fed citation on complaints and have do it yourself discovery BEFORE u hire lawyer or go to court. Fits w my experience not legal advice as usual.

  80. yes it would, and any court saying the banks dont need to ORIGINAL NOTE. should be held responsible for any lost of home.

    why. because a mortgage note , a original note is the same as a check, only a original check can be cashed, try taking a copy of your pay check and cash it at a bank, see what happens, as i would explain that to any judge and jury, i would not let any judge tell me different.

    he would have to explain his decision. because if that is true, why not have all home owners make a copy of a check for the full amount of any debt, and show it to judge, saying i payed it off here is a copy of the check your honor. right.

  81. Here’s a tactical question for California homeowners. The CA judiciary holds the lender doesn’t need the note to foreclose. I believe that can be traced to a ruling by one of the fed district courts in CA. However, under TILA, an alleged lender has to be ready to surrender the note within 20 days, certainly for the first 3 years, and possibly longer. And in CA the lender has to surrender the note within 120 days max when the loan is satisfied (upon written request). Do we see an situation ripe to claim federal preemption of case law held dear by the CA courts?

    In other words, does this TILA rescission issue re-open the “show me the note” defense for homeowners?

  82. The case by El makes Garfield’s point imo. You have to object to the invalid debt but be accountable as DB is saying and can’t acknowledge any standing. Basically “lenders” can “fix” their flaws. The fraud goes beyond the sales of wamu etc. It’s blatant when they claim notes that were “paid off” or obvious duplicates due to MERS and doc mills. Are judges ignoring settlement agreements and homeowner bill of rights in case below? Basic stuff that lawyer or person left out if they did. Valid transaction, reliable evidence! Repeat it over and over til it sinks in.

  83. david belanger – I would appreciate it if you would contact me asap – tke1232@gmail.com or 407-497-4690. It’s regarding a mutual friend and it’s important.
    Thank you.

  84. oh, and if you were wondering do i have the funds, well lets just say i have more then enough to pay many many times the value of the 350,000 in cash on hand. but as i showed you, they owe me at min-1,850,000 first.

  85. again you have said nothing, is there a debt, owed to someone other then the ones trying to foreclose. yes , i have not said there was ever not a debt to be paid,

    but i will only pay a debt owed to someone that can prove they do in fact own my debt. simple. it is really that simple.

    why would anyone pay peter, when paul gave you the money, and has
    vanished off the face of the earth.

    and peter says , well before paul went missing, he did sell me the rights to your debt. really. then prove it up and i will pay you.

    it’s that simple.

    am a 800 plus credit score, i pay my bills, to i owe money. to.

    so anyone saying there is no debt is stupid, its who has the real right to that debt that is impossible for the banks to prove. they cant. and until all americans just stop paying all the debt collectors , i.e. ( servicers. ) until we stop paying, and tell them f off. only the ones fighting will win.

  86. david belanger – Please contact me asap – tke1232@gmail.com or 407-497-4690. It’s regarding a mutual friend and it’s important.
    Thank you.

  87. Apologies. Stressed from being thrown back into shark tank.
    I meant to say IANAL and my posts should not be construed as legal advice.

  88. @DavidB – I don’t appreciate wasting my time over a re-post I reviewed already. You do a fine job of describing the workings behind these MBSs. It has nothing to do with your affirming an illegitimate debt, even if it was hand scrawled on toilet paper. The loan docs in question have your name on them, the loan number, and an amount. That satisfies the statute of frauds, which you may be agreeing to if you execute the rescission, because your adversaries have already agreed to the TILA rescission.

    IANAL, and nothing in this post should NOT be construed as legal advice.

  89. come on elexquisitor,

    are you trying to find someway to say i have nothing again.

    waiting

  90. The reason with JPMorgan not got loan schedule is because these loans were in Ginnie, Fannie or Freddie MBS. How stupid is the world when these three agencies have a stake in these loans that WaMu collapses and for nothing JPM is given 1.3 million loans?

    WaMu uses the Ginnie Mae pooled loans like a Pawn Shop item but because the Pawn Shop cannot be a bank and purchase a home mortgage loan, they are never the “holder in due course” and no one associated with then as in MERS cannot work as the “holder in due course”

    Almost 7yrs and stupid America does not understand the WaMu deal! Bottom line is that WaMu did endorse the Notes in blank without a sale occurring which separated the Notes from the Debts forever. So the debt been wipe clear as WaMu failed and was unable to claim a debt due without a Note! The Note is a mute point because WaMu when seized was not in possession of the Notes that were blank and in the possession of Ginnie Mae, and Wells Fargo was the custodian of record!

  91. david belanger (@revolutionnow1), on June 5, 2015 at 8:11 am said:
    to ex,
    On May 15, 2012, Ally put the company into bankruptcy. ResCap posted a $402 million loss in 2011 and had missed a $20 million payment on unsecured debt on April 17, 2012. ResCap listed $10.9 billion in mortgages on December 31, 2012
    , after wiping $22 billion in mortgages off its books in 2009, 2010 and 2011. The company had booked a substantial number of subprime mortgages. The bankruptcy was seen as a step by Ally to exit the mortgage business to focus on its profitable auto loan and direct banking business.[1][2]
    On December 17, 2013, the company went out of business as per its Chapter 11 liquidation filing under bankruptcy.[3]
    now lets see more facts, Bloomberg is still showing my mortgage payments are being paid as of today dates.
    was my mortgage / note one of the 22 billion mortgages charge off in 2009,2010,2011. if so , that would make it unsecured. and I did not stop making payments until 2011? so if my mortgage was charged off in 2009,2010, and I would say 2011 while I was making payments. who was getting my money.
    again all facts I have in paperwork, doc’s. I also have statesments from the trustee dept of wells fargo trust, that all collateral files, for gmacm mortgage loan trust, was paid off in 2012.
    and also, gmacm loan trust 2006-j1, does not exist in there computers, along with the trust of gmacm
    GMACM MORTGAGE PASS-THROUGH CERTIFICATES,
    SERIES 2006-J1 (THE “CERTIFICATES”)
    In February 2015, Citigroup, Goldman Sachs Group and UBS AG agreed to a $235 million settlement stemming from residential mortgage-backed securities (RMBS) issued by the defunct Residential Capital LLC (ResCap) and underwritten by the three financial institutions . The ResCap RMBS were issued before the sub-prime mortgage crisis, and the lawsuit dates from 2008. The lawsuit alleged that the prospectuses and reistration statements issued by Citigroup, Goldman Sachs and UBS did not adequately disclose the risk of the RMBS and were, in fact, misleading to investors, who sustained heav losses. The lawsuit alleged that the behavior of the three defendants violated securities law.[4]

    david belanger (@revolutionnow1), on June 5, 2015 at 7:37 am said:
    ex, lets look at what I have paid so far, 175000 in payments and closing cost.
    now lets see how much money they have gotten in selling my mortgage and note ok.
    and I do have all doc’s to prove that they sold it for all amounts stated here. from security and exchange doc’s, showing every time they sold it,
    GMAC MORTGAGE CORPORATION
    SERVICER AND SPONSOR
    RESIDENTIAL ASSET MORTGAGE PRODUCTS, INC.
    DEPOSITOR
    GMACM MORTGAGE LOAN TRUST 2006-J1
    ISSUING ENTITY
    GMACM MORTGAGE PASS-THROUGH CERTIFICATES,
    SERIES 2006-J1 (THE “CERTIFICATES”)
    now the first time they sold it , was the same day I sign for mortgage and note on this refi, to the party that really funded the loan contract, and that was dausher bank and trust ny. how much, 350,000 dollars , note and mortgage signed over to them without recourse, 8 nov 2005, and it is signed and dated, no stamp. with signature of someone acting for gmac mortgage corp.
    then on 2 feb 2006 gmac mortgage corp sold mortgage and note to residential asset mortgage products,inc. for 500,000.again without recouse,
    then residential sold it to gmacm loan trust for 500,000 , again without recourse,
    then gmacm sold it to gmacm mortgage oass-through series, again for 500,000 ,
    now every time they sold it, it was for the fraud appraisel price of double of what the property was worth, have that document also.
    so. lets see who owe’s who, 1,850,000 they made selling my mortgage and note without owning them,. this does not take in effect that they sold the note to tres/feds, for a credit of 30 times the value, of note, that would be 12 million dollars, on 350,000 dollar note.
    so I will let you do the math, on who owes who money.
    thank you
    david
    this does not include all money they made on swaps,insurance,etc,etc.

  92. No need to prove the loan in CA unless creditors dispute ownership amongst themselves. It’s merely a ‘flaw’ that is glossed over in the CA Judges playbook. A ‘showing’ on a sheet of toilet paper will do. Where’s Slorp when you need it?

    From today’s tentative ruling –
    The Verified Complaint is based upon a challenge to the chain of title of the beneficial interest in the Deed of Trust. [VC pars. 11-19, 31-35, 47, 49-52, 59, 62, 68-74.] This Court follows the majority rule that absent a dispute amongst lenders as to ownership, a party showing an assignment or other ownership interest may foreclose. The ‘in default’ borrower has no right to avoid foreclosure. It is clear from the allegations of the Verified Complaint that it has been drawn upon the premise that a claim can be made along the lines that were the subject of Glaski v. Bank of America (2013) 218 Cal.App.4th 1079, decided by the Fifth District Court of Appeal.
    This Court concludes that appellate courts are split upon the rule stated by the Fifth District Court that a debtor in default under the deed of trust upon his or her residence can bring an action on the simple basis that there is a flaw in the ownership claim of the party calling for foreclosure. A contrary conclusion has been reached by numerous California appellate courts. (See, Jenkins v. JPMorgan Chase Bank (2013) 216 Cal.App.4th 497, 515; Gomes v. Countrywide Home Loans, Inc. (2001) 192 Cal.App.4th 1149.) Various federal courts have examined the issue and reached the same contrary conclusion. Where conflicting opinions exist in the appellate courts, the trial courts are entitled to select that rule which they find the better one. (9 Witkin, California Procedure (Appeal §970). See also, Auto Equities Sales, Inc., v. Superior Court (1962) 57 Cal.2d 450.)

  93. To a pro se, this sounds like basic law, the application of the statute of frauds. In CA, title-affecting documents need to be in writing. Period. For a deed of trust loan, that would imply they need the obligor’s name and the loan number known to the obligor. I haven’t seen anyone challenge MERS using the statute of frauds, alleging the MERS MIN is not the loan number known to the obligor.

    Think about it. In the proper scheme of loan management, if a bulk sale occurs, a schedule of the loans affected is included. If a security is established, a schedule of loans defines its contents.

    Per the Nardi deposition, when WAMU failed, there was no schedule of loans affected passed to the FDIC. When the purchase agreement was consumated with Chase, there was no schedule of loans produced.

    When Chase allegedly acted as an agent of the beneficiary in my case, there was no document produced that had my name, the loan number, and ‘the beneficiary’ named granting Chase agency for my loan. Simple application of the statute of frauds to which the higher courts turn a blind eye.

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