US Supreme Court to Hear Case: Does Trust Own the Loan?

Row Over Mortgage Transfers To MBS Trusts Hits High Court

Law360, New York (September 8, 2015, 8:33 PM ET) — Property owners have asked the U.S. Supreme Court to review their suit against several banks, saying the Second Circuit did not appropriately determine whether they had standing to claim that mortgage-backed securities trusts managed by the banks did not own the petitioners’ mortgages.

In an Aug. 31 petition, the property owners said that their mortgages were transferred to 37 MBS trusts that the banks — Bank of New York Mellon Corp., HSBC Bank NA, US Bank NA, Deutsche Bank National Trust Co. and Wells Fargo Bank…

20 Responses

  1. I was just reviewing the Erobobo case (the first response cited). The reason that he was reversed on Appeal was that he initially responded to the Summons as a Pro Se attorney and messed up the appropriate defenses, as he is not an attorney he didn’t know the specific language to use, and got hung for it on the appeal.
    These Trusts are largely total BullS–t, the banks never properly transferred the loans to them, they were too busy flipping them, selling the securities and making a ton of money off them, then when everything came crashing down had the sucker taxpayers bail them out.

  2. Garfield’s Goose & Friends
    Description: A Follow-Up Q&A call to our friend Neil Garfield’s Thursday night call… where fans and those in need of clarification might find friends and sympathetic souls…

    First – Neil’s Show
    Click to tune in at
    The Neil Garfield Show
    “http://www.blogtalkradio.com/neilgarfield”
    Or call in at (347) 850-1260
    6pm Eastern Thursdays (for 30 min)
    Then…
    (every Thursday night 15 minutes after Neil)
    Garfield’s Goose & Friends
    http://www.talkshoe.com/tc/139335
    Or call in at (724) 444-7444 (then use Call ID: 139335)
    6:45 PM Eastern Thursdays (for 60 min)

    RULES

    Talkshoe lets you call-in or log-in 15 minutes ahead of the start time…
    First 5 questions posted ON CHAT BOARD get discussed – more if short
    – 10 min max each – IN ORDER –
    Call-In’s will be limited to people helping others by giving answers or explaining similar situations to the posted questions…

    The Call will be run Strictly – “like a Roman Centurion” – at least to start with – lol…
    [to get a feel for the flow of information…]

    (One Hour is MY ABSOLUTE limit)
    NO COMMERCIALS ALLOWED AT ANY TIME!
    If people need to hook up by private email or phone – and you send your contact info to me; i will provide a secure private reference service between parties who have posted or spoken that they mutually grant me permission to facilitate direct intercourse…
    i may ask you later “off-line” for written confirmation first…
    Otherwise – Publish your email or number at your own risk!
    recordings will all be public…

    host is a man; not a legal entity and reserves all inherent rights with none waived
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    i hope this helps…

    Hosted by: Greg
    Phone Number: (724) 444-7444 Call ID: 139335

  3. THIS WOULD BE THE BEST STUFF TO CHECK OUT PEOPLE.
    ALL SEC OF STATE OFFICE , RULES ALL AT MOST PART THE SAME.

    THIS NEEDS TO BE CHECK OUT, IN MASS LAWS, I HAVE ASK MANY TIMES , AT THE OFFICE OF SEC OF STATE, FOR RECORDS.
    THEY SAY THERE IS NONE, ALL SECURIZED MORTGAGE TRUSTS MUST BE REGISTERD IN THIS STATE. IF THE TRUST IS SAYING THEY HOLD LEGAL/OR OTHERWISE TITLE TO MASS PROPERTY.

    In Kalifornia, these investment trusts are defined in the Kal. Corporations Code as “unincorporated associations,” also known as foreign business trusts (foreign in that the birth occurred outside of Kalifornia, most likely in New York or Delaware) that are collecting monies within and from the People of the State of Kalifornia, and are thereby considered conducting an unincorporated business subject to business registration compliance with the Secretary of State. As such, just as an “unincorporated association” birthed within the State of Kalifornia must comply, so must the foreign investment trusts.
    Thus far, while not exhaustive, I have not located an investment trust that is registered with Kalifornia’s Secretary of State.
    You say….”Hence, without a registration the investment trust has no standing in a court of law or equity in Kalifornia. Moreover, under the Private Attorney General’s Act, which any of the People of the State of Kalifornia are entitled to enforce on matters of statewide and public concern, and most likely under some derivative of a false claims provision, the fiduciary of the investment trust is a proverbial “fish in a barrel” hoping and praying no one “gets it.” ” ….

    Letter Ruling 01-12: Engaged in Business; Filing of Massachusetts Business Trust with Sec. of State

    November 8, 2001

    This is in reply to your request on behalf of *************** Bank for a ruling that the filing of a Massachusetts Business Trust document with the Massachusetts Secretary of State, without more, will not subject such Massachusetts Business Trust to taxation in Massachusetts.

    STATEMENT OF FACTS

    *************** Bank, a non‑United States bank, is interested in raising capital from United States investors. As far as is relevant to this request, the entities used to accomplish the capital raising and their main activities are as follows:

    A. Trust
    Bank intends to organize ***** Trust, a Massachusetts Business Trust (“MBT”), the transferable common securities of which will be owned by a nominal U.S. tax resident subsidiary of the bank. Trust will issue transferable Trust ***** Securities (“Trust Securities”) to US investors. The investors will also enter into a forward purchase contract for the purchase of ordinary shares of the bank. The investors will pledge the Trust Securities as security for the purchase of the ordinary shares. On the settlement date under the forward purchase contract, the investors will be obliged either to pay the cash amount required for the purchase of the ordinary shares or to deliver the Trust Securities to the Bank in full satisfaction of their purchase obligation. If the investors default under the forward purchase contract, the Trust Securities will be delivered to the Bank by the collateral agent. Investors will receive non‑cumulative distributions on the Trust Securities. Trust will invest the proceeds from the issue of its securities in Fund Securities issued by “Fund Trust.” [1] The Trust will have the right to redeem all of the outstanding Trust Securities following settlement under the forward purchase contract. For federal tax purposes, the Trust will be treated as a grantor trust.

    In certain defined circumstances, the trustees of the Trust may elect to liquidate the Trust and distribute the Fund Securities to the investors (or the collateral agent if applicable). These circumstances are where there are adverse changes in U.S. investment company law or tax law.

    Trust will conduct no business and have no trustees, employees, offices or property in Massachusetts. No contracts will be executed by Trust in Massachusetts. Trust’s books and records will be maintained outside Massachusetts and its trustee will be a non-Massachusetts trustee. For purposes of organizing as an MBT, Trust will file and record its declaration of trust instrument with the Massachusetts Secretary of State, as required by G. L. c. 182, § 2. Trust will have no other connection to Massachusetts.

    The Trust qualifies as a fixed investment trust in accordance with 830 CMR 62.8.1 and 26 CFR 301.7701-4(c). [2]

    B. “Fund Trust”

    “Fund Trust” will be organized as an MBT, the transferable common securities of which will be owned by Bank directly. Fund Trust will also issue transferable Securities, all of which will be owned by Trust. The Fund Securities will also be entitled to non‑cumulative distributions. Fund Trust will exchange the U.S. dollar proceeds from the issue of the Fund Securities for pounds sterling and invest the proceeds in pound sterling‑denominated bearer debentures issued by a ********** tax resident corporation that will be a wholly owned subsidiary of the bank. The ********** denominated bearer debentures will be entitled to interest at a fixed rate. The ********** tax resident corporation will, in turn, use the proceeds to subscribe for sterling denominated debentures of the bank’s **********branch. For federal purposes, Fund Trust will elect to be treated as a partnership and will not be subject to an entity level tax.

    The Fund Trust also will conduct no business and have no trustees, employees, offices or property in Massachusetts. No contracts will be executed by the Fund Trust in Massachusetts. The income of the Fund Trust will be from sources outside of Massachusetts. Fund Trust’s books and records will also be maintained outside Massachusetts and its trustee will be a non‑Massachusetts trustee. For purposes of organizing as an MBT, Fund Trust will file and record its declaration of trust instrument with the Massachusetts Secretary of State, as required by G. L. c. 182, § 2.

    RULING REQUESTED

    The taxpayer requests a ruling that the mere filing of a Massachusetts Business Trust document with the Massachusetts Secretary of State, without more, will not subject the Trust or the Fund Trust to taxation in Massachusetts.

    DISCUSSION

    In Massachusetts, business trusts are subject to personal income tax and taxed as individuals because they enjoy no franchise conferred by the Legislature. See Letter Ruling 91-2. Massachusetts General Laws, chapter 62, § 8(a) states that “a corporate trust engaged within the commonwealth in any business, activity or transaction, whether or not it maintains an office or place of business within the commonwealth, shall be subject to the taxes imposed by this chapter unless exempted pursuant to paragraph (b).”

    General Laws chapter 182 requires the trustees of a Massachusetts business trust to file a copy of a declaration of trust with the Secretary of State and the clerk of every city or town where the trust has its usual place of business. However, the filing of the declaration of trust is not a condition precedent to the existence of the trust. See Letter Ruling 91-2.

    The activities of Trust and Fund Trust (the “Trusts”) are confined to issuing Securities and common securities and investing the proceeds of the sales of its securities in other Securities or debentures and engaging in incidental activities, all carried on outside Massachusetts. The Trusts will not have any trustees, employees, offices, books and records or property in Massachusetts, nor will they execute any contracts in the Commonwealth. The only connection the trusts will have to Massachusetts is that they will file their respective trust instruments with the Massachusetts Secretary of State, as required by G. L. c. 182, § 2.

    In addition, with regard to Trust, the taxpayer has represented that it qualifies as a fixed investment trust. 830 CMR 62.8(l) states that a fixed investment trust “is not, as an entity, engaged in any business, activity or transaction for purposes of M.G.L. c. 62, § 8(a).” See Letter Ruling 88‑6.

    CONCLUSION

    Based upon the facts stated and representations made in the request, and for the reasons discussed above, we determine that the Trusts are not engaged in any business, activity or transaction in the Commonwealth and that the mere filing of a Massachusetts Business Trust document with the Massachusetts Secretary of State, without more, will not subject the Trust or the Fund Trust to taxation in Massachusetts under G. L. c. 62, § 8.

    Very truly yours,

    /s/Bernard F. Crowley, Jr.

    Bernard F. Crowley, Jr.
    Acting Commissioner of Revenue

    BFC:DMS:atf
    LR 01-12

    [1] Fund Trust is discussed below.
    [2] The taxpayer has stated that it has received an opinion of counsel stating that the Trust will be classified as a “fixed investement trust” in accordance with 830 CMR 62.8.1 and 36 CFR 301.7701-4(c).

  4. check out this 2012 pdf
    DECONSTRUCTING THE BLACK MAGIC OF SECURITIZED TRUSTS:
    HOW THE MORTGAGE-BACKED SECURITIZATION PROCESS IS HURTING THE BANKING INDUSTRY’S ABILITY TO FORECLOSE AND PROVING THE BEST OFFENSE FOR A FORECLOSURE DEFENSE
    By Roy D. Oppenheim & Jacquelyn K. Trask-Rahn

    http://www.stetson.edu/law/lawreview/media/1-Oppenheim-Trask.Final.pdf

  5. The common theme here: they are trying to foreclose in the name of the trust, years later. Taxation or not, if the trust is closed/was closed…they have no injury, nor are they true holders in due course, no beneficiaries, etc….full of poop! If they do not follow the rules of the REMIC, they are not REMIC’s….end of story.

  6. That is correct. The trusts are REMIC trusts, and once a note is “sold” into the trust, it cannot come back out and be sold again.

  7. regarding the talkshoe episode 1 –
    sorry if it was not as planned…
    only a few people got on so it became more of a conference call – since there was really nothing to moderate…
    if there is more participation, then we can get into some stricter formatting
    FYI – i am not pretended to be a “guru” … i am just trying to host and be a facilitator…
    thanks
    g

  8. louise-

    the PSA for the trust states that additions to the trust are forbidden after the trust closes…. this is because to be eligible for REMIC and SPV status without being taxed it must be that way… so a claim to deposit a note/mortgage into such a trust is in violation of the governing law of the trust…

    then of course, if they get caught – they have the choice of saying “screw it – tax us at 100%” or – “oops the note & mortgage missed the window and are”wild” “

  9. We can hope the Supreme Court actually rules in homeowners’ favor. The trusts do not really exist, and most notes and mortgages never made it into a nonexistent trust and/or never made it by the proper date (within 3 months) to align to REMIC rules by the IRS. If the trust exists, all transfers to the trust must be within 90 day period, or they are taxed at 100%.

  10. Is there any information on WHEN the Supreme Court case is to be heard? Any insight on how long it takes the court to issue a ruling after the case is heard?

  11. Link found via information shared at jdsupra

    http://s3.amazonaws.com/cdn.orrick.com/files/FDICComplaint.pdf

    FEDERAL DEPOSIT INSURANCE CORPORATION
    AS RECEIVER FOR GUARANTY BANK sues for jury trial THE BANK OF NEW YORK MELLON
    (all caps corporate fictions)

    Trespass Unwanted, Creator, Corporeal, Life

  12. http://www.jdsupra.com/legalnews/nevada-supreme-court-reverses-course-on-91493/

    Nevada supreme court reverses course on MERS.

    In my opinion/layman’s term
    In so many words, if MERS is involved, there is no issue with bifurcation.

    Trespass Unwanted, Creator, Corporeal, Life

  13. Listening to the ‘shoe’.
    I expected a recap of Neil’s program and some of the questions his program raised for you, before you’d bring in the ‘listener’.
    I also thought the listener had to ‘star’ 8 to queue up for question and answer.

    I did not call in during the show and I am listening to the archived audio.

    Trespass Unwanted, Creator, Corporeal, Life, Free, People, Independent, State, In Jure Proprio, Jure Divino

  14. thats the big question, greg, foreign trust… most foreign trust have no, again no juristiction to do anything . in that state. any state

  15. i just looked up full doc’s at supreme court dont see anything . ??

  16. Just skipping the question of the Trust making an invalid claim to be the holder of your Note & Mortgage… let’s let them have that one just “academically” for a minute…

    There are many types of trusts – a private foreign (non-domestic) trust not organized by or in any State has little for any government to control.

    However, these trusts are public trusts accepting public funds, organized strictly under the laws of the United States (federal) and the State of their origin (so they are domestic to the United States and the State who’s laws of creation they rely upon). They are foreign to all other States, and almost all other States have a requirement that to do business in their State they must register with that Secretary of State’s Office.

    What they will probably say is that they are NOT doing business in your state, that all their business is conducted in their State of origin and the United States (federal) so they don’t need to register…

    The States’ Attorneys General, by their many lawsuits, have indicated they do not buy that argument… To have standing to sue, i think they must have a registered agent in the State they are appearing in… most if not all, do not.

    Further, if that were true, how do they appear in a State Court foreclosure case and not be doing business there?

    unless, by using a local attorney, the attorney becomes the temporary registered agent for the foreign trust…???

    thoughts?

  17. are you saying that the us supreme court said yes, they will here this matter.???????????? were can we see this.

  18. if you recall – i previously brought up the issue of homeowners/citizens/taxpayers borrowers being real third party beneficiaries of the MBS/REMIC Trusts with a real interest…

    The evidence i found in the annual reports of the Illinois State Board of Investments from 2005 to 2014 showed that Illinois is investing citizen/taxpayers’ money in those Trusts and has suffered an ongoing loss since the collapse…

    The beneficiaries of Illinois’ investments are the people/citizens/taxpayers, in the form of supplemental funding, through dividends, of their essential services like water, streets, police, fire, etc… The resulting losses have caused direct out-of-pocket damage to the people/citizens/taxpayers in the form of higher taxes to compensate for said losses…

    Now Illinois cannot even pay its lottery winners because the budget shortfalls created by these investment losses have gone so deep…

    Therefore – get copies of your state, county, city investment reports, show the losses – Then get copies of your taxes and show the increases – Finally get a report from your comptroller or treasurer showing reduction in services…

    Altogether, there is your smoking gun… there is your direct interest… there is your standing to sue.

  19. Please remember to stop over and visit for our 1st attempt at a follow-up Q&A call – just 15 minutes after Neil’s call at 6:45 EST
    at http://www.talkshoe.com/tc/139335
    or Phone Number: (724) 444-7444 Call ID: 139335

    Disclaimer: This call is not sponsored by or hosted by Neil in any way and he has no responsibility for any of the content…

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