This could get interesting. It’s complicated but it looks like the administration is closing in on the so-called REMIC Trusts. I personally doubt if anyone is going to be willing to sign the REMIC Tax Reports. The reason is simple: the REMIC Trusts never operated and never received any investments dollars or any startup funds. They exist only on paper. Writing a trust instrument does not create a trust. It is only when there is property transferred into the Trust that the Trust is created and becomes a legal entity. The blizzard of paperwork, forged and fabricated assignments, endorsements, backdating, etc. was meant to distract judges from the truth. It worked — up until now.
If the Trustee has some fool robo-sign the Tax reports, it is subjecting the person and the Company (frequently US Bank) to multiple Federal criminal and civil liabilities. If they say the Trust did operate when in fact it was not operating, they are cooked. If they admit that the Trust was not operating, then they are admitting that all those foreclosures past, present and future were a scam on borrowers, the courts and the economy. But that is not all there is.
The investors are in for a rude awakening when they find out that the “pass-through” characteristics of the REMIC Trust might not be operating either. That COULD mean that the investors are going to be hit with ordinary income taxes on every penny they received, whether it was principal, interest or anything else.
This is the natural consequence of fraud. As you will see when the movie “The Big Short” comes out in December, the phrase used is “fraud always goes south” meaning that at the end of the day everyone knows everything. The Banks and maybe even the Trustees may argue that they treated the money as though it was was a trust asset and that they should be treated as qualifying “REMIC” Trusts even tough the Trust had nothing in it. The case law is against them on that.
But the practice pointer suggested here is to ask for the tax return of the REMIC Trust in whose name “collection” or “enforcement” is sought. This is why I have been strongly suggesting that Accountants look at the mortgage crisis as an opportunity for them. With the help of a report from an accountant the demand in discovery for the REMIC Tax return is likely to produce some fireworks that end up in settlements. I would expand the request to include the financial statements of the REMIC Trust and the names of the parties who created them. You probably will never see either one. But when a judge says they do have to show their financial information and tax returns, it might just be that you have their backs up against the wall.