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Traders at global banks colluded to artificially inflate the price of instruments that allow them to sell U.S. debt before they own it, and then bought the debt at auctions for an artificially suppressed price, unfairly profiting at investors’ expense, according to several lawsuits filed against the banks beginning in July. The banks haven’t responded to those allegations in court.
“Vapor Money” is what the banks are saying about the defenses to foreclosure actions. As usual they are accusing us of doing what they are doing. Their argument is that if we can’t prove the chain of money, then we are dealing in hypothetical or theory; obviously a fool’s errand by their accounts. What difference does it make where the money came from on a loan as long as the money landed on the closing table? The first answer is how is a court to know one way or the other without the facts? And how is the Court to get the facts unless it permits the use of discovery to get the information from the only place it can be retrieved — the players in the securitization fail market.
I have been writing for years about the lack of any entity that could be legally identified as a creditor and therefore that the foreclosures were wrongful, illegal and are the root cause of our stumbling economy. Through the use of “naked” trades in which the appearance of a (nonexistent) trade is created the banks have created a “currency” market that is some twenty times the size of the actual fiat currency from all the countries in the world. Goldman just tried to sneak in a “disclosure” on the currency markets and they have effectively admitted that they are creating those trades out of thin air.They are attempting to sneak into the regulatory process to preserve the “shadow banking system” and exercising powers that only the Federal government should be exercising.
Doesn’t make any difference? Ask the treasury department whose unissued debt instruments are being used to create the appearance of profits for the banks; the existence of these vapor instruments traded on the anticipated issuance of US Treasury instruments is not only improper and illegal but actually effects the value of the instruments themselves when they are issued and sold. Does it matter where the money comes from and from whom the money is taken? Yes.
And that is exactly what happened with most of the “mortgage loans” during the mortgage meltdown era which is now ramping up again with such idiotic things as new securitizations of nonperforming loans. Think about that.
Just as a trade on an unissued treasury bill is a trade on nothing, so too is the trading before a “Loan” is issued. All those trades are based upon illusion, smoke and mirrors. The commercial paper market is supposed to take care of things like that. So too are the ratings and the insurance agencies. And the legal system is also supposed to be the legal bastion to combat over-reaching by the banks who have virtually unchecked powers to create anything they want — including “loans” they design for failure, bet on the failure and then sell the loans multiple times. So yes it does matter where the money came from and under what pretenses the money was secured.
Legally it is important because of basic contract law — offer, acceptance and consideration BOTH WAYS in a two party contract. Otherwise it is not a contract that can be enforced. It might be a contract, but it cannot be enforced — a distinction that nearly all judges miss. If the signature on the contract was procured by false pretenses then it isn’t even a contract. And since public policy requires disclosures of who is the actual creditor giving the “loan”, the writing of the name of an originator who is merely a paid servant of unknown principals creates neither a contract nor any other type of enforceable agreement or instrument. Enforcement is patently against the public policy contained in the law of the land — the Federal Truth in Lending Act.
State laws concerning property and recording also prohibit such actions. If the transaction relied upon by the person requesting recording is nonexistent (they didn’t give the loan) then the instrument should not have been released from the closing table, much less recorded. So there is no valid recorded instrument upon which one could seek foreclosure. And the reason is simple: the entire reason for the recording statutes is provide certainty in the real estate market. If the truth is that we don’t know who the lender is then we cannot be sure, without litigation, who to pay when we wish to satisfy such a loan nor can we be certain of who has the right to collect payments or enforce the loan. Judges who are so set on not giving homeowners a “free house” are sacrificing the entire marketplace to accomplish their sense of morality.
And speaking of the “closing table” it is just plain wrong to say that the loan contract, even if it was real, was consummated the moment the “borrower” signed the papers. The funding is not received by the closing agent until hours, days, weeks, or even months after the alleged closing. So there is no “closing table.” It is now custom and practice in the industry to allow for post-closing underwriting, which is to say that there is no closing, according to the banks, until they fund the loan; So the money DOES matter to the banks when it comes to the creation of the loan contract. Why wouldn’t it mean anything when they seek to terminate the loan contract through foreclosure?
The vapor is not in our theories of foreclosure defense. The vapor is in the pre-closing trading that eventually produces money that goes to pay the borrower, a former “lender”, a seller etc. At some point in the food processor that chews up the paper (lost notes etc) and title chains and money chains before “closing” and before “foreclosure” money ends up on the table. All of it was done, as with the rigged treasury debt market, BEFORE the investor gave its investment money to the selling brokers, and BEFORE the borrower signed, sometimes BEFORE the borrower actually signs the loan application and WITHOUT disclosures that would have sent the bankers to jail. —
Imagine a disclosure like this: “Borrower acknowledges that the party described on the note as ‘Lender’ is not the lender. The actual party whose money is being used to fund the transaction is unknown and shall never be known.”
Or imagine a disclosure like this: “Investor acknowledges that he is purchasing the certificates of an entity that does not exist, where the proceeds will not be paid to that entity. The underwriter and related entities will use such proceeds as they see fit within their sole discretion and shall not report nor respond to requests for reports on the use of proceeds.”
QUESTION TO THE SEC: If the certificates were not mortgage backed, why do they qualify for deregulation for REMICs? Why have you not investigated the fact that the Trusts received no money, assets, business, payments, or even a bank account?
Filed under: foreclosure | Tagged: affidavits • attesting • Daniel Edstrom • DTC-Systems • fabricating • false information • false sworn documents • foreclose • illicit business practices • improper statements • imp, Goldman Sachs |