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First of all let me thank all of you who wrote in sending me your prayers and best wishes. It worked. The surgery went fine and I recovering without complications.
Servicer advances are just one of dozens of fractures in the armor of the banks if anyone took them seriously. The very presence of servicer advances means that people are being added to the loan contract, if it ever existed, between the alleged borrower and the alleged lender (pretender lender). The simplest way to put it is that the banks are forcing borrowers to do business with people they don’t want to do business with. And THAT is the point and purpose of TILA.
Here’s why: The banks may not pick up one end of the stick without picking up the other end. Back in 2007-2009 the banks were saying there were no trusts. They are currently saying that either the Trust or the holders of trust certificates have rights against the borrower to collect and enforce the loan (and of course they dodge the issue of whether or not the loan was actually consummated by the originator who supposedly loaned money to the borrower.
The basis for the bank’s assertion is that the loan was transferred to the trust. Therefore the Trust, acting through the Trustee can collect or enforce the note signed by the “borrower.” And therefore, the trust provisions (i.e., the Pooling and Servicing Agreement —PSA) gives rights to servicers to collect on behalf of the Trust who owns the loan.
The problem with this has become evident to many people now, starting with my declaration in 2008 that the Trusts were created but none of them became active because they never received the money from the sale of their certificates. So the Trust didn’t acquire the loan even if there are dozens of documents that have been fabricated and forged to say that the transfer took place. Ask one question in discovery about the transaction in which the Trust allegedly acquired the loan and the bank stonewalls forever.
The rule of thumb is that for every monetary transaction there MUST be some paperwork that will prove it. And the corollary rule is that for every paper instrument offered to prove an actual transaction there must actually be a monetary transaction. Otherwise the paperwork is false or at best the paperwork is inconclusive and proves nothing. The banks have successfully finessed the fatal defect in their failed securitization plan: the money trail and the paper trial can never be reconciled because the money trail lacks the paperwork and the paper trail lacks the money.
The problem is compounded as to notice of default, notices of acceleration, the rare instances in which modifications are offered, and even end of month statements. Since the Trust never acquired the loan, any notice or statement or instrument sent on behalf of the Trust is a nullity — they don’t have the loan, and they had no right to collect anything and certainly no right to enforce the “loan” documents. Hence the paragraph 22 defense gets traction every time when presented properly — even if it needs to go to appeal in order to get that result.
The banks have been highly successful at blaming the victim for the banks’ own behavior. This is particularly evident when we look at the very long periods of time between the alleged “default” and the act taken by the bank to get the foreclosure judgment or ordering the Trustee on the Deed of Trust to sell the property (after s ending a self-serving notice of substitution of trustee where the false statement is made that it is being sent on behalf of XYZ, the beneficiary under the deed of trust).
The bottom line is that the false servicers are making money every day that the proceedings are delayed. And during the same period, the “creditors” if we can call them that, are the investors who are getting paid exactly as provided in the PSA. So a “servicer” declaring that a “loan” is in default is wrong on many levels:
- The investors have been paid, so if the action is brought by a “trustee” on behalf of the trust or certificate holders, it is based upon a default that does no exist even under the scenario painted by the bank narrative.
- The declaration by the servicer is wrong because they have no right to do so even if there was a default.
- The declaration on behalf of the REMIC Trust or the certificate holders is wrong because the Trust never acquired the loan. Hence it could not have possibly suffered a a loss due to the “default” of the borrower — i.e., the failure to pay an entity that has no right to receive the payments.
- The declaration injures the investors by diminishing the value of the security, assuming that the investors are secured.
- The declaration ruins the credit rating of the borrower who has good reason not to pay an entity that has no right to collect or enforce the debt.
- The declaration adds insult to injury. After stealing the money from the investors, the investment banks proceeded to make certain that the investors had no right to know the status of any loan nor to assert any rights in connection with any loan.
- Th declaration adds further insult to injury when it produces fabricated self serving documentation showing the “holder” of the note and mortgage as persons or entities other than the investors without whose MONEY nothing could have or would have occurred.
Some of the delays in actually getting to the point where the property is scheduled for forced sale are as long as 10 years. The banks will tell you that the reason for the delays is the volume. That isn’t true. If they had a valid loan contract that was enforceable they would have included such contracts in the overwhelming majority of foreclosures where the homeowner offered no defense or resistance. Those go through at the rate of about 3 minutes per foreclosure.
The real reason is, as can now be expected at every turn, much more convoluted. In delaying the foreclosure forced sale, the banks are racking up fees for “servicing” a “nonperforming” loan. And of course the investors do not and cannot know the status of any loan. They do not know that the payments they have been receiving are balanced out at the other end of the stick by a declaration of default. Hence they assume their bogus asset-backed securities have value when in fact they have no value.
As part of the “servicing,” the servicers are sending payments to the certificate holders day in and day out without regard to whether the borrower has paid or not. It is called various things in the PSA but they all mean the same thing — servicer advances, Advances by servicers, etc. And it is framed as a volunteer payment until such time that the bank decides, in its sole discretion, that it cannot recover the amounts being “advanced” by the “servicer.”
Note that as stated above, the “servicer” is not an authorized agent of anyone except the Trust which does not own the loan so the Trust is not the owner of the loan and the servicer is not the authorized entity to manage the loan — until they try to force a Power of Attorney into the court proceedings without notice to the homeowner’s attorney. Those are mostly cases they lose and the homeowner walks away with the “free house” that the banks have been propagating as a myth but still successfully. They are getting the judge to take his or her eyes off the ball as to WHO is seeking a “free house.”
Since neither the Trust nor the servicer has any right to be collecting or enforcing the loan, the facts point to the Servicer as the real party in interest who is attempting to use the court system (successfully I might add) to steal the loan, steal the property and run off with the money and the free house. Sanctions should apply. Instead, they are awarded the foreclosure and they attack the proceeds of the foreclosure sale like sharks, now that the loan, its collection and enforcement have been rubber stamped by a Judge in a court order that is effective by operation of law.
Foreclosure ties the knot such that procedurally it is very difficult for the homeowner to get discovery or to investigate the facts before trial; and when the the judgment or sale is transferred post judgment to some other party that never had anything to do with the loan the homeowner either doesn’t know what to do with that nor how to get into court for a hearing on the real amount required for redemption. And of course the investors are not advised at all or if they eventually get notice it is long after the shark feeding frenzy is over.
As part of the “servicing” the “servicer” makes those advance payments to the certificate holders without any right of action to collect back the money from the certificate holders should they receive the money they were promised in the PSA, which is inoperative because the money was never put into the trust and the trust does not even have a bank account.
In Court the servicer says nothing about the servicer advances and when the subject is broached by the homeowner the witness knows nothing and so the court disregards talk about the the servicer advances. But what really happens is fascinating and destructive.
“Servicer advances” are made from a cesspool of money from investors in hundreds of trusts. The servicer theoretically could be said to have effectuated payment (pursuant to the terms of the PSA, not the note — which is different), but the “servicer advances” are actually payments from the cesspool — i.e., money from the investors themselves.
So the servicer advances are being paid with the investor’s money, not the servicer’s money or credit. Judges, who are too weary to attempt to understand this process will simply say that goes on in the backrooms of these players is not their concern; the only issue for the Judge is whether the borrower stopped payment according to the note, even if the parties on the other end are still being paid. Clearly there is no subrogation here and even if there was, there would need to be an accounting of how to split ownership of the note and mortgage — something that nobody has done because of obvious defects in the money trail conflicting with the documentary trail.
So all of the above discussion leads to one point: the servicers attack the sale proceeds claiming “recovery” of servicer advances they never made because the investors were paid with their own money. But they did so as volunteers where there is no right of action to recover those “advances” from the certificate holders who were paid and whose books and records shows that they have not experienced a default — which then led them to get more confident about these “derivatives” and buy more bogus mortgage backed certificates issued by a non-operating entity without even a bank account.
Greed tends to reveal what is really happening. Those advances that the banks told the court to ignore because it is all just back-room adjustment, are now the subject of bundling and sale and securitization claims — with the “servicer” getting the money instead of the investors. The investors don’t see anything wrong because they got paid what they were expecting regardless of where the money came from. According to the investors, on whose behalf the loan was declared in default, there is no default because they received payment in full and as they expected.
With the several recent announcements of closing on the sale of bundled servicer advances, the proceeds go to the servicer, not the investors. So the investors get to keep their “payments” received from the servicer and the “Servicer” gets to keep the proceeds of the claim to “recover” the “servicer advances.” I would argue that those proceeds should NOT be taken out of the sale proceeds and that they should be counted as part of the investors’ stake, thus reducing the amount due from the borrower. If the total money is actually received by the investors or which is received by their “agent” on behalf of the investors is an amount in excess of what the borrower owes, then the balance is due to the borrower under law.
This has a direct effect on the right of the borrower to redeem. AND it has a direct effect on the money judgment contained in the Final Judgment of Foreclosure. In my opinion it is ripe for a motion to set evidentiary hearing on the redemption amount and/or a motion to vacate the judgment because the “lender” failed to disclose all the money that was received on account of the subject mortgage. The fact that they did not allocate those moneys as such is not controlling. Under GAAP rules the receipt by the agent is receipt by the principal. The account is paid off in whole or in part or in excess of the loan receivable from what the investors thought was the trust — but the receivable of the investors turns out to be due from the investment bank. But the investors have no documentation establishing their right to the note or the mortgage.
Judges who fail to inquire about the lack of reconciliation between the money trail and the paper trail and disclosure the way they did 25 years ago are adding fuel to the fire.
The longer the servicers can stretch out the time between the time when the homeowner stopped payments and the time when the foreclosure sale proceeds, the more servicer advances were paid to the certificate holders. Since the “servicer advances” actually were “advances” out of the investors’ own money, and since the servicer was going to claim those advances, it makes sense to prolong the time because the more time that passes, the higher the value of the claim for “recovery” of servicer advances.
If you do the math here is what you get:
- The certificate holders have not experienced a default even though one has been declared allegedly on their behalf but really on behalf of the servicer.
- The certificate holders lose the rights they thought they had as to proceeds of foreclosure.
- The only way to close the deal on servicer advances is to have a foreclosure sale. This is why you see modifications being turned down as a result of “rejection” by the investor (who in reality never saw or heard of the borrower, the default, the foreclosure or the request for modification).
- The push toward foreclosure sale instead of workouts or modifications floods the market with homes just as Wall Street flooded the market with money that increased the price of homes far above their fair market value. This knowledge allowed the banks to bet against housing prices and to bet against asset backed securities and win every time. Thus the “servicers” at every turn are working against the interests of the investors and for their own interests.
- Hundreds of billions of dollars have been paid to those investors who had the muscle to take on the mega banks. Those were settlements because it was obvious that the investment banks were liable to the investors for breach of every conceivable duty that arose from a fairly straightforward indenture on the mortgage backed securities. There is a question of how this money was paid and why. If it was paid on account of the loans that the investors wished to reject but are now stuck with, then a portion of that settlement money should be apportioned to the balance due from the borrower — which results in a principal deduction for the borrower that is congruent with the theft by the banks.
The only real question is why are so many of the investors allowing this rape of their stable managed funds? Maybe that “Chinese wall” between investment banking and commercial brokerage isn’t so thick?
Filed under: foreclosure |