Back to Basics: Step Transaction Doctrine and Single Transaction Doctrine

From Dan Edstrom, senior forensic analyst for livinglies. —

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The OCC Interpretive Letter #1016 (attached) supports our determination that the Step Transaction and Single Transaction Doctrine applies to the alleged mortgage and securitization transactions…
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Consider the following:
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Office of the Comptroller of the Currency Interpretive Letter #1016 (February 2005) available on the following government website: http://www.occ.gov/static/interpretations-and-precedents/feb05/int1016.pdf states, among other things:
“[I]n no sense, under the facts presented, can the Banks be viewed as making a real estate loan under 12 U.S.C. §371 and 12 C.F.R. §34.4.
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The Banks did not originate the loans. They did not fund the loans at inception. Nor did they ‘purchase’ the loans as part of any real estate lending program comprehended by the regulation. *** [T]he Banks act as trustees for the benefit of investors in the trusts. The substance of the transaction is that the investors, not the Banks, are purchasing the loans that have been made by Delta. The investors own the beneficial interest in the loans held by the Banks as trustees.
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And the effect of any liability for violation of the [New Jersey Act] ultimately falls on the investors. Nowhere do the Banks allege that they themselves, as opposed to the trusts they represent, are exposed to liability for any violation of the [New Jersey Act]. For all these reasons, 12 U.S.C. §371 and 12 C.F.R. §34.4(a) simply do not apply to the transactions by which the Banks acquired legal title to the loans***.”
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This interpretation supports our assertion (described first and foremost by Neil) that the Step Transaction and Single Transaction Doctrine apply where complex financial engineering transactions (i.e. securitization transactions) are claimed.  So the IRS uses this pursuant to the tax code, California uses this for Assessors, and the OCC uses it (at least implicitly) for securitized transactions.  I would actually describe this use by the OCC as using SUBSTANCE to overcome FORM and collapse the transaction leaving out the irrelevant parts.
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This would seem to support the fact that the real parties in interest are NEVER named (the investors) in any lawsuit, non-judicial foreclosure or claim in bankruptcy. (Seems to me this might impact “finality”, especially because the investors are hidden and never disclosed – and in fact may not exist).  And of course this could lead us back in to the other problem described by Neil – resecuritization …
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This interpretive letter would also seem to support the idea that the homeowner is a party to the securitized transaction (the PSA, etc.) as is the investor. Both of whom are not named or disclosed (except that the investors supposedly purchased securities offered by the trust and the homeowner’s loan attributes and property attributes are included in the static loan level file usually filed publicly with the SEC (and which in most cases contains personal identifying information of the homeowner).
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And of course we still have all of the problems described by Neil (the parties aren’t in privity, the trusts were never funded, etc., etc., etc.,).
Office: 916.207.6706

8 Responses

  1. Another thing homeowners need to research is absolute ownership of their land under Federal Land Patent/Homestead. After rescission, one must bring the Federal Land Patent/Homestead in their name, and file a Certificate of Acknowledgement with Indefeasible (look up definition of this word) Title. Google Land Patent and a plethora of information will populate, or google, WHAT IS A LAND PATENT?; you will be amazed to learn that under a ‘Warranty Deed’, you are nothing more than a ‘tenant’ paying to a feudal system! You need to secure TRUE LAND OWNERSHIP as a sovereign individual, which is exempt of collateral attack, liens, taxation, etc. These land patents go all the way back to the presidency of George Washington, and have been signed and awarded by the president of the United States to the heirs and assigns FOREVER! You just have to bring it forward in your name and it cannot be refuted! Like rescission, they can only be challenged in a Federal Court, and no land patent case has ever lost! You will discover organization online that help people in every state secure their land patent/homestead. This is vital, because the powers at be have put our land up as collateral to secure the national debt. This is the only way to prove one has absolute ownership of their land and it is NOT a part of the collateral package secured by those supposedly running the show!

  2. JG! Yes!! Yes!! Yes!! Thank You!

    Considering they Cook those records ….
    A Homeowner 2ho keeps Good Records….

    SEES THE DISCREPANCIES RIGHT AWAY!
    Demand Proof of Claim!
    Get them to take a position under oath and nail their
    Little Peckers! !!

    I Don’t take Kindly having to defend myself against
    False Claims!

    As a matter of fact it Ticks me Off & The Claws Come Out

    The Cat clawed & scratched its way out of the Bag, no one let it out.

  3. LATMAN v. BURDETTE, 366 F.3d 774 (9th Cir. 2004)

    “Further, the La Jara account records attached to the Trustee’s
    counsel’s declaration were not properly qualified under the
    business record exception to the hearsay rule as set forth in
    Rule 803(6). To comply with this rule, the Trustee would have to
    provide specific testimony or a specific certification that the
    account records constituted records of regularly conducted
    activity, as defined by the rule. Fed.R.Evid. 803(6).

    The Trustee’s counsel’s declaration does not suffice. The requisite
    testimony must come from the custodian of the records or “other
    qualified witness.” The Trustee’s counsel is neither.[fn10]

    Nor did the declaration constitute a proper “certification”
    under Rule 803(6). Any such certification must comply with the
    strictures of Federal Rule of Evidence 902(11). See Fed.R.Evid.
    803(6). Rule 902(11) requires that a party wishing to offer a
    record into evidence under that rule must “provide written notice
    of that intention to all adverse parties, and must make the
    record and declaration available for inspection sufficiently in
    advance of their offer into evidence to provide an adverse party
    with an opportunity to challenge them.” Fed.R.Evid. 902(11).
    There was no such written notice or opportunity to challenge the
    declaration here. In short, the bank account records were not
    properly qualified as business records in any way that Rule
    803(6) approves. Thus we agree with the district court that there
    was error in admitting the La Jara account records here.

    The Latmans were also prejudiced by the admission of the La
    Jara account records. Once these records were admitted, the…..”

  4. Wednesday 20 April 2016

    Kalifornia:
    >UGH!!!! The issue interpreted is: federal PREEMPTION of state laws.

    Ostensibly, yes, but who cares?! There are some real gems in that
    letter where complying with state laws or otherwise is a non-issue.

    In general, as opposed to directing this at Kalifornia:

    From the letter, cited above:
    >[I]n no sense, under the facts presented, can the Banks be viewed as >making a real estate loan under 12 U.S.C. §371 and 12 C.F.R. §34.4.

    and expanding further…
    >The Banks did not originate the loans. They did not fund the loans at >inception. Nor did they ‘purchase’ the loans as part of any real estate >lending program comprehended by the regulation. *** [T]he Banks act >as trustees for the benefit of investors in the trusts. The substance of >the transaction is that the investors, not the Banks, are purchasing the >loans that have been made by Delta. The investors own the beneficial >interest in the loans held by the Banks as trustees.

    I read that as saying the trustee banks have no dog in the fight, none.
    That is a pretty big “interpretation” by the OCC. Edstrom rightfully
    points out reference to the SUBSTANCE of the transaction rests with
    the investors. The trustee is an outsider to any financial claims or
    claim[s] for financial injury, requisites for establishing standing in any
    federal court. They have no substance, just paperwork describing it.
    Sound familiar?

    Piggy back that with a rescission notice, in federal court. I do not
    believe rescission has the legs to withstand state court venues where
    standing is already a given. Plus, self defenders are more than likely
    unable to make the proper arguments. Rescission is a federal issue,
    and in a federal venue is where it can best be argued, again, my
    opinion.

    >…Nowhere do the Banks allege that they themselves, as opposed to >the trusts they represent, are exposed to liability for any violation of >the [New Jersey Act]

    Let me correct the above to read:

    >Nowhere do the Banks allege that they themselves, as opposed to the >trusts they represent, are exposed to liability for anything!

    The trustee is quick to point out how much one owes, but never does any
    trustee assert financial injury or will suffer financial loss.

    The letter keeps exposing the trustee banks for being left hanging to
    twist in the judicial winds. It bears repeating, this letter is stating the
    trustee banks have no substance, no dog in the fight, and THAT is
    what gets to be challenged in federal court.

    Not mentioned in parts cited above, the letter further states:

    >…banks derive their power to act as trustees from 12 USC 92a.

    From 92a:
    >Authority of the Comptroller of the Currency …shall be authorized and
    >empowered to grant by special permit to national banks applying therefor…
    >the right to act as a trustee…

    Hey, trustee bank, show me your permit giving you the right to act!

    92c:
    >…shall keep a separate set of books and records showing in proper
    >detail the transactions engaged in…

    Show me, show me!

    Kalifornia:
    >Complex layers to be sorted out…

    Thinking makes it so… Law is like a box of chocolates…

    The letter ends:
    >In short, the bank’s authority to act as trustees under federal law does
    >not insulate the assets the banks hold in trust for the benefit for
    >investors from state law requirements otherwise applicable to those
    >assets.

    Sounds a bit contradictory, but there is enough, as stated above, to put
    a lot of pressure and added discovery on the bank trustees, and none
    of this even addresses other gorilla issues about true sale endorsements
    missing on the note, [void] assignments, etc, etc. etc.

    Garfield has hit the judicial rescission attack nail on the head in his
    ongoing series and radio shows pertaining to rescission and how to
    effectively undress securitized trustees in federal court. He even makes
    the arguments to be included in a federal complaint.

    I have been defending myself for a number of years in court. One thing
    I have learned that really helped was that I can make any argument I
    want in court, presuming of course that it is factually and lawfully based
    and not one that is emotionally charged raging at the trustee and court.

    The information disseminated by Garfield on rescission over the last
    several months has been impressive. He gets my donation.

    Cheers…

  5. Way to go, Your my hero .Wide awake in canton ,ohio. Fraud on THE court.

  6. UGH!!!! The issue interpreted is: federal PREEMPTION of state laws.

    The OCC interpretation pertains to a “bank” foreclosing in the capacity of a trustee on behalf of the investors of a putative MBS trust, and whether federal banking law(s) PREEMPT New Jersey’s consumer fraud protections. The OCC interpretation suggests no preemption.

    However, does there exist a OCC (or other regulatory agency) interpretation where a “bank” is foreclosing in the capacity of a assignee-servicer purporting to act (pursuant to a PSA) on behalf of investors of a putative MBS trust, and includes an interpretation on preemption?

    I believe a number of Kalifornia court cases have previously interpreted otherwise, but that paradigm may have shifted to the contrary since the Yvanova case appeared to affirm the opinion in Glaski.

    Complex layers to be sorted out…

  7. Wednesday 20 April 2016

    First-rate information over the past several weeks, including this article.

    Well done!

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