The Mortgage Loan Schedule: Ascension of a False Self-Serving Document

At no time were the Trusts anything but figments of the imagination of investment banks.

As an exhibit to the alleged Pooling and Servicing Agreement, the Mortgage Loan Schedule” appears to have legitimacy. Peel off one layer and it is an obvious fraud upon the court.

The only reason the banks don’t allege holder in due course status is because nobody in their chain ever paid anything. The transactions referred to by the assignment or endorsement or any other document never happened — but they are  wrongly presumed to be true.

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I’m seeing more and more cases where once again the goal post keeps moving, in order to keep the court and foreclosure defense counsel off balance. Now it is the attachment of a “Mortgage Loan Schedule” [MLS] to the PSA. As an exhibit to the alleged Pooling and Servicing Agreement, the “Mortgage Loan Schedule” appears to have legitimacy. Peel off one layer and it is an obvious fraud upon the court.

Here is my thought. The MLS supposedly attached to the PSA never has any proof as to when it was attached. It has the same problem as the undated endorsement on the note only worse. It is not a facially valid document of transfer. It relies, derivatively on the PSA that was created long before an MLS existed even if they were telling the truth (which they are not — the trusts are empty).

The securitization process is described in the Pooling and Servicing Agreement along with the parties who are involved in the purchase, Sale and ownership of the alleged loans that were “purchased” by the Trust. But there was no purchase. If there was a purchase the bank would assert status as a holder in due course, prove the payment and the borrower would have no defenses against the Trust, even if there were terrible violations of the lending laws.

First you create the trust and then after you have sold the MBS to investors you are supposed turn over the proceeds of the sale of mortgage backed securities (MBS) to the Trustee for the Trust. This never happened in any of the thousands of Trusts I have reviewed. But assuming for a moment that the proceeds of sale of MBS were turned over to the Trust or Trustee THEN there is a transaction in which the Trust purchases the loan.

The MLS, if it was real, would be attached to assignments of mortgages and bulk endorsements — not attached to the PSA. The MLS as an exhibit to the PSA is an exercise in fiction. Adhering strictly to the wording in the PSA and established law from the Internal Revenue Code for REMIC Trusts, and New York State law which is the place of origination of the common law trusts, you would THEN sell the loan to the trust through the mechanism in the PSA. Hence the MLS cannot by any stretch of the imagination have existed at the time the Trust was created because the condition precedent to acquiring the loans is getting the money to buy them.

The MLS is a self serving document that is not proven as a business record of any entity nor is there any testimony that says that this is in the business records of the Trust (or any of the Trust entities) because the Trust doesn’t have any business records (or even a bank account for that matter).

They can rely all they want on business records for payment processing but the servicer has nothing to do with the original transaction in which they SAY that there was a purchase of the loans on the schedule. The servicer has no knowledge about the putative transaction in which the loans were purchased.

And we keep coming back to the same point that is inescapable. If a party pays for the negotiable instrument (assuming it qualifies as a negotiable instrument) then THAT purchasing party becomes a holder in due course, unless they were acting in bad faith or knew of the borrower’s defenses. It is a deep stretch to say that the Trustee knew of the borrower’s defenses or even of the existence of the “closing.”By alleging and proving the purchase by an innocent third party in the marketplace, there would be no defenses to the enforcement of the note nor of the mortgage. There would be no foreclosure defenses with very few exceptions.

There is no rational business or legal reason for NOT asserting that the Trust is a holder in due course because the risk of loss, if an innocent third party pays for the paper, shifts to the maker (i.e., the homeowner, who is left to sue the parties who committed the violations of lending laws etc.). The only reason the banks don’t allege holder in due course status is because nobody in their chain ever paid anything. There were no transactions in which the loans were purchased because they were already funded using investor money in a manner inconsistent with the prospectus, the PSA and state and federal law.

Hence the absence of a claim for holder in due course status corroborates my factual findings that none of the trusts were funded, none of the proceeds of sale of MBS was ever turned over to the trusts, none of the trusts bought anything because the Trust had no assets, or even a bank account, and none of the Trusts were operating entities even during the cutoff period. At no time were the Trusts anything but figments of the imagination of investment banks. Their existence or nonexistence was 100% controlled by the investment bank who in reality was offering false certificates to investors issued by entities that were known to be worthless.

Hence the bogus claim that the MLS is an attachment to the PSA, that it is part of the PSA, that the Trust owns anything, much less loans. The MLS is just another vehicle by which banks are intentionally confusing the courts. But nothing can change the fact that none of the paper they produce in court refers to anything other than a fictional transaction.

So the next question people keep asking me is “OK, so who is the creditor.” The answer is that there is no “creditor,” and yes I know how crazy that sounds. There exists a claim by the people or entities whose money was used to grant what appeared to be real residential mortgage loans. But there was no loan. Because there was no lender. And there was no loan contract, so there is nothing to be enforced except in equity for unjust enrichment. If the investment banks had played fair, the Trusts would have been holders in due course and the investors would have been safe.

But the investors are stuck in cyberspace without any knowledge of their claims, in most instances. The fund managers who figured it out got fat settlements from the investment banks. The proper claimant is a group of investors whose money was diverted into a dynamic commingled dark pool instead of the money going to the REMIC Trusts.

These investors have claims against the investment banks at law, and they have claims in equity against homeowners who received the benefit of the investors’ money but no claim to the note or mortgage. And the investors would do well for themselves and the homeowners (who are wrongly described as “borrowers”) if they started up their own servicing operations instead of relying upon servicers who have no interest in preserving the value of the “asset” — i.e., the claim against homeowners for recovery of their investment dollars that were misused by the investment banks. An educated investor is the path out of this farce.

 

8 Responses

  1. Chase false claims on anything WaMu is example of what I’m talking about below.

  2. Ian I agree. But the Ocwen case against Wells Fargo backs up what I’m saying. I agree w 99% of what Neil says but it seems tgere are cases where investors or gov’t agencies verify trusts so that the fraud is more than just securitization fail. The multiplying of notes could be outright fraud even without MERS or securitized trusts involved such as with mergers or “sales”. I’m not buying that it’s all about servicers but may not be what NG is saying now that I read it again. But Ocwen shows there are others layers of fraud being covered up.

  3. Hammertime- the “settlements” are just am extension of the fraud, as the banks (actual banks) are paying just a couple percent of the original MBS offering. So by paying, investors are given the impression that they actually bought something rather than vapor.
    It will be proven sooner than later, that the TBTF banks, who were providing warehouse lines of credit to all the originators, kept all the funds received from the MBS investors, while holding themselves out to the regulatory agencies as writing the mortgages themselves, and simply cashed them in at the FED, as is the normal procedure for banks making loans. And kept the borrowers deposits as well, over and above their meager obligation to the FED for lending requirements.

  4. Do not forget that the alleged notes have been sold multiple times. In some cases, many times. I, personally, have three notes in my case(s).

  5. I don’t buy it. Investors are settling with servicers and “lenders” left and right in this giant fraudulent scheme to steal homes and cover up their derivative casino shell game.

  6. Question … What did they ut um. ..do with the money from the sale of securities if they didn’t fund the trust with it?

    Answer…. They funded more and more bad loans to make more and more money for themselves using Our Money & Our Assets!

    .

  7. “DIRTY HANDS” in My Cookie Jars!

    Homeowner/Grantor (Not a Borrower)
    Investor
    Taxpayer

    Think … OREO COOKIES WITHOUT THE KILLER STUFFING IN THE MIDDLE.

    Irrevocably Yours ….

    Snickerdoodles.

  8. Not to mention, a vast majority of ‘lenders’ are not even named in the entire 250 plus PSA…nowhere are they even mentioned as a party to the supposed ‘trust’. They must resort to redacting 95% of the PSA which includes several big banks…except themselves.

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