have you ask your lawyers or your self, to check on these guys, they say the have real evidence, send out to all, and get someone as I am also going to do, and get the evidence they say they have.
Ibanez and Securitization Fail
Ibanez and Securitization Fail
posted by Adam Levitin
The Ibanez foreclosure decision by the Massachusetts Supreme Judicial Court has gotten a lot of attention since it came down on Friday. The case is, not surprisingly being taken to heart by both bulls and bears. While I don’t think Ibanez is a death blow to the securitization industry, at the very least it should make investors question the party line that’s been coming out of the American Securitization Forum. At the very least it shows that the ASF’s claims in its White Paper and Congressional testimony are wrong on some points, as I’ve argued elsewhere, including on this blog. I would argue that at the very least, Ibanez shows that there is previously undisclosed material risk in all private-label MBS.
The Ibanez case itself is actually very simple. The issue before the court was whether the two securitization trusts could prove a chain of title for the mortgages they were attempting to foreclose on.
There’s broad agreement that absent such a chain of title, they don’t have the right to foreclose–they’d have as much standing as I do relative to the homeowners. The trusts claimed three alternative bases for chain of title:
(1) that the mortgages were transferred via the pooling and servicing agreement (PSA)–basically a contract of sale of the mortgages
(2) that the mortgages were transferred via assignments in blank.
(3) that the mortgages follow the note and transferred via the transfers of the notes.
The Supreme Judicial Court (SJC) held that arguments #2 and #3 simply don’t work in Massachusetts. The reasoning here was heavily derived from Massachusetts being a title theory state, but I think a court in a lien theory state could easily reach the same result. It’s hard to predict if other states will adopt the SJC’s reasoning, but it is a unanimous verdict (with an even sharper concurrence) by one of the most highly regarded state courts in the country. The opinion is quite lucid and persuasive, particularly the point that if the wrong plaintiff is named is the foreclosure notice, the homeowner hasn’t received proper notice of the foreclosure.
Regarding #1, the SJC held that a PSA might suffice as a valid assignment of the mortgages, if the PSA is executed and contains a schedule that sufficiently identifies the mortgage in question, and if there is proof that the assignor in the PSA itself held the mortgage. (This last point is nothing more than the old rule of nemo dat–you can’t give what you don’t have. It shows that there has to be a complete chain of title going back to origination.)
On the facts, both mortgages in Ibanez failed these requirements. In one case, the PSA couldn’t even be located(!) and in the other, there was a non-executed copy and the purported loan schedule (not the actual schedule–see Marie McDonnell’s amicus brief to the SJC) didn’t sufficiently identify the loan. Moreover, there was no proof that the mortgage chain of title even got to the depositor (the assignor), without which the PSA is meaningless:
Even if there were an executed trust agreement with the required schedule, US Bank failed to furnish any evidence that the entity assigning the mortgage – Structured Asset Securities Corporation [the depositor] — ever held the mortgage to be assigned. The last assignment of the mortgage on record was from Rose Mortgage to Option One; nothing was submitted to the judge indicating that Option One ever assigned the mortgage to anyone before the foreclosure sale.
So Ibanez means that to foreclosure in Massachusetts, a securitization trust needs to prove:
(1) a complete and unbroken chain of title from origination to securitization trust
(2) an executed PSA
(3) a PSA loan schedule that unambiguously indicates that association of the defaulted mortgage loan with the PSA. Just having the ZIP code or city for the loan won’t suffice. (Lawyers: remember Raffles v. Wichelhaus, the Two Ships Peerless? This is also a Statute of Frauds issue–the banks lost on 1L contract issues!)
I don’t think this is a big victory for the securitization industry–I don’t know of anyone who argues that an executed PSA with sufficiently detailed schedules could not suffice to transfer a mortgage. That’s never been controversial. The real problem is that the schedules often can’t be found or aren’t sufficiently specific. In other words, deal design was fine, deal execution was terrible.
Important point to note, however: the SJC did not say that an executed PSA plus valid schedules was sufficient for a transfer; the parties did not raise and the SJC did not address the question of whether there might be additional requirements, like those imposed by the PSA itself.
Now, the SJC did note that a “confirmatory assignment” could be valid, but (and this is s a HUGE but),
“cannot confirm an assignment that was not validly made earlier or backdate an assignment being made for the first time. Where there is no prior valid assignment, a subsequent assignment by the mortgage holder to the note holder is not a confirmatory assignment because there is no earlier written assignment to confirm.”
In other words, a confirmatory assignment doesn’t get you anything unless you can show an original assignment. I’m afraid that the industry’s focus on the confirmatory assignment language just raises the possibility of fraudulent “confirmatory” assignments, much like the backdated assignments that emerged in the robosigning depositions.
So what does this mean? There’s still a valid mortgage and valid note. So in theory someone can enforce the mortgage and note. But no one can figure out who owns them.
There were problems farther upstream in the chain of title in Ibanez (3 non-identical “true original copies” of the mortgage!) that the SJC declined to address because it wasn’t necessary for the outcome of the case. But even without those problems, I’m doubtful that these mortgages will ever be enforced.
Actually going back and correcting the paperwork would be hard, neither the trustee nor the servicer has any incentive to do so, and it’s not clear that they can do so legally. Ibanez did not address any of the trust law issues revolving around securitization, but there might be problems assigning defaulted mortgages into REMIC trusts that specifically prohibit the acceptance of defaulted mortgages. Probably not worthwhile risking the REMIC status to try and fix bad paperwork (or at least that’s what I’d advise a trustee). I’m very curious to see how the trusts involved in this case account for the mortgages now.
The Street seemed heartened by a Maine Supreme Judicial Court decision that came out on Friday, Harp v. JPM Chase. If they read the damn case, they wouldn’t put any stock in it.
In Harp, a pro se defendant took JPM all the way to the state supreme court. That alone should make investors nervous–there’s going to be a lot of delay from litigation. Harp also didn’t involve a securitized loan. But the critical difference between Harp and Ibanez is that Harp did not involve issues about the validity of chain of title. It was about the timing of the chain of title. Ibanez was about chain of title validity
. In Harp JPM commenced a foreclosure and was subsequently assigned a loan. It then brought a summary judgment motion and prevailed. The Maine SJC stated that the foreclosure was improperly commenced, but it ruled for JPM on straightforward grounds: JPM had standing at the time it moved (and was granted) summary judgment. Given the procedural posture of the case, standing at the time of summary judgment, rather than at the commencement of the foreclosure was what mattered, and there was no prejudice to the defendant by the assignment occurring after the foreclosure action was brought, because the defendant had an opportunity to litigate against the real party in interest before judgment was rendered. The Maine Supreme Judicial Court also indicated that it might not be so charitable with improperly foreclosing lenders that were not in the future; JPM benefitted from the lack of clear law on the subject. In short, Harp says that if the title defects are cured before the foreclosure is completed, it’s ok. There’s a very limited cure possibility under Harp, which means that the law is basically what it was before: if you can’t show title, you can’t complete the foreclosure.
What about MERS?
The Ibanez mortgages didn’t involve MERS. MERS was created in part to fix the problem of unrecorded assignments gumming up foreclosures in the early 1990s (and also to avoid payment of local real estate recording fees). In theory, MERS should help, as it should provide a chain of title for the mortgages. Leaving aside the unresolved concerns about whether MERS recordings are valid and for what purposes, MERS only helps to the extent it’s accurate. And that’s a problem because MERS has lots of inaccuracies in the system. MERS does not always report the proper name of loan owners (e.g., “Bank of America,” instead of “Bank of America 2006-1 RMBS Trust”), and I’ve seen lots of cases where the info in the MERS system doesn’t remotely match with the name of either the servicer or the trust bringing the foreclosure. That might be because the mortgage was transferred out of the MERS system, but there’s still an outstanding record in the MERS system, which actually clouds the title. I’m guessing that on balance MERS should help on mortgage title issues, but it’s not a cure-all. And it is critical to note that MERS does nothing for chain of title issues involving notes.
Which brings me to a critical point: Ibanez and Harp involve mortgage chain of title issues, not note chain of title issues. There are plenty of problems with mortgage chain of title. But the note chain of title issues, which relate to trust law questions, are just as, if not more serious. We don’t have any legal rulings on the note chain of title issues. But even the rosiest reading of Ibanez cannot provide any comfort on note chain of title concerns.
So who loses here? In theory, these loans should be put-back to the seller. Will that happen? I’m skeptical. If not, that means that investors will be eating the loss. This case also means that foreclosures in MA (and probably elsewhere) will be harder, which means more delay, which again hurts investors because there will be more servicing advances to be repaid off the top. The servicer and the trustee aren’t necessarily getting off scot free, though. They might get hit with Fair Debt Collection Practices Act and Fair Credit Reporting Act suits from the homeowners (plus anything else a creative lawyer can scrape together). And mortgage insurers might start using this case as an excuse for denying coverage. REO purchasers and title insurers should be feeling a little nervous now, although I doubt that anyone who bought REO before Ibanez will get tossed out of their house if they are living in it. Going forward, though, I don’t think there’s a such thing as a good faith purchaser of REO in MA.
You can’t believe everything you read. Some of the materials coming out of the financial services sector are simply wrong. Three examples:
(1) JPMorgan Chase put out an analyst report this morning claiming the Massachusetts has not adopted the UCC. This is sourced to calls with two law firms. I sure hope JPM didn’t pay for that advice and that it didn’t come from anyone I know. It’s flat out wrong. Massachusetts has adopted the uniform version of Revised Article 9 of the UCC and a non-uniform version of Revised Article 1 of the UCC, but it has adopted the relevant language in Revised Article 1. There’s not a material divergence in the UCC here.
(2) One of my favorite MBS analysts (whom I will not name), put out a report this morning that stated that Ibanez said assignments in blank are fine. Wrong. It said that they are not and never have been valid in Massachusetts:
“[In the banks’] reply briefs they conceded that the assignments in blank did not constitute a lawful assignment of the mortgages. Their concession is appropriate. We have long held that a conveyance of real property, such as a mortgage, that does not name the assignee conveys nothing and is void; we do not regard an assignment of land in blank as giving legal title in land to the bearer of the assignment.”
A similar line is coming out of ASF. Courtesy of the American Banker:
Perplexingly, the American Securitization Forum issued a press release hailing the court’s ruling as upholding the validity of assignments in blank. A spokesman for the organization could not be reached to explain its interpretation.
ASF’s credibility seems to really be crumbling here. It’s one thing to disagree with the Massachusetts SJC. It’s another thing to persist in blatant misstatements of black letter law.
(3) Wells and US Bank, the trustees in the Ibanez case, immediately put out statements that they had no liability. Really? I’m not so sure. Trustees certainly have very broad exculpation and very narrow duties. But an inability to produce deal documents strikes me as such a critical error that it might not be covered. Do they really want to litigate a case where the facts make them look like such buffoons? Do they really want daylight shed on the details of their operations? Indeed, absent an executed PSA, I don’t think the trustees have any proof of exculpation. They might be acting, unwittingly, as common law trustees and thus general fiduciaries. I think they’ll settle quickly and quietly with any investors who sue.
Finally, what are the ratings agencies going to do?
It seems to me that any trust with Massachusetts loans that doesn’t have a publicly filed, executed PSA with a reviewable loan schedule should be on a downgrade watch. Very few publicly filed PSAs are executed and even fewer have publicly filed loan schedules. That doesn’t mean they don’t exist, but somewhere off-line, but if I ran a rating agency, I’d want trustees to show me that they’ve got those papers on at least a sample of deals. Of course should and would are quite different–the ratings agencies, like the regulators, are refusing to take the securitization fail issue as seriously as they should (and I understand that it is a complex legal issue), but I think they ignore it at their (and our) peril
have you contacted this trustee as they said they have real proof that they will give?
We do offer evidence to use in court in the form of
affidavits, depositions, and direct trial testimony. We may also offer amicus curie briefs to the court, totally
independent of your legal representation or pro se status
the end is near
this is what i have said. and as even they have said. only a few can see through the fog, fraud,and the truth. that is me..included.
The Depositor is the key player in the REMIC trust and the one in our view
best suited to put a stop to the fraudulent mortgage transfers. Few have
recognized the significance and power of the Depositor and nobody has argued it
in a meaningful way to a foreclosure court. The role of the Depositor after the
trust is formed has been completely ignored by everyone. Other than Park Place,
no other Depositor has appeared in court or assisted in a foreclosure case. This
is the key to our new and exclusive strategy.
This report is general advice and an explanation of how things work and what you might be able
to do to affect a REMIC foreclosure.
We do offer evidence to use in court in the form of
affidavits, depositions, and direct trial testimony. We may also offer amicus curie briefs to the court, totally
independent of your legal representation or pro se status,
HOME OWNERS CAN WIN FORECLOSURES … NOTE: This book:, Home Owners Can Win Foreclosures is copyright 2014 and 2015 by Dan F. Schramm and Park Place
… Home Owners Can Win Foreclosures … securitized over the years. REMIC trusts normally contain single … label REMIC trusts, most created by big mortgage …
just maybe it sounds like someone want to get something off there chest! and put a end to the fraud. i would contact them to see if they are willing to help the fraud?
the biggest question is what i also have stated, the depositor, is the keyto everything!!!!!
as they said, as a trustee,
Park Place Securities, Inc.
The Home Office
Investor & Trust Relations
Pursuant to the Park Place Pooling and Servicing Agreements, Park Place Securities, Inc. must maintain a Home Office and the trustee must notify the investor representative of each tranche in every trust when the Home Office changes. The Home Office existed in Orange, CA for only a short period. For Park Place and the trustee to be in compliance with the PSA, a new Home Office was required and has now been established. See the bottom of the page for address, contact information and the compliance officer. Please scroll down for registration forms.
In the case of Park Place Securities, it created 14 trusts. They include: 2004-MCW1, 2004-MHQ1, 2004-WCW1, 2004-WCW2, 2004-WHQ1, 2004-WHQ2, 2004-WCH1, 2005-WCW1, 2005-WECW2, 2005-WCW3, 2005-WHQ1, 2005-WHQ2, 2005-WHQ3, and 2005-WHQ4.
The approximate amount of prinicpal in each trust was: 2004-MCW1 $1,800,000,081, 2004-MHQ1 $2,800,600,000, 2004-WCW1 $1,565,329,270, 2004-WCW2 $2,999,932,852, 2004-WHQ1 $2,000,000279, 2004-WHQ2 $4,300,000,000, 2004-WCH1 $1,900,000,241, 2005-WCW1 $2,600,000,080, 2005-WCW2 $2,400,001,992, 2005-WCW3 $1,500,000,730, 2005-WHQ1 $1,952,000,000, 2005-WHQ2 $3,500,003,307, 2005-WHQ3 $2,000,001,800, and 2005-WHQ4 $2,275,008,970.
Park Place CUSIPs in PDF Format: Page 1&2, (CUSIP stands for Committee on Uniform Securities Identification Procedures. Formed in 1962, this committee developed a system (implemented in 1967) that identifies securities, specifically U.S. and Canadian registered stocks, and U.S. government and municipal bonds. How do you find out CUSIP numbers for securities? Unfortunately, this can be a little difficult as CUSIP numbers are owned and created by the American Bankers Association and operated by Standard & Poor’s. To get access to the whole database of CUSIP numbers, which mainly cover U.S. and Canadian equities along with U.S. government and corporate debt, you will need to pay a fee to Standard & Poor’s or a similar service that has access to the database. We provide the Park Place Securities CUSIP numbers here for free.)
These trusts mainly used loans originated by Argent Mortgage Co., Orange, CA. Argent was the wholesale arm and Ameriquest was the retail part of ACC Holdings which was the sponsor/aggregator of most of these trusts. J.P. Morgan & Co. was the underwriter. Olympia Mortgage provided about 10 percent of the loans to select trusts.
Ameriquest, the seller of the loans to Park Place, was the first to originate the “stated income loan” which allowed borrowers to simply state what their income was without any verification. These stated income loans, i.e. subprime loans, became the cataylst for the failure of Ameriquest and a key factor in the 2007 subprime mortgage financial crisis. The REMIC certificates from tens of thousands of Trusts were sold around the world. Later the increasing default rates caused a worldwide financial crisis from which we still have not recovered. Unknown to most American taxpayers is that the vast majority of TARP and other funds that were used to bail out the insurances companies and other players in REMIC trusts went overseas. The U.S. substantially bailed out the world.
REMICs, which were authorized by Congress, are the only investment that allowed “forward selling”, the sales of investor certificates before the promised property (promissory notes, mortgages, title insurance certificates) was ever transferred to the trust. In any other security, such a scheme would be a federal crime. Having sold the investment certificates, lots of parties to the REMIC didn’t worry about their duties under the PSA which has caused countless problems when it comes to foreclosures.
Are you an investor/certificate holder or a investor representative, or a trustee supervisor in any of the Park Place Securities REMIC offerings? We want to hear from you. Please register and provide your contact information. Please complete the online form or email us any questions at the address below.
Concerns About Foreclosures and the Trusts
We have realized that many foreclosures are being done improperly, in violation of the PSAs and this has a negative impact on the trustee, Wells Fargo, the Trust and especially the investors. The central problem is sub-servicers and the other servicers foreclosing in the name of Wells Fargo as trustee. Under the Pooling and Servicing Agreements it is the duty of the servicer to foreclose. For example, in the 2005 WCW1 trust the original servicing agent was Countrywide Home Loans Servicing, which was taken over by Bank of America. Other trusts named BAC Servicing, etc. It is the duty of Bank of America to foreclose. Bank of America is supposed to foreclose in its own name. It is responsible for the legal costs and purchasing the property at auction if third-party bid price is not high enough. It is responsible for the carrying costs of the property and for selling the property. It also must pay the foreclosure amount to the trustee shortly after foreclosure. Countrywide and Bank of America don’t get to make money on all the servicing without also taking on fiduciary duties.
So, they have created themselves a nice deal collecting the money but ignoring their duties under the PSA. The trust vehicle can’t own real property or do anything else an actual business corporation can. If a property is foreclosed, the terms of the PSA puts all the problems into the hands of BofA and BofA pays the trust (via the trustee) for the property. The trust procedures thus converts the bad property loan into cash for payment to the investors. By BofA orchestrating foreclosure in the name of the trust the property does not leave the trust as it should and the trust is saddled with it and all the attendant costs and liabilities.
This can have other very bad conseqences.
Let us say that the property is foreclosed, bought back and is in the name of the trust. What if a legal visitor to the property is injured due to its bad condition. What if a city sues under code enforcement? Can the trust be sued? What if the property was not transferred properly and actually isn’t in the trust,
who would be responsible? Personally I don’t think the trust can be sued but have never read case law on it. The point is, it should never have been put in this position in the first place. I would guess that if these things happen, Wells Fargo itself quietly settles and takes money from the trust to pay itself back. This should never have happened and it is fraud on the investors.
Another fraud is created as well which rips off the investors. The investors invested in the income stream. The investors are not responsible for bad debt. The investors don’t own the properties. The BofA method drops it all into the lap of the investors by making the trust a property owner and reducing the income stream. It also forces the trustee and the trust to pay all the carrying costs (propety taxes, maintenance, insurance?) of the property and the expenses of selling it along with any actual shortfall created by the sale. Rather than the investors pretty much immediately getting the value for the property in cash, they are in effect forced to buy the property and all of its liabilities instead. Thus the bank saves itself a ton of money and passes the buck to the investors. This should never happen and is a total violation of the PSA and their fiduciary duties.
The final problem with BofA foreclosing in the name of the trust, is the property stays in the trust after foreclosure and Wells Fargo trust officials do not know anything about it and the local Wells Fargo banks know nothing about the property
. People inquire about buying it and nobody can tell them anything about it. Due to the fact that nobody in trust management is tracking mortgage payments on individual properties (and isn’t responsible for that as BofA is) much less tracking foreclosure cases and under what name they are filed, property gets foreclosed and just sits there. It can sit there for years getting run down and falling apart, while squatters call it home, trash the place, build risky fires, and so forth. Thus, the certificate holders investment is going downhill and if it couldn’t be sold at the foreclosure sale for enough money, it certainly isn’t going to be sold now for anything approaching that earlier amount. This is all lost income for the investors and the trust is taking on expensives and liabilities that it should never of had too. So, once again, the banks make money. They make money they are not supposed to be making and the investors are once again screwed without even realizing it.
This I think is really the underlying reason that the lawyers doing these foreclosure are prohibited by contract from contacting the servicer and/or the trustee.
It is equally obvious that this is intentional to try to keep the hands of the servicer and the trustee clean. unclean hands ???
What nobody seems to realize is that, at least in Florida, fiduciary duties can not be contracted away.
Such a contract is a violation of public policy and is void.
It is also obvious that all of this illegal conduct is ongoing and has no statute of limitations problem for a potential plaintiff or class of plaintiffs.
Bank of America Rips Off Everyone
Bank of America does not want to do it right, it costs them money. To insulate themselves, they have a sub-servicer such as Select Portfolio Servicing, in the case of 2005 WCW1, It is SPS that is actually doing the foreclosure in the name of Wells Fargo and the trust. It has no standing to do so. The lawyer appearing does not represent the Wells Fargo trust and can’t bind the trust,
but in point of fact, he does bind the trust without permission, and without ANY authority to do so. He needs to have a Power of Attorney from Wells Fargo and they never do. Usually the lawyer can’t even directly talk to Wells Fargo.
One of these days the right people are going to figure this out and these crooked lawyers are going to find themselves so sued for fraud and malpractice,
they are going to end up living in their cars, assuming the car (in Florida) is worth less than $3,000. They do it this way to try to insulate themselves. We have not yet had the opportunity to find out or do discovery on Bank of America to find out if the sub-servicer actually has a contract to do this. The sub-servicer has no authority under the trust agreements. A further problem is that Bank of America has specific duties under the PSA, fiduciary duties. In Florida, for example, fiduciary duties can not be contracted away. Such a contract is in violation of public policy and is void.
The Trust is a passive pass-through vehicle. It can only own paper. It can not own physical property. (There is a trust provision that it can for 90 days, but that is for emergency situations and not as a routine matter.) It has no power to engage in business transactions. The reason for the transfer from the originator to the aggregator and then to Park Place Securities, Inc. before transfer to the trust vehicle is to make the trust bankruptcy remote. It can not be sued or sue. If the trust property is not transferred to it properly, it violates REMIC federal law and the trust agreement. It also exposes investors to 100% taxation.
There is some published case law that confuses a REMIC and a REIT. A REIT is a Real Estate Investment Trust which is an actual business corporation with all the powers of any ordinary corporation.
A REMIC is a passive vehicle that has no corporate powers and can not do any type of business. In addition a REIT trust can accept a mortgage/note endorsed in blank. All Park Place trust agreements are under New York law, and although the PSA seems to allow endorsements in blank, New York law for REMICs does not permit
endoresements in blank and it is controlling. Of course, most courts prohibit the borrower from raising the trust agreement saying they are not a party to it and most don’t care about that and the differences of capacity and standing.
The IRS is never going to go after the parties or investors involved in the 25,000+ trusts done through Fannie Mae or Freddie Mac. Never going to happen. However, the 2,500+ private label trusts such as Park Place is another question entirely. Due to the fact that trustees including Wells Fargo are already being sued by investors for the fraud involved in the credit worthiness of a large percentage of loans, the trustee(s) should not be exposing themselves further.
The REMIC trusts are also a convenient cover for notes/mortgages that are held off-books by Bank of America and other banks. The property (appears ) to be in a trust so it doesn’t affect the banks reserve requirements for underperforming or bad debt. Because it is not really in the trust, none of the mortgage payments are going to the trust. BofA just pockets them all. Plus then it manages to foreclose in the name of the trust, which lets them off the hook again. The trust is stuck with the property which it isn’t supposed to have, and all the costs associated with it.
On top of all that, nobody seems to understand or care that the trustee can NOT FORECLOSE. The trustee has no power to foreclose under the PSA. Forclosure is not their job or duty. That is a breach of the PSA and a violation of their fudiciary duties. It is also a conflict of interest.
Do You Know Where Our Notes Are?
Park Place gets called by someone at one Bank of America branch or another on a regular basis. They ask: “Do you know where their notes are?” They should be held by the Master Custodian of the Trust. That seldom is the case. They should all have physically gone through the hands of Park Place Securities, Inc. before going to the trust and then being held by the Master Custodian. The trustee is NOT the master custodian, as that too would be a conflict of interest and a violation of their fiduciary duties.
The fact the Master Custodian does not have them is a good indication they never legally made it into the trust. This is doubly true when the imposter plaintiff has to rely upon a forged mortgage assignment.
Step back a bit. There are reports that the mortgage originators never gave up the original notes and mortgages. However, in the case of Argent, I believe that Argent simply turned them over to the Servicer, Countrywide Home Loans Servicing. They were purchased by Bank of America. What paperwork BofA actually got is anyone’s guess. Undoubtedly they have lots of paperwork because they have been collecting mortgage payments. At the same time, I don’t believe that BofA has any idea at all which mortgages/notes are in a trust or not in a trust. I also seriously doubt they are making the payments to the trustee they are supposed to be making. I would bet that most of this paper is keep off books, so it does not affect their reserve requirements, and then the fake mortgage assignments are created as need for foreclosures.
The Foreclosure Scam & Money From Nothing
Then when it becomes time to foreclosure, the bank has a law firm (which uses paralegals or contract employees) to prepare a mortgage assignment to the trust. These are done usually years after the trust has closed. They are signed by people claiming vice president status of this or that bank but there is never any paperwork to support that.
The biggest failings of these fake assignments is that they transfer the property directly from the loan originator which in the case of the various Park Place trusts is usually Argent Mortgage Company LLC, to the trust vehicle itself. It never goes through the sponsor, and worse of all, it never goes through the depositor, Park Place Securities, Inc. If Park Place did not own that note and mortgage it is a legal impossibility for it to be in the trust. Nobody from Wells Fargo would ever admit that assignment was real, for it would be a violation of their fiduciary duties under the PSA and would open them to civil class actions and tax liability into the hundreds of millions of dollars.
The paper trail, i.e. endorsements on the notes and mortgages must show the transfer AND THE ACCEPTANCE by each party on the document. Creating fake allonges after the fact is also one of their favorite tricks, but they almost always leave out the acceptance parts.
There are a vast number of these fake assignments in circulation. Here in Florida the law firm of David J. Stern had a backoffice operation (a forgery business) that he sold to investors, separate from his law firm, for $60 million dollars. When the law firm shut down, the back office operation had no more business. The investors sued, claiming they didn’t know they had purchased a forgery operation. Stern settled the case, reportly giving up $30 million. Not a bad payday.
One of my favorite cons is the scammers giving the assignment an effective date months or even years before it was created/signed. Judges do not know or seem to care that this is absurd. Yes, a contract can be backdated but not like this. If two companies have been working together and then later work out a contract they can backdate the document to the time they started working together. Note that is a decision agreed to by two different companies. The mortgage assignment backdating is unilateral, only one party agrees. There are no acceptances or endorsements from anyone else in the chain. There is no such thing as one party backdating. Such an event is the hallmark of fraud and forgery.
And the Clowns March In
I would love to see these criminal clowns do it right and include a transfer to Park Place and try to claim that there is any acceptance of the backdating. As if that would fly or be binding when the depositor Park Place deposited the documents into the trust. The Document Custodian named in the PSA would never agree to such a thing, and if he did, that company could be sued into the ground. The trustee, Wells Fargo, could never accept such a thing either, as that would violate the PSA and be a breach of their fiduciary duties.
Finally, nobody has really cared about any of this except the borrower in limited cases facing the lose of their home. This stuff was not designed to be easy to understand. If the borrower is very intelligent and does lots of research they will figure out some of this. They say to the court”: “Wait a minute. This was done all wrong.
” The judge then says that the borrower is not a party to the PSA and can’t argue any of this stuff. The courts ignore the difference between enforcing the PSA and the basic concepts of standing and capacity. If the property is NOT in the trust, then neither Wells Fargo, Bank of America or their hired guns have any standing to foreclose. Either the property is in the trust, or it is not.
Judges will often say that only the investors have standing to enforce the trust. Certainly certificate holders/investors have standing because they are entitled to cash flow from the trust as per the PSA. However, there seems to be one fact that is not apparent to the judges.
The investors do NOT own the contents of the trust. The trustee has no ownership claim and such a thing would be a massive conflict of interest. The trust vehicle is the owner of its contents, and in a sense, the depositor Park Place is the owner of the trust.
An investor certificate is like a share of stock in a business corporation. Each tranche is like a different class of stock which gets a payout from different assets based upon a schedule and does not get payouts from the assets in any other tranche.
There can be many classes of stock in a corporation with different rights, benefits and costs. The tranches have DIFERENT property’s with different credit ratings and payout schedules. The tranches get paid one at a time, not all at once. The tranches with the best property were also the most expensive. In the 2005 WCW1 trust, only the top six tranches were insured.
I bet you can guess who owned those certificates? The tranches that had the lowest credit rating and the longest payout schedule were the cheapest to purchase and had the best interest rate of return. These lower tranches are also the ones that have voting rights. each tranche has a representative for all the owners therein.
And What About the Insured Tranches?
When the default rate reached a certain level, say 20%, the insurance kicked in and the certificate holders in those six tranches got paid off.
The insurance companies were broke so Uncle Sam kicked in billions of taxpayer dollars to pay off the Wall Street crooks who created this disaster. Unlike what would happen in an auto insurance case, the insurance company did not take the investment certificates. They considered them worthless. They should have been cancelled and destroyed. The property in those tranches, a valid argument goes, is paid off by the insurance. There actually is nobody to collect on the property (payments on the note or foreclosure sale) in those tranches as income streams are limited the specific property in that tranche and there no longer are any investors. Some borrowers have tried to argue this, but usually not well. They seldom understand the tranche system and think the entire lot of investors have been paid off. In truth, only a select handful of investors and tranches got the insurance. All 11 Park Place trusts became non-reporting to the SEC in 2006 by certifying there were fewer than 300 investors in each Park Place Trust. Thus there are only about ten investors in each tranche. How many of those actually remain with certificates in any paying tranche or one yet to pay off; is anyone’s guess.
Of course the banks and courts could not possibly allow them any success. The people with the facts know this entire thing is a house of cards. Most people probably understand it was a ponzi scheme but they don’t have any standing or capacity to do anything about it. Luckily for the system, most borrowers are broke by this point and are appearing pro se – representing themselves. They put up a fight but they don’t really know what they are doing — fact, law or procedure wise. They appeal and appeal’s courts are only too happy to issue written opinions in favor of the banks because the pro se didn’t really know procedure and screwed up, creating bad case law that will affect other foreclosures and home owners.
Even in cases where the borrowers have counsel, counsel does not want to rock the boat and will never bring any of this stuff before the court. They will only defend you on the basis of lame issues like claiming a lack of foreclosure or acceleration notice. I have pesonally seen this happen to other people. Of course, they too believe the borrower has no standing to raise any of this and they don’t understand standing and capacity or much care.
As far as most judges are concerned, the homeowner borrowed the money and didn’t pay it back, so they deserve to lose their home. The courts don’t really care who is foreclosing. They just want to get rid of the case because there are thousands more to hear and kick out the other end.
We are not going to reveal our business plans further, as they are trade secrets. Our goal is to increase the cash flow to investors and return some market value to the trust certificates. We intend to force the parties to live up to the terms of the PSA. We also intend to make some money on the scammers and beat them at their own game.
Fraud Was Intentional to Redistribute Wealth
Originally, the greatest source of American wealth was heavy manufacturing and natural resources. Most heavy manufacturing was (ultimately) lost to China and then technology manufacturing. That is creating new wealth for the Chinese. The opportunities for the rich and those on Wall Street were dwindling along with natural resources. The rich people on Wall Street were not happy with making money on only war which takes money from the average taxpayer and puts it into the pockets of the few while killing off the best and brightest possible competition. What most do not realize is that war generally dumbs down the home population, or helps to get rid of the underclass, such as in Vietnam.
Wall Street realized two things. The last great concentration of wealth was in the American home and its equity. The second greatest concentration of wealth, especially the little guy’s wealth, was in pension funds and other aggregations of wealth which were mostly invested in Wall Street, plus things like municipal bonds.
Banks had to wait typically 15 to 30 years to get back the money they had loaned out. Wall Street promised them they could get all their money out of the loan in no time at all by letting Wall Street convert the loans into marketable securities.
Then Wall Street sold the investment certificates to state pension funds and private pension funds, foreign funds and banks and vaccumed in the rest of the wealth that way. REMICs were too good to last. Property values got inflated, people took out second loans and refinanced thinking property values would continue to increase. The appetite for mortgages and notes to convert to marketable securities was voracious. It is estimated some 333 TRILLION DOLLARS of these things were sold.
Then after the American home owner and lots of people and institutions overseas lost their shirts, the bogus insurance companies and Wall Street got themselves bailed out by the U.S. government using what was left of the little people’s wealth. Of course there isn’t that much money in the pockets of the little people anymore, which is why the U.S. government put itself and the little people on the hook for some $16 TRILLION DOLLARS in debt, much of it borrowed from the Chinese who got rich by undercutting us with slave labor and substandard wages and working conditions to first take our heavy manufacturing and then technology manufacturing.
It is a vicious circle. We now have to import millions of tons of stuff we used to make because American’s want the best deal they can find and have the shortest memory and attention span. Due to the import deficits, billions of dollars are flowing out of our economy every month. In a way Wall Street helped to get some of it back, but that was nothing compard to the ultimate cost to the U.S. taxpayer.
And Wall Street, the rich, the banks and the judges say it was the borrower’s fault. You were a sucker and now you deserve to get ripped off again, because you are still a sucker and the deck is stacked against you. Plus it was the REMIC investors fault. Those pension funds, including the Florida Public Employees Retirement Fund, which lost over $1 BILLION DOLLARS on REMIC Trusts, should have known better.
It is time those really at fault begin to pay, starting with servicing banks and their lawyers.
Right Hand Not Know What Left Hand Do
An even larger problem for us (and the investors) is that Bank of America and Select Portfolio Servicing foreclose in the name of Wells Fargo. Wells Fargo is not notified and has little idea this happens until after the fact when they are forced to use the foreclosure judgement in their name to take the property back. The contracts the attorneys work under prohibit them from contacting Wells Fargo or Bank of America. However, for all we know, the attorney for the sub-servicer shows up, takes the property and it is sold by a party other than the trust. We believe a large amount of property has been stolen from the trusts in this manner.
We have also seen foreclosure complaints (eg: here in Florida) that are verified by an alleged officer of Bank of America who do not exist. They are complete fictions. We wonder if the SPS attorney is actually prohibited from contacting Bank of America and how many of the verifications on Florida foreclosure complaints are forgeries and fake.
We get calls and email regularly from individuals that see a property that has been foreclosed in the name of Wells Fargo as trustee for a Park Place Securities, Inc. Trust, and Wells Fargo allegedly got the property back, so they contact Wells Fargo. WF representatives know NOTHING about the property and actually tell people to contact us.
Further, Bank of America representatives call us up and ask if we know where their promissory notes are.
We regularly get contacted by City Code Enforcement departments wanting us to board up houses, put up fences around pools or fill the pool in. Individuals contact us about the poor condition of foreclosed trust property and want us to take action. In all of these situations Park Place has no power and is not responsible. The trustee is responsible and they have done it to themselves. These properties should be in the name of Bank of America which should be handling all of these carrying costs and responsibilities. In a nutshell, Bank of America is cheating everybody.