Why The Investors Are Not Screaming “Securities Fraud!”

Everyone is reporting balance sheets with assets that derive their value on one single false premise: that the trusts that issued the original mortgage bonds owned the loans. They didn’t.

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This article is not a substitute for an opinion and advice from competent legal counsel — but the opinion of an attorney who has done no research into securitization and who has not mastered the basics, is no substitute for an opinion of a securitization expert.

Mortgage backed securities were excluded from securities regulation back in 1998 when Congress passed changes in the laws. The problem is that the “certificates” issued were (a) not certificates, (b) not backed by mortgages because the entity that issued the MBS (mortgage bonds) — i.e. the REMIC Trusts — never acquired the mortgage loans and (c) not issued by an actual “entity” in the legal sense [HINT: Trust does not exist in the absence of any property in it]. And so the Real Estate Mortgage Investment Conduit (REMIC) was a conduit for nothing. [HINT: It can only be a “conduit” if something went through it] Hence the MBS were essentially bogus securities subject to regulation and none of the participants in this dance was entitled to preferred tax treatment. Yet the SEC still pretends that bogus certificates masquerading as mortgage backed securities are excluded from regulation.

So people keep asking why the investors are suing and making public claims about bad underwriting when the real problem is that there were no acquisition of loans by the alleged trust because the money from the sale of the mortgage bonds never made it into the trust. And everyone knows it because if the trust had purchased the loans, the Trustee would represent itself as a holder in course rather than a mere holder. Instead you find the “Trustee” hiding behind a facade of multiple “servicers” and “attorneys in fact”. That statement — alleging holder in due course (HDC) — if proven would defeat virtuality any defense by the maker of the instrument even if there was fraud and theft. There would be no such thing as foreclosure defense if the trusts were holders in due course — unless of course the maker’s signature was forged.

So far the investors won’t take any action because they don’t want to — they are getting paid off or replaced with RE-REMIC without anyone admitting that the original mortgage bonds were and remain worthless. THAT is because the managers of those funds are trying to save their jobs and their bonuses. The government is complicit. Everyone with power has been convinced that such an admission — that at the base of all “securitization” chains there wasn’t anything there — would cause Armageddon. THAT scares everyone sh–less. Because it would mean that NONE of the up-road securities and hedge products were worth anything either. Everyone is reporting balance sheets with assets that derive their value on one single false premise: that the trusts that issued the original mortgage bonds owned the loans. They didn’t.

Banks are essentially arguing in court that the legal presumptions attendant to an assignment creates value. Eventually this will collapse because legal presumptions are not meant to replace the true facts with false representations. But it will only happen when we reach a critical mass of trial court decisions that conclude the trusts never owned the loans, which in turn will trigger the question “then who did own the loan” and the answer will eventually be NOBODY because there never was a loan contract — which by definition means that the transaction cannot be called a loan. The homeowner still owes money and the debt is not secured by a mortgage, but it isn’t a loan.

You can’t force the investors into a deal they explicitly rejected in the offering of the mortgage bonds — that the trusts would be ACQUIRING loans not originating them. Yet all of the money from investors who bought the bogus MBS went to the “players” and then to originating loans, not acquiring them.

And you can’t call it a contract between the investors and the borrowers when neither of them knew of the existence of the other. There was no “loan.” Money exchanged hands and there is a liability of the borrower to repay it — to the party who gave them the money or that party’s successor. What we know for sure is that the Trust was never in that chain.

The mortgage secured the performance under the note. But the note was itself part of the fraud in which the “borrower” was prevented from knowing the identity of the lender, the compensation of the parties, and the actual impact on his title. The merger of the debt into the note never happened because the party named on the note was not the party giving the money. Hence the mortgage should never have been released from the closing table much less recorded.

So if the fund managers admit they were duped as I have described, then they can kiss their jobs goodbye. There were plenty of fund managers who DID look into these MBS and concluded they were just BS.

5 Responses

  1. BRENDA. if that is for me, yes there is a chiodo fake indorsement fabricated after filing the complaint

    , the copy of the note “attached” to the second slipped complaint (they just replaced the complaint with a new one after noticed we were responding to the complaint ) . has also another one joanne wright . UNDATED. indorsed to the plaintiff.. which should be indorsed in blank from the begging as required by GINNIE MAE. none of the fake notes meet this requirement

    something weird happened because the master service agreement states that GMAC MORTGAGE ”SOLD” the pool to the servicer almost instantaneously , barely a month after the purported closing.

    i was thinking that the plaintiff was actually the “lender” and “loan” was put in that pool before closing , i got several papers from ocwen and the fraudclosure entity were is blatant the forgery of my signature in the “SETTLEMENT STATEMENT” they even changed the date to be the same as the note , i have the original of this document blue ink.

    this happened in 2005 and the fraud assignment (fake notary) appeared 2009 a week before fraudclosure filing..

  2. BRENDA, this is dave, belanger, please send me what you have, on gmac. i have investigted rescap bk for 4 yrs, seen all assets of them all, subsid of gmac. djabelanger@hotmail.com

  3. GMAC Bank/Ally Bank may not have serviced/owned any part of your mortgage loan. Google and see release from any third party claims due to GMAC Mortgage/RESCap Bankruptcy. I even got a letter from GMAC Bank to that fact. Who are the names on the note? Chiodo? J Gray? You may send me an email.

  4. Trust does not exist in the absence of any property in it.

    The above statement is a good point. We filed a complaint with the SEC stating that the Assignment of Mortgage done by Bank of America, to Bank of New York Mellon, FKA The Bank of New York, as trustee for the certificate holders of CWABS, INC., asset backed certificates, series 2007-4 contains fraud and therefore be investigated.

    We got a reply from the SEC stating, “The SEC does not regulate mortgage lending but does regulate disclosure to investors, including those in mortgage-backed securities. While the SEC requires issuers of these securities to provide key information to investors, it does not require them to supply detailed information on individual loans or properties backing security, in part to protect the privacy of borrowers. That means the prospectus, the offering document for the security, may not identify mortgages by loan number or address of the home.”

    They wanted us to contact them again. How do we prove to the SEC that the securities issued based on our property are fraudulent?

    Will searching EDGAR be helpful?

  5. would be interesting to address GINNIE MAE SECURITIZATIONS,

    i received the ” certified copy of the note” from ocwen and has one indorsement from “lender” to gmac bank. however reading GINNIE MAE requieres the note be indorsed in blank ….

    how this note was included in that pool if is not indorsed in blank and also how in the world the note was indorsed to specifically to the plaintiff (two more magic undated indorsements while fraudclosure ) who also ended being the “new ” ISSUER” (“bought” the pool from gmac) .

    which also brings the issue , how the note is now indorsed two more times if it was in that pool and was supposed to be in blank as requiered by GINNIE MAE guideliness …..?

    ocwen states. :
    ………this loan was transferred into a pool of mortgages guaranteed by Ginnie Mae, which runs a federal mortgage securities guaranty program. The actual owner of the mortgage is a mortgage backed securities trust in which investors own parts……

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