Standard Operating Procedure: Create more bogus paper on top of piles of old bogus paper and you contribute to the illusion that any of it is real. The “business model” still leaves out the basic fallacy: that most loans were never actually securitized into the trusts that are claiming them. Hence the at the base of this pyramid, is an MBS issued by an entity without any assets in cash, property or loans.
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The actual goal here is to spread the risk so wide that the impact is reduced when it is finally conceded that the original MBS had no value and every successor synthetic derivative is just as worthless as the one before it.
At ground level, this creates a dichotomy. First the act of a Government Sponsored Entity (GSE) engaging in a “re-REMIC” transfer adds to the illusion that the issuing trust ever acquired the loan in the first place. But second, it corroborates the finding by me, Adam Levitin and others who know and have studied the situation: the foreclosure based upon claims from alleged REMIC Trusts are false claims.
If the original MBS had real value because it was issued by a real REMIC Trust, the process described as “re-REMIC” would not be necessary. Hedge products would be sufficient to cover the changing risk from alleged defaults on loans that were legitimately made by originators. The fact is that the “loans” did not produce loan contracts because one party was owed the debt while another party was named on the bogus note.
And THAT corroborates the experience of millions of homeowners who attempted to learn about the fictitious financial transaction in which “successors” to the “originator” paid nothing for the “transfer” of the loan because it could not be sold by the preceding party who had no ownership.