Financial Industry Caught with Its Hand in the Cookie Jar

Like the infamous NINJA loans, the REMICs ought to be dubbed NEITs — nonexistent inactive trusts.

The idea of switching lenders without permission of the borrower has been accepted for centuries. But the idea of switching borrowers without permission of the “lender” had never been accepted until the era of false claims of securitization.

This is just one example of how securitization, in practice, has gone far off the rails. It is significant to students of securitization because it demonstrates how the debt, note and mortgage have been separated with each being a commodity to sell to multiple buyers.

Let us help you analyze your case: 202-838-6345
Get a consult and TEAR (Title & Encumbrances Analysis and & Report) 202-838-6345. The TEAR replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).
https://www.vcita.com/v/lendinglies to schedule CONSULT, leave message or make payments. It’s better than calling!
THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
—————-

see https://asreport.americanbanker.com/news/new-risk-for-loan-investors-lending-to-a-different-company

Leveraged loan investors are now concerned about whether they are funding a loan to one entity and then “by succession” ending up with another borrower with a different credit profile, reputation, etc. You can’t make this stuff up. This is only possible because the debt has been separated from the promissory note — the same way the debt, note and mortgage were treated as entirely separate commodities in the “securitization” of residential mortgage debt. The lack of connection between the paper and the debt has allowed borrowers to sell or transfer their position as borrower to another borrower leaving the “lender” holding a debt from a new borrower. This sounds crazy but it is nevertheless true. [I am NOT suggesting that individual homeowners try this. It won’t work]

Keep in mind that most certificates issued by investment bankers purportedly from nonexistent inactive trusts (call them NEITs instead of REMICs) contain an express provision that states in clear unequivocal language that the holder of the certificate has no right, title or interest to the underlying notes and mortgages. This in effect creates a category of defrauded investors using much the same logic as the use of MERS in which MERS expressly disclaims and right, title or interest in the money (i.e., the debt), or the mortgages that reregistered by third party “members.”

Of course those of us who understand this cloud of smoke and mirrors know that the securitization was never real. The single transaction rule used in tax cases establishes conclusively that the only real parties in interest are the investors and the borrowers. Everyone else is simply an intermediary with no more interest in any transaction than your depository bank has when you write a check on your account. The bank can’t assert ownership of the TV you just paid for. But if you separate the maker of the check from the seller of the goods so that neither knows of the existence of the other then the intermediary is free to make whatever false claims it seeks to make.

In the world of fake securitization or as Adam Levitin has coined it, “Securitization Fail”, the successors did not pay for the debt but did get the paper (note and mortgage or deed of trust). All the real monetary transactions took place outside the orbit of the falsely identified REMIC “Trust.” The debt, by law and custom, has always been considered to arise between Party A and Party B where one of them is the borrower and the other is the one who put the money into the hands of the borrower acting for its own account — or for a disclosed third party lender. In most cases the creditor in that transaction is not named as the lender on the promissory note. Hence the age-old “merger doctrine” does not apply.

This practice allows the sale and resale of the same loan multiple times to multiple parties. This practice is also designed to allow the underwriter to issue investors a promise to pay (the “certificate” from a nonexistent inactive trust entity) that conveys no interest in the underlying mortgages and notes that supposedly are being acquired.

It’s true that equitable and perhaps legal rights to the paper (i.e., ownership) have attached to the paper. But the paper has been severed from the debt. Courts have inappropriately ignored this fact and stuck with the presumption that the paper is the same as the debt. But that would only be true if the named payee or mortgagee (or beneficiary on a Deed of Trust) were one and the same. In the real world, they are not the same. Thus we parties who don’t own the debt foreclosing on houses because the real parties in interest have no idea how to identify the real parties in interest.

While the UCC addresses situations like this Courts have routinely ignored statutory law and simply applied their own “common sense” to a nearly incomprehensible situation. The result is that the courts apply legal presumptions of facts that are wrong.

PRACTICE NOTE: In order to be able to litigate properly one must understand the basics of fake securitization. Without understanding the difference between real world transactions and paper instruments discovery and trial narrative become corrupted and the homeowner loses. But if you keep searching for things that ought to exist but don’t — thus undercutting the foundation for testimony at deposition or trial — then your chances of winning rise geometrically. The fact is, as I said in many interviews and on this blog as far back as 2007, they don’t have the goods — all they have is an illusion — a holographic image of an empty paper bag.

15 Responses

  1. Not legal advice. In the United States of America anyone can sue anyone for reason.

    Like

  2. @louise,

    Before non-judicial foreclosure, we were owners of the house. After the non-judicial foreclosure the bank recorded foreclosure deed with the town and claiming to be the present owner. A realtor was assigned by the bank or the servicer to sell the house.

    We talked to the court clerk and he mentioned that we need to file a motion for Lis Pendens for judge to grant as we did not have an attorney.

    I talked to an attorney and he told me that there is a risk in filing Lis Pendens as the bank might file an objection stating that it is to slander the title and stating the case has no merit in winning even though it was not dismissed.

    What if the house is sold ? Could we sue both the bank and the buyer as well ? Is the buyer suppose to check whether there is any pending legal action on the house?

    Like

  3. @louise,

    Before non-judicial foreclosure, we were owners of the house. After the non-judicial foreclosure the bank recorded foreclosure deed with the town and claiming to be the present owner. A realtor was assigned by the bank or the servicer to sell the house.

    We talked to the court clerk and he mentioned that we need to file a motion for Lis Pendens for judge to grant as we did not have an attorney.

    I talked to an attorney and he told me that there is a risk in filing Lis Pendens as the bank might file an objection stating that it is to slander the title as the case has no merit in winning even though it was not dismissed.

    What if the house is sold ? Could we sue both the bank and the buyer as well ? Is the buyer suppose to check whether there is any pending legal action on the house?

    Like

  4. First, who is the owner of the house on record? Is it your house? Not legal advice. You must notify the judge that the foreclosure action has not been dismissed, and the bank is still selling it. If there is a realtor working on this, make sure he knows about the foreclosure not being dismissed. I saw another post about Lis Pendens–look that up as well at both the county level and the court system. Talk to the Clerk of Court.

    Like

  5. @louise,

    It says the foreclosure litigation suit is not dismissed. The bank is selling the house anyway. Could we sue the bank and buyer after sale?

    Like

  6. Look in the judicial records in the same county the house and owner are located in.

    Like

  7. Could anyone please tell us, whether or not while doing a title search the prospective buyer of a property would find out of a pending case litigating illegal foreclosure on the house. The bank is selling the house to a third party even though there is a case not dismissed. What recourse do we have if the house is sold? Could we still pursue the pending case to litigate foreclosure?

    Like

  8. Ian – absolutely

    Like

  9. Is it a good idea to file a proof of claim in BKR for the last known creditor on my mortgage, which is fannyMae, now in conservatorship, so that the servicer Bank of America won’t be able to file a proof of claim on the same mortgage which they have already admitted they do not own?

    Thanks,

    >

    Like

  10. It’s a good idea to file a proof of claim for the last known creditor on my mortgage, which is fanny may, now in conservatorship, so that the servicer America won’t be able to file a proof of claim on the same mortgage which they have already admitted they do not own?

    >

    Like

  11. ANON- another way for people to look at and grasp this:
    Almost NO PSAs ( or Trusts) has a mortgage loan schedule. Which of course is because they never bought or contained any mortgages.
    And there is never any mention of a “trust” until the homeowner goes into default. Then, as Neil has often stated, the servicers “rent” the name of the trust for foreclosure purposes.
    So, the only way that a mortgage gets into a trust, at least on paper, is after they go into “default”, at which time the loan is allegedly swapped out of the trust.

    Like

  12. I was once asked — “What do you have against securitization?” Nothing, I answered, as long as it is not done fraudulently.

    In the beginning, only the GSEs securitized mortgage loans. Then came the financial crisis — private securitization, to which the GSEs invested in. Now, back to all GSEs securitization – unless Trump has his way to return to private (mortgage loan) claimed securitization.

    Securitization is simply the pass through of cash flows. No borrower should have any concern with it. Trusts and Trustees do not lend directly, and, therefore, cannot ever be the Lender, or assign, as that would allow avoidance of TILA. (has anyone ever seen a case for TILA violations against a trust or trustee)?

    The entity who claimed to lend you money is the Lender, and any assign or successor to them is the successor Lender. Not the trust or trustees. These trusts are simply securities falsely created to pass through “distressed” debt cash flows – not the loans themselves – and, in violation of accounting guidelines.

    Neil is right, these trusts were not funded. Neither were the refinance loans of the crisis period. All that was funded, by the debt buyer, was any “cash out” received. Nothing else had to be funded as all were classified (default) debt to begin with.

    Thus, the trusts were just a “shell” holding place for the transfer of claimed distressed debt collection rights – leveraged over and over and over again. .

    Inactive is a good word, Neil, for these trusts. There is no longer ANY cash pass through. .

    Like

  13. Fake documents, fake transactions, fake entities and fraud on the court again and again.

    Like

  14. […] via Financial Industry Caught with Its Hand in the Cookie Jar — Livinglies’s Weblog […]

    Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

w

Connecting to %s

%d bloggers like this: