The West Coast Foreclosure Show with Charles Marshall: Table Funded Loans, Consummation and the Courts

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The West Coast Foreclosure Show

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Attorney Charles Marshall and Investigator Bill Paatalo will discuss the issues resulting  from table funding today on the West Coast Foreclosure Show.
Table Funding is a legal theory of liability Charles Marshall is applying in several of his California cases.   The theory has only received limited traction so far. Some judges are starting to accept that many loans were table funded and thus concealed the true lender, while other judges continue to reject the theory in fear that over a decade of table-funded loans would open up the floodgates.
Courts that have considered the argument that when “a borrower’s mortgage loan documents allegedly fails to identify the borrower’s ‘true lender’ that the mortgage loan was never consummated”— and have unanimously rejected it. (Marquez v. Select Portfolio Servicing, Inc. (N.D. Cal. Mar. 16, 2017, No. 16-CV-03012-EMC) 2017WL 1019820,  citing Sotanski v. HSBC Bank USA, Nat’l Ass’n, (N.D. Cal. Aug. 12, 2015) No. 15-CV-01489-LHK, 2015WL 4760506, at *6; Mohanna v. Bank of Am., N.A. (N.D. Cal. May 2, 2016, No. 16-CV-01033-HSG) 2016WL 1729996, Ramos v. U.S. Bank (S.D. Cal. Sept. 14, 2012,No. 12-CV-1820-IEG) 2012 WL 4062499, (holding that where “a lender was plainly identified … the loan was consummated regardless of how or by whom the lender was ultimately funded”)).

Table funded loans, according to Reg Z of the Federal Reserve, are predatory loans  per se especially if it was part of a pattern of conduct by the originator.

“Table Funding” now comes in many flavors:

1. The one addressed by TILA and required disclosures of the identity of the lender (giving the consumer choice over who he/she decides to do business with) has some basics to it. You have a real lender with real money making a real loan. But the disclosures say that the originator is the lender and do not disclose thee existence or identity of the real lender. Regulators have often treated a pattern of table funded loans as “predatory per se.” Back in the 60’s the banks were changing things at closing giving the borrower no option but to close with a “lender” who was different from the entity identified as lender in the original documents (application) and disclosures (GFE etc).

2. So the banks set up what they called warehouse lending in which the originator was borrowing money from the real lender and therefore really was the lender.

3. But in the customary purchase and assumption agreement with the “warehouse lender” it is clear that the so-called “warehouse lender” is the real lender, since it asserted ownership of the loan starting before the closing of the new loan.

4. In the era of claims of securitization, most such claims were completely false. But it created a vehicle in which sham conduits could be used to such an extent that it was virtually impossible to identify ANY real lender. This was done to cover-up theft of investor funds who thought they were buying certificates in a viable REMIC Trust that turned out not to exist and whose name was never used in the purchase of loans although it was used in foreclosures — only after the banks swore up and down that the trusts didn’t exist back in 2006-2009.

5. It was those stolen funds that funded “trading profits” from sham transactions including paying fees to originators who would have the borrower execute the note and mortgage in favor of the originator, who in turn transferred the paper to the various sham conduits. The actual debt never changed hands in any transaction because the owner of the debts, whether secured or not, was the investors whose money was illegal used to fund the whole venture.

This can demonstrated by using glasses of water. You have the investors pour some of their water (money) into a glass whose name is the underwriter of a so-called REMIC trust. The investor water is controlled by the underwriter who created a fictional entity (REMIC Trust) to issue bogus certificates that were entirely worthless. The water is owned by the investors. It never goes into the trust. It stays under the control of the underwriters. Just this week there was another multi-billion dollar settlement with investors who sued not for beach of contract (Bad loan underwriting) but for fraud.

So at all times the water is controlled, every drop of it, by the underwriter and the only movement of the water is when it is poured into separate pockets of the underwriter whose name does not appear on any of the so-called loan documents that are based upon a transaction that never happened — a loan of money by and from the originator to the borrower.

The underwriter used SOME of the money from investors to create the illusion of a loan transaction with the originator. So neither the originator nor the warehouse lender has any money in the deal (i.e., water). But endorsements and assignments are fabricated to create the illusion that someone purchased the loan. The only way that could have happened is if someone paid the investors. So the transaction didn’t happen but the paper did happen. All smoke and mirrors.

 

Please refer to page 24 of the attached brief (this was the appellate case Charles Marshall orally argued by phone this morning) for a negative spin on why table funding as a viable legal theory.
Charles Marshall, Esq.
Law Office of Charles T. Marshall
415 Laurel St., #405
San Diego, CA 92101
Investigator Bill Paatalo
BP Investigative Agency, LLC
P.O. Box 838
Absarokee, MT 59001
Office: (406) 328-4075

3 Responses

  1. You say table funding as a defense has received only “limited traction” and then you string cite a bunch of cases which show that it has receive no traction whatsoever.

    Like

  2. A Wells Fargo loan funded with a Deutsche Bank sight draft referencing a warehouse line of credit….would qualify as table funded, would it not?

    Like

  3. What did the investors, say FNMA, get in return?

    Like

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