Mortgage-Transfer Systems are another layer of Illusion

By T. Anderson

Abstract – US Residential-Mortgage Transfer Systems – A Data Management Crisis

Investigator Bill Paatalo won’t stop digging until he unearths the entire skeleton of the fraudulent securitization scheme.  He recently stumbled upon a golden nugget contained in a white paper on residential mortgage transfers.  Confirming what Paatalo has already discerned from his decade of research, ““The loans are literally impossible to track, have no verifiable accounting, AND the master servicers and trustees manipulate and expunge data with no oversight.”

In a May 16, 2012 white-paper entitled U.S. Residential-Mortgage Transfer Systems: A Data Management Crisis by John Hunty, et al., the paper examines the current state of residential-mortgage data structures and transfers from origination through the securitization supply chain and concludes that it is impossible to trace an individual mortgage loan.

“The data in mortgage loan securitizations was a mortgage-risk management disaster, lacking transparency, consistency and accountability- thus opening the door for wide-scale fraud and masked by plausible deniability.    The securitization system, by design, was engineered with the purpose of facilitating the largest financial hoist the world has never seen.

Current data-management practices make it impossible for homeowners, lenders, investors, government regulators, and law enforcement to perform any oversight, analysis or even access individual loan data to determine the status of the loan (balances, write-down, insurance payoffs, transfers, ownership).  Thus, the servicers create the information as they go along to create the appearance that they have access to this information, and that the information exists.

Any sense of order was shattered in the process, allowing data to be resold, repackaged and recreated with a keystroke.  With this being true, a proper boarding of a loan from servicer to servicer is impossible, and investors in mortgage-backed securities are buying only ink, paper and data backed by nothing.”

      On page 7 of the white paper, under section 2.2 Origination Data, the paper reveals that there is “no permanent, unique, and verifiable loan identifier attached to the loan at origination,” and “instead, loan identification numbers are re-created by the different owners and managers (such as servicers and pool trustees).” If a loan identification number is changed there is no way to trace the prior history back to the securitized pool.  From page 7:

“Mortgage-origination data comprise the set of static information related to the mortgage at the time of the loan origination. As shown at the top of Table 3, the loan record is identified by an internal loan identification number. Currently, in the U.S. there is no permanent, unique, and verifiable loan identifier (like the CUSIP number in the bond market) attached to each loan at origination. Instead, loan identification numbers are re-created by the different owners and managers (such as servicers and pool trustees) of the loan origination and performance data sets. Nearly always, the loan IDs are changed as the loans travel though the mortgage supply chain (which will be described in subsequent sections of this Chapter), making it all but impossible to track a unique loan through the supply chain from its originators, via its servicers, to its securitized pool.”

      To add further insult, the servicers and trustees are attempting to track loans by “common loan elements” like zip code, loan amount and contract features.

“Without unique and permanent identifiers, the only way to track loans is through complicated, and often erroneous, computer matching schemes that link the information by common loan elements such as zip code, loan amount, and contract features.”

     The paper states the data is available to the loan originator, but originators typically aren’t very concerned about contractual details like properly transferring the note by assignment, or maintaining payment details.  An originator is focused on collecting their FEE to fund the loan, not in the quality of data or file transfer.

The paper claims that the data is “fully available internally to the….GSEs and their regulator, the Federal Housing Finance Administration (FHFA)” but there is no way that is true and there is no way that the authors were permitted to audit the GSE or FHFA data.

The Federal Reserve receives incomplete “subsets of the data” that is available through private data vendors.  But according to the private data providers, the “trustees expunge nearly ALL of the borrower and co-borrower identification information.”  The data received by the Federal Reserve is deficient and inaccurate, as well.

When a loan goes into foreclosure, the servicer must create the illusion that the loan file exists- by fabricating a note, assignments, and the appearance of a legitimate loan file when none exists.  The servicer’s game plan in court is to defeat the homeowner by deceiving the courts with fabricated documents, filing a plethora of motions meant to exhaust and deplete the homeowner’s limited resources, and ensure the loan-level data never sees the light of day with the assistance of a biased court.

“The data reported in Table 3 are fully available internally to the analysts of the loan originator, the loan servicer, the GSEs, and their regulator, the Federal Housing Finance Administration (FHFA). However, only subsets of the data are available through the private data vendors who represent the primary data source to investors and analysts in the securitized mortgage bond market and to the regulatory institutions, such as the Federal Reserve. The private data providers and all of the trustees expunge nearly all of the borrower and co-borrower identification information reported in Table 3

        In section 3.2.2 REMIC Data Reporting, the paper states that prior to the financial crisis and in 2012 when the paper was written that there was no loan-level information for mortgage backed assets in the REMIC-SPVs at the “date of the issuance of the prospectus supplement or the date of the initial offering of the certificates.” Thus, the individual loan characteristics including payment of principal and interest are NOT available!  The investors and certificate holders were forced to rely on “summary statistics” of the sub-pool.  The investors and certificate holders are not aware that they bought shares of a “mortgage-data” smoothie where no individual loans could be identified.”

3.2.2 REMIC Data Reporting

“As previously discussed, both prior to the crisis and currently, there is no loan-level information available for the mortgage collateral held as assets in the REMIC-SPVs at the date of the issuance of the prospectus supplement or the date of the initial offering of the certificates.

Because many of the REMIC-SPVs were composed of more than one distinct pool of mortgages, often the summary statistics would be provided for each of the sub-pools rather than for the collateral aggregates. Of course, mortgage analytics based solely on this information would be challenging, because the full distributional effects of the loan characteristics on the payments of principal and interest could not be specified.”

        The servicers, who are the bottom-feeders of this entire fraudulent scheme, are tasked with being the ‘data providers’ that are supposed to comply with the pooling and servicing agreements but typically have no idea what the original loan number was or balance, let alone what PSA is controlling of a particular loan pool.  This is an unmitigated disaster the banks can’t fix and the government doesn’t want to touch.

Shockingly, the prospectus supplements don’t require monthly payment remittance statistics, loan balances, delinquencies, prepayment status or audits to the investors.  There is literally no oversight or accountability for trillions of dollars of mortgage backed securities.

“During the run-up to the crisis, the only data that were available to analyze the loan origination and loan performance data for securitized mortgages were the data generated as the result of the PSA data management and reporting requirements stipulated in the prospectus supplement. These activities were carried out by the servicers and trustees of the REMIC SPVs.

Interestingly, the prospectus supplements never require that the monthly remittance statistics for the principal and interest payouts on the loans, the loan balances, and current loan delinquency or prepayment status be subject to external verification by accountants.

Access to the remittance data are available through subscriptions to private vendors such as ABSNet Lewtan and Bloomberg, the servicers, such as LPS and LoanPerformance (now Corelogic), and the trustees, such as CTSlink. Since the vendors source their data differently, the data that they maintain and sell is in part unique from, and in part overlaps, data available from other sources. Because there was, and is, no unique loan identifier, and because only some of the sources include data on the securitization status of the loans, it was and remains nearly impossible to obtain a consistent aggregate of securitized-loan characteristics and performance in the U.S.

This is consistent with the CA Case that was unsealed in 2016 – United States v. Discovery Sales, Inc. – The originating lenders who made loans to purchase DSI properties, including Wells Fargo and J.P. Morgan Chase, generally would not keep the mortgages and thus did not end up losing money as a result of the DSI fraud scheme. Instead, they would sell the mortgages to other banks who would package them in securities that were sold to other investors. These securities failed when the underlying mortgages went into default. It was impossible to trace the majority of the mortgage loans on the over 300 homes sold by DSI that were the subject of the FBI investigation; it would have been harder yet to identify individual victims of the fraud given that the mortgages were securitized and traded.  (Emphasis added.)”

     Below is the information that is allegedly contained in the loan files at the GSEs.  The GSEs must be audited to determine if such files exist:


2012 Abstract Shows Absence of Data Credibility for Borrowers, Lenders, Investors and Government Regulators

Hat tip to Bill Paatalo who brought this to my attention.

see: Abstract – US Residential-Mortgage Transfer Systems – A Data Management Crisis

U.S. Residential-Mortgage Transfer Systems: A Data-Management Crisis

John Patrick Hunt† , Richard Stanton‡ , and Nancy Wallace§ May 16, 2012


This paper reviews the current state of residential-mortgage data structures from origination through the securitization supply chain. We discuss the various uses of these data, their limitations in mortgage-risk management, and the current lack of transparency in important segments of the mortgage market.

We conclude that despite the size and importance of the mortgage market in the overall U.S. economy, current data-management practices make it difficult or impossible for borrowers, lenders, investors and government regulators to perform the oversight and analysis functions necessary to maintain an orderly market and to ensure fair pricing of securities backed by those mortgages.

Editor’s Note: Except for the seminal study by Katherine Ann Porter that she conducted at the University of Iowa in 2007, there is no study concluding the obvious — that the banks deliberately chose to use and invent systems that make it difficult and in fact, usually impossible, to track any residential loan in either the money trail or the paper trail.

The two things that stand out from this very comprehensive report, are that there is no common number used to identify loan documents and  their finding that the alleged REMIC Trusts are composed of multiple pools. These are high value financial instruments. In the securities markets we use a CUSIP number for every stock and bond purchased and sold. No such control number is used on mortgage loans.

The finding that the alleged REMIC Trusts are at least theoretically composed of MULTIPLE LOAN POOLS corroborates a basic tenet of my analysis, to wit: there is no single pool of loans that is attributable to a REMIC Trust and therefore, the mortgage loan schedule (MLS) presented in court does NOT represent the entire asset picture of the Trust. It’s very clever. If they are caught red handed they only need say that they didn’t think the other loan schedules were relevant. Nonetheless they proffer the MLS as THE MLS when the Trust was formed and that the MLS represents a current picture of the ownership of the PAPER even though it does not represent that the Trust is the obligee of the borrowers’ debts.

Katie Porter, now running for Congress in California, came to a more sinister conclusion that turned out to be true. She predicted that the original note would not be available at time of enforcement because it had been destroyed. I corroborated this conclusion when I surveyed multiple “lenders” who only claimed to be the “holder” of the note, not the obligee of the debt,  and not the holder in due course (i.e., where the REMIC Trust paid for the debt, and didn’t even receive a copy of the note.)

Like many other reports and abstracts prepared by eminently qualified experts in economics, securities, underwriting of loans and underwriting of securities, the conclusion is real, obvious and not contested by anyone representing the banks. The system was rigged to enable all loans and all paper trails to be shifted around at will to suit the needs of the TBTF banks — leaving the borrower, the borrower’s attorney and the court with only clouds of smoke and mirrors.

Let us help you plan your defense or offense: 202-838-6345. Ask for a Consult.

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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). to schedule CONSULT, leave message or make payments. It’s better than calling!



Royal Bank of Scotland Trained Employees on How to Forge Signatures

Fraud for the first time in history has been institutionalized into law.

It is foolishness to believe that the banking industry is trustworthy and that they have the right to claim legal presumptions that their fabricated documents, and the forged documents are valid, leaving consumers, borrowers and in particular, homeowners to formulate a defense where the banks are holding all the information necessary to show that the current foreclosing parties are anything but sham conduits.

Here we have confirmation of a practice that is customary in the banking industry today — fabricating and forging instruments that sometimes irreparably damage consumers and borrowers in particular. Wells Fargo Bank did not accidentally create millions of “new accounts” to fictitiously report income from those accounts and growth in their customer base.

Let us help you plan your narrative : 202-838-6345. Ask for a Consult.

Video available now for Neil Garfield’s Mastering Discovery and Evidence in Foreclosure Defense webinar.

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). to schedule CONSULT, leave message or make payments. It’s better than calling!

Across the pond the signs all point to the fact that the custom and practice of the financial industry is to practice fraud. In fact, with the courts rubber stamping the fraudulent representations made by attorneys and robo-witnesses, fraud for the first time in history has been institutionalized into law.

RBS here is shown in one case to have forged a customer’s signature to a financial product she said she didn’t want —not because of some rogue branch manager but because of a sustained institutionalized business plan based solidly on forgery and fabrication in which employees were literally trained to execute the forgeries.

The information is in the public domain — fabrication, robo-signing and robo-winesses testifying in court — and yet government and the courts not only look the other way, but are complicit in the pandemic fraud that has overtaken our financial industries.

Here are notable quotes from an article written by J. Guggenheim.

Once upon a time, in a land far, far away- forgery, fabrication of monetary instruments, and creating fake securities were crimes that would land you in prison.  If you forged the name of your spouse on a check it was a punishable crime.  The Big Banks now forge signatures and fabricate financial instruments on a routine basis to foreclose on homes they can’t prove they own, open accounts in unsuspecting customer’s names, and sign them up for services they don’t want.  If this isn’t the definition of a criminal racketeering enterprise- what is?

RBS, following the Wells Fargo Forgery model, conceded that a fake signature had been used on an official document, which means a customer was signed up to a financial product she did not want.  RBS’s confession comes only two weeks after whistle-blowers came forward claiming that bank staff had been trained to forge customer signatures. [e.s.]

The confession comes only two weeks after The Scottish Mail on Sunday published claims by whistle-blowers that bank staff had been trained to forge signatures.

At first, RBS strenuously denied the allegations, but was forced to publicly acknowledge this was likely a widespread practice. [e.s.]  The bank was forced to apologize publicly after retired teacher Jean Mackay came forward with paperwork that clearly showed her signature was faked on a bank document.  The great-grandmother was charged for payment protection insurance (PPI) back in 2008 even though she had declined to sign up for the optional product.

At first the bank refunded her fees but refused to admit the document was forged.  [e.s.]A forensic graphologist confirmed the signatures were ‘not a match’, forcing the bank to concede and offered her a mere £500 in compensation for their fraudulent act.

Forensic Graphologist Emma Bache, who has almost 30 years’ experience as a handwriting expert, examined the document and said the fundamental handwriting characteristics do not match.

The Banks in Britain, Australia, New Zealand and Canada, along with the United States include forgery and fabrication in their business models to increase profits.  Why shouldn’t they?  There is NO THREAT because they know they will not be held accountable by law enforcement or the courts- so they continue to fleece, defraud, and steal from their customers.

Homeowners must force an urgent investigation into claims of illegal practices by the banks.  Wells Fargo is not doing anything that CitiBank, JPMorgan Chase, Bank of America and others aren’t doing.  To remain competitive in an unethical marketplace, you almost have to resort to the same fraudulent tactics.[e.s.]

However, whistle-blowers have now revealed that managers were coached on how to fake names on key papers.  Whistle-blowers said that staff members had received ‘guidance’ on how to download genuine signatures from the bank’s online system, trace them on to new documents then photocopy the altered paperwork to prevent detection.  When in fact the bank taught its employees how to engage in criminal conduct.

Although clearly against the law, the whistle-blowers claim it was “commonly done to speed up administration and complete files.”  Just like American banks forge notes and assignments to ‘speed up foreclosures and complete files.’  They claim the technique was also used to sign account opening forms – and even loan documents. [e.s.]


According to, the “criminal offense of forgery consists of creating or changing something with the intent of passing it off as genuine, usually for financial gain or to gain something else of value.” This often involves creation of false financial instruments, such as mortgage notes, assignments, checks, or official documents. It can also include signing another person’s name to a document without his or her consent or faking the individual’s handwriting.  Forgery often occurs in connection with one or more fraud offenses. 

Attorney Fee Debate Heats Up as Florida Supreme Court Accepts Case

CFPB: Declaration of Dependence

Born as a fiercely independent agency meant to protect citizens, the Consumer Financial Protection Bureau has quickly been subsumed into the Trump administration. Banks, student-loan agencies and payday lenders are the winners.

In early February, the Federal Reserve delivered its most significant punishment of a major bank in a generation, sanctioning Wells Fargo for its pattern of customer exploitation.

A few blocks away, meanwhile, another of the giant bank’s regulators, the Consumer Financial Protection Bureau, has recently displayed a different attitude: It has been softening on scandal-inundated Wells Fargo. After an edict about data handling from Mick Mulvaney, the man Donald Trump installed as acting head of the agency late last year, the bureau’s enforcement lawyers suddenly found their hands tied, according to three CFPB staffers. The attorneys weren’t permitted to upload information the bank supplied about its auto insurance business, one of the areas in which Wells Fargo has been accused of malfeasance.

Another probe of bad behavior — this one involving Wells Fargo’s treatment of its checking customers — has bogged down, ProPublica has learned. And a third investigation of the bank (for mortgage abuses) that was about to yield tens of millions of dollars in fines, according to Reuters, now languishes unresolved. Staffers fear they will be ordered to reduce the penalty that Richard Cordray, the previous head of the agency, approved before he left, according to people familiar with the probe.

To continue go to ProPublica….

Fla. Supreme Court Takes Jurisdiction Over Attorney Fees Controversy

Under current doctrine, banks can continually file baseless claims against homeowners until they win — mostly because the homeowner does not have infinite resources. In the meanwhile each time the banks lose they are not liable for attorney fees. But if they win they get attorney fees under F.S. §57.105. If the homeowner prevails on the theory that the named Plaintiff is an imposter having nothing to do with the loan, then, according to current doctrine, the basis for recovery of attorney fees (as set forth in the mortgage and note) does not apply.

The basic injustice of this doctrine has attracted the attention of the Florida Supremes. The logic should apply both for the homeowner and for the bank. That is what we mean by blind justice. If someone takes a position in court and ultimately prevails then they are entitled to fees if the contract provides for fees. The appellate courts have erroneously concluded that this can only be applied for the banks, not the borrower.

Let us help you plan your case narrative and strategy: 202-838-6345. Ask for a Consult.
Register now for Neil Garfield’s Mastering Discovery and Evidence in Foreclosure Defense webinar.
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). to schedule CONSULT, leave message or make payments. It’s better than calling!

See Fla. Supreme Court Weighs in on Homeowner’s right to Recover Attorney

The current doctrine is that once you have prevailed on the issue of standing you have also disproved your right to recover attorney fees. The problem is that the decisions have focused on the wrong thing: the contract exists regardless of who is asserting rights for or against the contract. If the finding of the court was that no contract ever existed, then it would make sense that neither party could claim any benefit from a contract that never existed.

But that is not what is happening. The courts have gone off the tracks and hopefully the Florida Supremes will fix the problem. The current doctrine assumes that for purposes of the case the contract does not apply to the party who filed the case seeking relief pursuant to the contract (the note and mortgage). The current process requires a homeowner to defend a baseless action. But having asserted rights under the contract, the banks should die by their own sword. Otherwise the banks can keep coming into court under the same named Plaintiff forcing the homeowner to defend the same action repeatedly — until they run out of money.

Failure to award fees to the homeowners presents a clear strategy to the banks. Since there is no risk of loss, they will keep filing actions in which their named Plaintiff has no standing until they win by default because the homeowner simply can’t afford to litigate forever.

If fees were awarded, as they always were until the courts  invented a doctrine to deny the fees, then the banks would have risk of loss and would therefore be inclined to file only file actions that had merit.

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


The West Coast Foreclosure Show

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Or call in at (347) 850-1260, 6pm Eastern Thursdays

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
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