The Neil Garfield Foreclosure Show at 6pm Eastern: Phantom Collectors of Phantom Debt

Phantom Debt

Phantom Debt collected from Servicers on behalf of Phantom Creditors

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Mortgage servicers are collecting Phantom Debt on behalf of Phantom creditors by creating fabricated and forged documents.  Servicers counterfeit mortgage notes, assign them a value, and pursue collection of this ‘debt’- but who do they send the proceeds to, if there is no true creditor or funded trust that can be identified, or can accept payments from the servicer?
According to Neil Garfield:

  • We know that the banks funded themselves instead of the trusts which never really existed (phantom trusts).
  • We know that the banks covered up their theft of investor money by originating or buying loans with investor money and not trust money.
  • We know that the theft has been the subject of settlements in which the owner of the debt — the investors — is paid off with cash and “resecuritization” in which actual loans were  “sold” into a new trust (Like Zuni) by a party who STILL didn’t own them (phantom sales).
  • We know that the proceeds of judicial and nonjudicial sales does not go to investors but back to the “underwriters” of nonexistent worthless certificates issued by nonexistent trusts that are registered nowhere and unfunded(phantom trusts).
  • We know that the underwriter acts as “Master Servicer” for the phantom trust and collects “servicer advances” that were neither advances nor from the servicer, but rather a return of investor capital even if it was OTHER investors.
  • We know that the “Trustee” of the Trust is not a Trustee either in writing nor in practice (phantom trustees).
  • We know that the banks are acting on their own behalf and not on behalf of the investors or the trusts.

So with this fact pattern, the central question becomes: To whom does the “Servicer” send money after they collect their monthly servicing fee, or after they foreclose?  Based on the aggressive and illegal behavior of mortgage servicers- it would be fair to speculate that the servicer does not forward funds to any party but retains all money for itself.  It would also explain why loan servicers used HAMP to generate payments from the homeowner and sabotage any modification.  Servicers are incentivized to force the loan into default, not to work-out a plan that helps the homeowner remain in their home- because a foreclosure results in massive profits likely retained by the loan servicer.

Investigator Bill Paatalo of BP Investigative Agency will also discuss the fact that he has examined Hundreds (thousands) of cases and has yet to see a single document or any information that reveals the mortgage securitization money trail.   Neil Garfield speculates that “since the underwriter is posing as the Master servicer, even though the trust might not exist, that the money is going to the underwriter. That in turn leads to the question of what the Master Servicer did with the money?”

One thing is known for sure and that is that the servicer is collecting payments from homeowners who are paying. It is also common knowledge that servicer advances have been securitized indicating that “certificate holders” are being paid without recourse. Of course we don’t know how much is claimed as servicer advances and whether the money was claimed but not really paid because the banks have successfully buried this information.   It’s a rat’s nest by design,  but eventually the information will surface.


Paatalo will touch on Cashmere Valley Bank v WA Dept of Revenue_Unsecured Mortgages (WA Sup Ct 2014), where it was discovered that REMIC investors are far removed from the underlying mortgages.  In this case the court ruled that the investor must have some type of recourse against the collateral.  In Cashmere, the REMIC issuers, “offered no interests in mortgage or trust deeds to back their promises to pay investors. Relatedly, Cashmere has no direct or indirect legal recourse to the mortgages that underlie its REMIC investments in the case of default.”  Thus, the court ruled that Cashmere could not claim a tax deduction.

Neil Garfield points out that that in Cashmere, the borrowers do not owe Cashmere because Cashmere never loaned money and there is no contractual relationship between the borrowers and Cashmere. That is especially significant and Garfield reminds homeowners and attorneys that some of the best cases supporting securitization fail are found in tax law.

Cashmere illustrates how different types of interests are given to the holders of certificates and vary. Which means that in cases where US Bank appears as Trustee for certificates or certificate holders that might mean nothing- but homeowners and attorneys should have an absolute right to see the certificates and any indenture or other agreements regarding the certificate and its entitlement to income and the alleged underlying mortgage.

Garfield reiterates that strategy, “might be just what we need to force the opposition to respond to discovery about the nature of the certificates and if the Trustee is asserting a direct agency relationship with the certificate holders (i.e., in cases where a trust is not mentioned), and then we would be entitled to see that agency agreement and very possibly allowed to see the names of the certificate holders.


Excerpts from Cashmere include (thank you Bill Paatalo for providing these excerpts):

Cashmere snip - Investors are far removed from the underlying mortgages.PNGCashmere snip - Investors are far removed from the underlying mortgages(1).PNG

and lastly:Cashmere snip - no direct or indirect legal recourse to the mortgages that underlie REMIC investments.PNG

Bill Paatalo, Private Investigator:
BP Investigative Agency, LLC
P.O. Box 838
Absarokee, MT 59001
Office: (406) 328-4075
Attorney Charles Marshall, Esq.
Law Office of Charles T. Marshall
415 Laurel St., #405
San Diego, CA 92101

Bank Fabrication and Fraud Causes Rise of New “Industry” — Phantom Debt

It was inevitable that smaller players would seize upon the “irresistible” opportunity to create or sell phantom debt. With the justice system lining up to approve the practice of stealing debt owned by investors and claiming the right to collect, it did not take a genius to come up with a plan to invent the right to collect debts that never existed.

It also didn’t take a genius to realize that that if you could pretend to be a servicer or collector of a real debt, it was just as easy to skip the part about real debt.

We can help evaluate your options!
Get a LendingLies Consult and a LendingLies Chain of Title Analysis! 202-838-6345 or to schedule CONSULT, leave a message or make payments.
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Hat tip to Eric Mains

see Therrien


systematic schemes to collect on fake debts started only about five years ago. It begins when someone scoops up troves of personal information that are available cheaply online—old loan applications, long-expired obligations, data from hacked accounts—and reformats it to look like a list of debts. Then they make deals with unscrupulous collectors who will demand repayment of the fictitious bills. Their targets are often poor and likely to already be getting confusing calls about other loans. The harassment usually doesn’t work, but some marks are convinced that because the collectors know so much, the debt must be real.

Phantom debt actually falls into multiple categories all sharing the same fundamental characteristic — there is no right to collect it. The debt might be entirely fictional, partially fictional, or real. The parties seeking to collect on it are either real debt collectors or just scam artists. The owners of the debt have been left in the dust. They are investors who were defrauded and who are being silenced by confidential settlements.

So a small cottage industry has emerged out of the cancerous great mortgage fraud. To make money you merely need to get a list of people and then send out collection notices. Those collection notices look pretty frightening until you scratch the surface.

In the end, it comes down to the same thing we have been facing in wrongful foreclosures (which means virtually all foreclosures). The foreclosing parties are no more than the same scam artist fake debt collectors that has rippled through the financial industry.

They don’t own the debt because they never paid for it either by lending money nor by paying for the debt afterwards. Fake documents are used to paper over the obvious defective nature of their claims. The money collected is never used to forward or pay to the real victims — investors who put up the money in the first place.

All this became possible because the justice system discarded the rule of law. Had it simply stayed consistent with existing case law and statutes, virtually none of the foreclosures would have happened, and the new industry of fraudulent collections would have been limited to just a few scam artists who ended up in jail.

Back when dinosaurs roamed the Earth and I was doing foreclosures for banks and homeowners associations, I can remember judges denying me a final judgment and sending me back to the drawing board because my paperwork was incomplete and therefore “not in order.” Every judge in the country was doing that whether the case was contested or not. The Judge reviewed the documents and if the dots were not connected they threw it back at the lawyer.

What happened to that?

Defining the Players — Seminar on Monday

There really is only one reason to attend the seminar I am conducting on Monday. Lawyers and Pro Se Litigants will get a bird’s eye view of the players and specific strategies to deal with claims made by a “Successor” or “attorney in Fact” when the “originator” has gone out of business or is in bankruptcy.

Dead originators open the door to strategies that don’t work in other fact patterns.

Sign up now at

Death of a Salesman — when the party who “originated” an apparent loan transaction is dead or bankrupt.

The usual published chain of parties in cases where there are claims of securitization rarely includes all of the participants. The actual list is much longer. They all overlap in time so it is not possible to actually view them as specific numbered steps. The items in bold represent a main focus of the seminar:

  • Salesperson
  • Originator
  • Aggregator
  • Securities underwriter trading desk
  • Securities underwriter CDO manager
  • Designated “Lender”
  • Nominee (e.g. MERS)
  • Seller
  • Custodian
  • Securities Underwriter/ Master Servicer
  • Subservicer
  • Named Trustee of a self proclaimed REMIC Trust
    • Or Trustee for Certificates
    • Or Trustee for Certificate holders
  • Named REMIC Trust
  • Certificate holders
  • Investors who advanced money
  • Borrowers who received money
  • Trustees under deed of trust
  • Holders with rights to enforce the note
  • Substituted Trustees
    • On Deeds of trust
    • On REMIC Trusts
  • Designated foreclosing parties, assignors/assignees
  • Named attorneys in fact

Another Countrywide Sham Goes Down the Drain

Banks use several ploys to distract the court, the borrower and the foreclosure defense attorney from the facts. One of them is citing a merger in lieu of presenting documents of transfer of the debt, note or mortgage. We already know that the debt is virtually never transferred because the transferor never had any interest in the debt and thus had no authority to administer the debt (i.e., as servicer).

So the banks have successfully pulled the wool over everyone’s eyes by citing a merger, as though that automatically transferred the note and mortgage from one party to another. Mergers come in all kinds of flavors and here the 5th Circuit in Florida recognizes that simple fact and emphatically states that the relationship between the parties must be proven along with proof that the note, or authority to enforce the note, must be proven by competent evidence.

We can help evaluate your options!
Get a LendingLies Consult and a LendingLies Chain of Title Analysis! 202-838-6345 or to schedule CONSULT, leave a message or make payments.
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see Green v Green Tree Servicing Countrywide Home Loans et al 5D15-4413.op

*Judgment for Borrower (Involuntary Dismissal)
*Failure to provide evidence to explain relationships in mergers
*Failure to provide evidence of the terms of the merger and the transfer of the subject loan
* Failure to to provide evidence of standing at commencement of the lawsuit

An interesting side note to this case is that it never mentions the debt, which is the third rail of all claims of transfers and securitization. The opinion starts off with a recital of facts that differs from most other cases, to wit: it talks about how the homeowner signed the note and mortgage, and does not reference a loan made to him by the originator, Countrywide Home Loans (CHL).

The court remains strictly in the confines of who owns, controls or has the right to enforce the note — a fact that is relevant only if the note is evidence of an underlying debt. If no such debt exists between CHL and the homeowner, then the note is irrelevant — unless a successor possessor actually paid for it, in which case the successor could claim that it is a holder in due course and that the risk of loss shifts to the maker of the note under such circumstances.

The Green case here stands for the proposition that the banks may not paper over ownership or control or the right to enforce the note with vague references to a merger. The court points out that a merger might not include all the assets of one party or the other. More particularly, a merger, if it occurred must be proven along with some transfer of the subject note and mortgage.

And very specifically, the court says that entities may not be used interchangeably. The foreclosing party must explain the relationship between the parties affiliated with the “merged” entities.

[NOTE: Bank of America did not directly acquire CHL. CHL was merged into Red Oak Merger Corp., controlled by BofA. One of the reasons for doing it that way is to segregate questionable assets and liabilities from the rest of the BofA. BofA claimed ownership of CHL, and changed the name of CHL to BAC Home Loans. But it didn’t just change the name; it also made assertions, when it suited BofA that BAC was a separate entity, possibly an independent entity, which is also not true. So the Court’s objection to the lack of evidence on the merger is very well taken].

The Court also takes note of the claim that DiTech Financial was formerly known as Green Tree Servicing. That is not true. The DiTech name has been used by several different entities, been phased out, then phased in again. Again a reason why the court insists upon evidence that explains the actual relationship between actual entities, and not just names thrown around as though that meant anything.

Ultimately Green Tree, which no longer existed, was made the Plaintiff in the action. Some certificate of merger was introduced indicating a merger again, this time between DiTech Financial and GreenTree. In this lawsuit Green tree was presented as the surviving entity. But in all other cases DiTech Financial is presented as the surviving entity — or at least the DiTech name survived. There is considerable doubt whether the combination of Green Tree was anything more than rebranding an operation merging out of the Ally Financial bankruptcy and ResCap operations.

A sure sign of subterfuge is when the lawyer for the foreclosing party attempts to lead the court into treating multiple independent companies as a single entity. That, according to this court, would ONLY be acceptable if there was competent evidence admitted into the court record showing a clear line of succession such that a reasonable person could only conclude that the present successor company in fact encompasses all of the business activities and assets of the predecessors or, at the very least, encompasses a clear chain of possession, title and authorization of the subject loan.

[PRACTICE NOTES: Discovery of actual merger documents and documents of transfer should be vigorously pursued against expected opposition. Cite this case as mandatory or persuasive authority that the field of inquiry is perfectly proper — as long as the foreclosing entity is attempting tons the mergers and presumptive transfers against the homeowner.]




Smoke and Mirrors: Illinois Case

This 2016 Illinois case corroborates exactly what I have been saying for 11 years. Sleight of hand accounted for the 1st Mortgage that was payable to Lehman Brothers who funded every loan with advances from Investors who then owned the debt. The investors were cut out of the chain of paper and the chain of money.

Thus equitable principles were attempted in order to establish a right to foreclose. But nothing can take away the fact that the forecloser, as in virtually all foreclosure cases these days, is a complete stranger to any part of any transaction that is memorialized in fabricated, forged, robo-signed, false representations on worthless documents of transfer.

We can help evaluate your options!
Get a LendingLies Consult and a LendingLies Chain of Title Analysis! 202-838-6345 or to schedule CONSULT, leave a message or make payments.
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Hat tip to Cement Boots

see CitiMortgage, Inc. v. Parille, 2016 IL App (2d) 150286, (For some reason it won’t upload). Try This:

Citi steps into the paper chain based upon nothing and THAT is their legal problem. So they attempt to file multiple amended complaint that only get themselves in worse trouble because in the final analysis, they are making allegations that imply legal standing that they will never be able to prove.

Specifically they seek to have the court declare an equitable mortgage in favor of Citi. For the most part, equitable mortgages don’t exist, but there is a doctrine called equitable subrogation in which title to the existing mortgage shifts to a new owner because the new owner has paid for the debt — something that is impossible because even Citi does not say they paid the investors who owned the debt. Further, as this Court points out such a doctrine won’t do Citi any good if the initial mortgage was defective.

In short the fundamental assumptions (arising from political rather than legal policies) do not apply. Those assumptions are frequently erroneously raised to legal presumptions), that the debt MUST be owed by the homeowners to the putative foreclosing party and that the imperfections in the paper chain are technical in nature and that therefore allowing the homeowner to win would be inequitable.

As the Courts dig deeper they are confronting the fundamental conflict between political doctrine and legal doctrine. Political doctrine mandates that the banks win in order to preserve a financial system that is now largely dependent on a ladder of financial products deriving (hence derivative) their value from each other, but based upon the assumption that the base transaction exists. The base transaction in the paper chain is a loan by the Payee on the note. In this case as in most cases, there is no base transaction in real life that would support the closing documents. Hence all the paper deriving value from the nonexistent transaction is worthless.

The simple truth is that in order for equitable subrogation to apply, one must allege and prove facts that there is injury to the pleading party — something that none of the players could ever claim in this case. Injury could only occur in financial form. And the only thing lost to Citi or even the Lehman estate, which is still in bankruptcy, is the opportunity to make a profit by deceit.

Live Now! The West Coast Foreclosure Show with Charles Marshall @ 3pm Pacific: Arkansas Bankruptcy Court goes Rogue- No Note? No Endorsement? No Valid Lender? NO PROBLEM!

Charles Marshall Logo Southern California

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Investigator Bill Paatalo joins California foreclosure attorney Charles Marshall to discuss one of the most egregious foreclosure decisions in recent history.  An Arkansas Bankruptcy court ruled that bank fraud is an acceptable practices in Shiefer v. Wells Fargo.  Wells Fargo, on the record, admited to executing a note by a WaMu Officer in 2013- when WaMu no longer existed and long after FDIC Receivership.  The Arkansas courts have repeatedly proven they will permit fraud to protect the banks.

The Arkansas Bankruptcy Court under Trustee Joyce Babin appears to get the facts utterly wrong in this case, but there is one valuable nugget (FACT) that now exists – Wells Fargo admits to executing an endorsement upon a note by a WaMu Officer in 2013!  The endorsements of WaMu officers appearing on notes long after the FDIC Receivership is what investigator Bill Paatalo has been attesting to for years now based upon a conglomeration of evidence. But now, there is an actual admission that endorsements are being fabricated to satisfy the bankruptcy and foreclosure courts!

Charles Marshall will discuss how legal decision making in the area of foreclosure law is infected with and reflective of major political machinations, not the rule of law.  Judges are ramrodding homeowners in foreclosure with displays of indifference and contempt. The political posturing occurs in mega-million dollar settlements between Federal and State entities and big lender/servicers to create the appearance of enforcement- but provides only a trickle of relief to homeowners.

The sun is setting on the California Homeowner Bill of Rights & will no longer be operative (except for submitted loan mods under review on or before Dec. 31, 2017). Lawmakers have made no attempt to extend CHBOR protections to homeowners who are disproportionately nonwhite.  It is time for #MineToo! to stop this flagrant foreclosure abuse.

Bill Paatalo at the BP Investigative Agency




Attorney Charles Marshall

Phone 619.807.2628


The Elephant in the Living Room — “No Action Arises From Deceit”

For the past decade we have been dealing with the politics of foreclosure. The law of foreclosure has been pushed to the curb because of political decisions. Out of abject terror and total confusion the rule of law has been abandoned in favor of not angering the beast that brought ruin to millions of families.

We can help evaluate your options!
Get a LendingLies Consult and a LendingLies Chain of Title Analysis! 202-838-6345 or to schedule CONSULT, leave a message or make payments.
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I think that it is time to talk about the elephant in the living room — that foreclosures are not so much about law — which  favors homeowners — than they are about politics, which favors the banks.
If you look at litigation in the student loan marketplace, you will see that the same defenses that we use in foreclosure are getting traction because of the perception that students are different from homeowners.
Student stereotype is young white up and coming professional who got a raw deal. The homeowner is a lower middle class person of color whose eyes were bigger than their wallet.
This type of stereotyping produces incongruous results. And it is based upon the erroneous notion that there was a legal, valid loan at the base of all the paper. In almost all cases there was not. In almost all cases, if the disclosure had been proper, the investor and the homeowner would have known that the banks were creating “trading profits” to launder the money they stole from investors.
In all cases neither the investor nor the homeowner would have opted in on the deal without the investor being compensated for  their investment or the homeowner being compensated for his/her signature and reputation.

The biggest problem for people to wrap their heads around is that there was no loan, as it is defined by law. You can’t argue that point because it makes you sound nuts, but it is true. If we were to use hundreds of years of common law development, as it exists today, the money received by most homeowners was not the result of a loan contract. In real life, investors were defrauded into thinking their money would be managed by a trust with a trustee that they knew very well. That never happened. SOME of the stolen money ended up on the “Closing table” where the homeowner thought he/she was getting a home loan.

The fundamental error committed by the courts is that they are allowing benefits to flow to the banks from an illegal scheme.

Ex dolo malo non oritur actio [“no action arises from deceit”].

“from a dishonorable cause an action does not arise”) is a legal doctrine which states that a plaintiff will be unable to pursue legal remedy if it arises in connection with his own illegal act.[1] Particularly relevant in the law of contract, tort and trusts,[2] ex turpi causa is also known as the “illegality defence”, since a defendant may plead that even though, for instance, he broke a contract, conducted himself negligently or broke an equitable duty, nevertheless a claimant by reason of his own illegality cannot sue.
So the actual legal effect is as follows: the homeowner is credited with money that ultimately came from the investors but was paid by the banks who intercepted the money that was intended for a REMIC Trust. The banks, under ex dola malo non oritur actio, cannot receive the benefits of their illegal scheme.
The investors contributed money and the homeowners contributed their personal reputation and signature without knowing they were being used for an illegal scheme. Neither one received disclosure or a share of the pornographic “profits” created by the illegal scheme.
As for the current status, legally, the investors have an equitable unsecured claim against the homeowner that could be converted to a judgment lien. The mortgage and note are void and unenforceable both because they are defective in referring to a nonexistent loan and a nonexistent loan transaction and because they are part of a fraudulent scheme.
BUT the politics of foreclosure is entirely different. As noted above, homeowners are seen not as victims but as the appropriate parties to bear the risk of untenable “loans.” Every branch of government had a choice when this thing broke in 2008. Either make the banks pay for it and provide direct relief for homeowners and investors (thus providing a stimulus to the economy), as they did in Iceland, or buckle under the threat that the entire financial system would collapse if the illegal behavior was not sanctified. In most countries the choice is obvious — let the homeowners burn.
The problem with politics governing legal decisions (besides the fact that it should never happen) is that politics change. Thus it is the trial lawyers job to embarrass the judge, piece by piece, such that the judge feels pushed into a corner and that in this one case he/she will allow the homeowner to prevail.
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