The Role of Dynamic Dark Pools in Ponzi Schemes Masquerading as Securitized Loan Pools

The bottom line is that there are no financial transactions in today’s securitization schemes. There is only fabricated paper. If you don’t understand the DDP, you don’t understand “securitization fail,” a term coined by Adam Levitin.

GET A CONSULT

GO TO LENDINGLIES to order forms and services. Our forensic report is called “TERA“— “Title and Encumbrance Report and Analysis.” I personally review each of them for edits and comments before they are released.

Let us help you plan your answers, affirmative defenses, discovery requests and defense narrative:

954-451-1230 or 202-838-6345. Ask for a Consult. You will make things a lot easier on us and yourself if you fill out the registration form. It’s free without any obligation. No advertisements, no restrictions.

Purchase audio seminar now — Neil Garfield’s Mastering Discovery and Evidence in Foreclosure Defense including 3.5 hours of lecture, questions and answers, plus course materials that include PowerPoint Presentations.

THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.

===================================

I received a short question today to which I gave a long answer. The question is “What happens when an investor decides that he or she wants to cash it in does someone redeem their certificate ?”

Here is my answer:

YES they get paid, most of the time. It is masked as a “trade” on the proprietary trading desk of the CMO Dept. which is completely unregulated and reports nothing. As long as the Ponzi scheme is going strong, the underwriter issues money from the investor pool of money (dynamic dark pool -DDP). It looks like a third party bought the “investment.” If the scheme collapses then the underwriter reports to investors that the market is frozen and there are no buyers.

 *
There is no redemption because there are no certificates. They are all digital entries on a server. Since the 1998 law deregulated the certificates, reporting is limited or nonexistent. The entries can be changed, erased, altered, amended or modified at will without any regulator or third party knowing. There is no paper trail. Thus the underwriter will say, if they were ever asked, whatever suits them and there is no way for anyone to confirm or rebut that. BUT in discovery, the investors have standing to ask to see the records of such transactions. That is when the underwriter settles for several hundred million or more.
 *
They discount the settlement based upon “market” values and by settling for pennies on the dollar with small community banks who do not have resources to fight. Thus if they received $2 billion for a particular “securitized pool” that is allocated to a named trust they will instantly make about 10-20 times the normal underwriting fee by merely taking money before or after the money hits the DDP. Money is paid to the investors as long as sales of certificates are robust. Hence the DDP is constantly receiving and disbursing money from many more sources than a fixed group of homeowners or investors.
 *
It is all about gaps and absences. If a debt was properly securitized, the investor would pay money to the underwriter in exchange for ownership of a certificate. The money would then be subject to fees paid to the underwriter and sellers of the certificates. The balance would be paid into a trust account on which the signatory would be a trust officer of the Trustee bank.
 *
If a scheme is played, then the money does not go into the trust. It goes to the DDP. From there the money is funneled through conduits to the closing table with the homeowner. By depositing the exact and expected amount of money into the trust account of the closing agent, neither the closing agent nor the homeowner understands that they are being played. They don’t even have enough information to arouse suspicion so that they can ask questions.
 *
Hence if you combine the proper securitization scheme with the improper one you see that the money is diverted from the so-called plan. This in turn causes the participants to fabricate documents if there is litigation. They MUST fabricate documents because if they produced real documents they would have civil and criminal liability for theft, embezzlement in investor litigation and fraud and perjury in foreclosure litigation.
 *
It is only by forcing a peek around the multiple layers of curtains fabricated by the players that you can reveal the absence of ownership, authority or even an economic interest — other than the loss of continued revenue from servicing and resales of the same loan through multiple investment vehicles whose value is completely derived from the presumed existence of a party who is the obligee of the debt (owner of the debt, or creditor).
 *
That party is the DDP — fund that is partially authorized for “reserve” and which the prospectus and trust instrument (PSA) state (1) that the mortgage loan schedule is not the real one and is presented as an example and (2) that the investors acknowledge that they might be paid from their own money from the “reserve.”
 *
The gap is that the DDP and the reserve are two different accounts. The “reserve” is a pool of money held in trust by, for example, U.S. Bank as trustee for the trust. There is no such account. The DDP is controlled by the underwriter but ownership is intentionally obscured to avoid or evade detection and the liability that would attach if the truth were revealed.
 *
We win cases not by proving theft from investors but by hammering on the fact that the documents are fabricated, which is true in virtually all cases involving a named trust. We will win a large award if we can show that the intended beneficiaries of the foreclosure were parties other than the obligee on the debt.
 *
Thus the attorneys, servicers and trustee are protecting their ill-gotten gains and seeking to grab more money and property at the expense of the unnamed investors and homeowners. They are then transforming an expected revenue stream into the illusion of a secured debt owed not to the funding sources but to the intermediaries.
Go to LENDINGLIES for more help.

THE CURRENT BIAS: EVEN IF HOMEOWNER WINS, NO FEE RECOVERY

The continuing bias in favor of the banks’ fraudulent scheme of mortgages and foreclosures gives rise now to a nutty theory. The logic seems so obvious to the courts and yet it is erroneous. In a nutshell the theory goes, if a homeowner eventually proves that the parties attempting to foreclose have nothing to do with the loan, then the homeowner is barred from receiving fees under the contract.

The fact that the foreclosing party represented and fought for status as a party with standing and was entirely dependent upon their ability to enforce contract (note and mortgage) means nothing to the courts. They want to set up whatever obstacles they can to valid defenses  showing the homeowner owes nothing to the parties who are foreclosing.

Let us help you plan your 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).
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 4th DCA Reaffirms No Fees to Prevailing Homeowner

Essentially the courts are punishing homeowners for winning the case and letting the real offender go free without any form of sanctions or payment to the homeowner. By disallowing fees to the homeowner they make it less likely for homeowners to raise meritorious defenses including the key defense that the parties seeking foreclosure are scamming the court.

The logic of the court is that once you prove that the foreclosing party has no factual or legal relationship to the loan, you have destroyed your claim to enforce fees via statute, contract or both. This is also in keeping with the finding that fraud, forgery and fabrication once proven, means nothing in terms of clean hands.

The Courts could have shut down the flood of foreclosures that started 12 years ago and continues to this day. All they needed to do is continue their procedure of making absolutely certain that the foreclosing party actually had a right to foreclose. Instead of being worried about fraudulent claims, the courts are worried about meritorious defenses. THAT is the opposite of due process. It is a political decision instead of a legal one.

First the basis of this modern “doctrine” is that proof that the forecloser is a stranger means that there are no remedies to the victim of fraudulent behavior. That is simply due process in reverse. Once someone files something in the courts or county records, they are submitting themselves to the jurisdiction of the court, even if it is based upon fraudulent claims based upon forgeries and fabrications. If this “doctrine” were true and sustainable it  would present an optional basis to avoid penalty for lies told in court. They can do it and if they are caught they pay nothing.

Second, the forecloser has hoisted itself on its own petard. By proclaiming that it is the only party to a contract entitled to enforce it, it must suffer the consequences of failing to prove that — especially if the evidence shows, as in the case cited above in the link, that the failure was not just wrong or negligent, but rather intentional and fraudulent. The courts are rewarding bad behavior.

Third, fees, costs and other sanctions should be available against a party who lies to the court about a transaction and loses the case because they were found to be lying.

The entire concept of denying the existence of a contract when both parties agreed in court that the contract existed, is out of Gulliver’s Travels. Perhaps what is needed is some pleading in affirmative defenses or counterclaim that the action is frivolous and fraudulent, seeking fees for abuse of process or wrong full foreclosure. But that again puts the intolerable burden of litigating the right to title and possession of a homestead on the homeowner.

The courts are interposing an issue that should never come up, to wit: if you own your home and you have obvious defenses against foreclosure that shows that the party attempting to foreclose is lying to the court, you need to factor in the high cost of litigation before you defend — or get out and let the the liar enter the house.

Expired, Forged, Robo-Signed Notary: How to use it.

THE GOAL IS TO SHOW THAT THE ABSENCE OF A TRANSACTION, NOTWITHSTANDING THE REFERENCE IN A DOCUMENT.

While the defective notarization does not itself invalidate the document, it certainly suggests questions about how that happened and then to question whether the same thing happened with other documents or endorsements. If you can cast sufficient doubt as to the trustworthiness of documents (and the party proffering it to the Court) of then the laws of evidence require that the proffering party actually prove the transaction instead of having the Court presume that the transaction referenced in a document actually existed.

Get a consult! 202-838-6345

https://www.vcita.com/v/lendinglies to schedule CONSULT, leave message or make payments.
 
THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
—————-

Whether an instrument is notarized or not it is still valid between the parties to the instrument. So a mortgage for instance is required to be notarized only to get it recorded, which is for the protection of the lender and not for the protection of the debtor. Whether it was recorded or not the mortgage becomes enforceable when it is signed.

So the problem is this: if the notary’s commission expired, then the instrument was not properly “RECORDED”. Theoretically there is an academic argument to challenge the procedural legitimacy of a foreclosure if the notary was forged or expired. But as a practical matter nothing changes in the end. However, if some judge is convinced that not having recorded it in county records means that the lien was not perfected, it could cause substantial delays in the process.

BUT all that said, the use of a notary that has expired suggests that the notary was robosigned. AND robosigning could be evidence that other documents are robosigning, which is a form of forgery. And robosigning itself suggests the possibility or even likelihood of fabrication of documents including the note, assignments, endorsements etc. CAUTION: You cant just say it. You most prove the possibility or even probability of forgery, fabrication and robo-signing.

Establishing relevant and sincere doubt is easier than proving the “defense” of defective instruments etc.

If the robo-signing and fabrication issue are properly highlighted at trial or in motions THEN you have cast doubt on the trustworthiness of all the documents (or at least the ones where robo-signing and forgery are put into question). THAT in turn suggests that legal presumptions arising from the apparent facial validity of an instrument would not apply. Check the laws of your state.

In Florida once sufficient doubt is cast upon the trustworthiness of the documents, the documents are no longer sufficient to prove the truth of the matter asserted — i.e., in a note that money was loaned to the homeowner, in an assignment that the debt was sold (not just a sale of the paper instrument). This would require the the party proffering said documents to go in reverse, which we are very confident they cannot do — i.e., they must first establish the transaction and then prove that the instrument is an accurate reflection of the actual financial transaction.

There is no “prejudice” to a foreclosing party if they must prove up the transactions, since they are asserting that those transactions occurred anyway. What has changed is that instead of presuming and assuming the transactions shown on the documents were real, they must simply prove that the transaction occurred by showing delivery of money in exchange for the note, or money in exchange for the assignment or money in exchange for the endorsement.

Banks Struggle to “FIND” Nonexistent Documents

So for the people who are unemployed due to a recession that won’t really quit until the money stolen from the system is somehow replaced or clawed back, you have a job waiting for you if you can sleep at night knowing that if your activities are exposed, the bank will disavow your “irresponsible” actions, leaving you exposed to jail or prison.

THE FOLLOWING ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.

—————-

see http://4closurefraud.org/2016/06/17/mortgage-companies-seek-time-travelers-to-find-missing-documents/

Every Bubble Bursts. The banks are now struggling to find people who will “find” nonexistent documents without expressly telling their superiors at the bank that the “found” documents were fabricated. The evidence is all over the internet as banks troll for prospective employees who will get their hands dirty and be prepared to get thrown under the bus should the malfeasance be discovered.

The documents are not merely missing. They do not exist. And without the critical documents required in every foreclosure, there can be no foreclosure. The documents must be fabricated because they don’t exist. The documents don’t exist because they were actually intentionally destroyed and because the banks have no interest in the property, the alleged loan, the “original” note (“missing” in most cases), the mortgage or the debt itself. Many documents existed but were destroyed by the banks.

If pushed to open their books we would find a complete absence of any financial transaction in which the banks or their pet trusts were involved. Up until recently the banks were able to get their employees to execute documents that were fabricated for the purposes of presentation in court. But the number of people who are willing to do that is diminishing. Bank employees sense the impending disaster for the banks and they don’t want to take the blame even if it costs them their job.

The entire bank scheme, as I previously reported, is based upon the ability to use legal presumptions. These presumptions create an opportunity for epic fraud and theft. If a document is facially valid, the burden shifts to the homeowner to rebut the presumption that it is indeed a valid, authentic document. But now homeowners are hiring forensic document examiners who are showing that the document presented is not the original even if it looks that way. More and more homeowners, when presented with a “blue ink” document will say they don’t know if that particular signature is their own signature because they know that the documents and signatures are being fabricated. The bank’s witness in court is treading the fine line between ignorance and perjury when they say that the note is the original. The same holds true to bogus assignments, indorsements (“endorsements”), powers of attorney and other documents the banks use to avoid being required to prove their case without the presumptions.

So the banks, without using their own names, are posting job openings for what 4closurefraud.com calls “time travelers.” People get hired for their willingness to create documents that appear to have been prepared and executed years ago. This is required because if there was no transaction years ago, then the sham is exposed — the “loan contract” between the homeowner and the originator never existed. And so when the originator endorses or assigns the note or mortgage to an undisclosed third party, the assignment is completely and irrevocably void as coming from an entity that never owned the loan but was merely named as the Payee or Mortgagee.

BUT if the original loan documents look valid, and the alleged transfers of the loan look valid, then the burden shifts to the homeowner to rebut the presumption that a real transaction took place between the homeowner and the originator and between the originator and the next party in the false chain of possession and ownership of the loan. This is why I have been relentless in insisting that discovery take place and be pursued aggressively. I have already seen many cases in which an order was entered requiring the banks to respond to discovery requests; in virtually all cases someone steps forward and settles with the homeowner. The only exceptions are where it is clear that the judge is going to rule for the banks anyway and will deny subsequent motions to compel the discovery that was previously ordered.

Of course the problem with the settlement is that the homeowner is being coerced into accepting a settlement that acknowledges some bank, servicer or trustee as actually having rights to collect or enforce the loan; since these parties are merely intermediaries who issue self-serving paper designating themselves as real parties in interest, such settlements could result in the homeowner being presented with claims later from the real source of funding in their loan. This is unlikely, but nonetheless possible. The only reason it is unlikely is that the real parties in interest are investors whose money was commingled with thousands of other investors in hundreds of trusts that never received any proceeds from their offering of mortgage backed securities that were neither mortgage backed or securities. The investors need a way to trace their money into the loans or, if they elect not to do so, to settle with the bank that cheated them in the first place with bogus mortgage bonds. There have been many such settlements, most of them unreported.

The fact remains that the “lender” is never part of any documented transaction. Hence the “lender” (the investors) enjoy none of the protections of a holder of a note nor the security of a mortgage. Fabricating documents and forging them is the only way of breathing life into the false loan contract that was documented, even if it never happened. And borrowers and their attorneys should take note that the entire loan infrastructure is an illusion that has been awarded judgments that pretend the illusion is real. we are either a nation of laws or a nation of men. Our Constitution makes us a nation of laws. This is our challenge. Do we allow bankers and politicians to turn back time on paper and treat them as though they are doing something right because NOW it is right because they declared it right, or do we reject that and apply rules of law that have existed for centuries for this very reason.

So for the people who are unemployed due to a recession that won’t really quit until the money stolen from the system is somehow replaced or clawed back, you have a job waiting for you if you can sleep at night knowing that if your activities are exposed, the bank will disavow your “irresponsible” actions, leaving you exposed to jail or prison.

Schedule A Consult Now!

 

TILA (NON-JUDICIAL AND JUDICIAL) Rescission Gets Clearer in Most Respects

For further information please call 954-495-9867 or 520-405-1688

=========================

It is becoming crystal clear that with help from a competent attorney the options under the TILA rescission process are (a) different from common law rescission and (b) very effective against “lenders” who can no longer hide behind “presumptions”. LIKE THE PRESUMPTIONS THAT HAVE BEEN STRICTLY APPLIED AGAINST HOMEOWNERS, BUT WHICH ARE REBUTTABLE, TILA RESCISSION IS STRICTLY APPLIED AGAINST “LENDERS.” Just as presumptions force the borrower to take the burden of proof on basic facts in the pretender lender’s case, TILA rescission forces the “lender” to take the burden of proof in the borrower’s loan, establishing that there was no basis for rescission. This article covers the law regarding those legal presumptions AND the effects and mechanics of a TILA rescission.

Amongst the things that are clear now is the plain fact that rescission is a private statutory remedy requiring only a letter to give notice of exercising the TILA right of rescission. If a homeowner wants to file suit to enforce the rescission, there is a one year statute of limitations to collect damages or get any requiring the “lender” to comply. But the effective date of rescission remains the same even if the one year statute has passed. In plain language that means that by operation of law you don’t have a mortgage encumbrance on your property if more than 20 days has passed since the rescission was effective (the day you dropped it in a mailbox).

But if you are looking to recover the financial damages provided by TILA (disgorgement of payments etc.) then you need to file suit within one year of the rescission. If you want to clear title with a quiet title action my opinion is that the one year statute of limitations does not apply — because the act provides that the mortgage and note are void by operation of law. Thus the title issue is cleared as of the date of rescission. As argued by the ACLU and as stated by a unanimous Supreme Court the rescission is effective upon notice. There is no requirement of notice AND a lawsuit. So the suit to clear or quiet title is merely based on removing the mortgage from your chain of title because it is (and has been) void since the day of rescission.

I cannot emphasize enough the importance or reading the ACLU brief below. Too many judges and lawyers have become confused over the various provisions of TILA. A lawsuit based upon rescission to to enforce the rights due to the borrower because the rescission is already effective. The lawsuit is NOT the exercise of the right of TILA rescission. The letter declaring the rescission is the exercise of the right of TILA rescission. This is far different from common law rescission.

FOR REBUTTING PRESUMPTIONS See Franklin Decision

FOR ADMISSIONS REGARDING FABRICATION OF DOCUMENTS THUS REBUTTING PRESUMPTIONS See Wells Fargo Foreclosure_attorney_procedure_manual-1

FOR THOROUGH ANALYSIS AND HISTORY OF TILA RESCISSION SEE jesinoski_v._countrywide_home_loans_aclu_amicus_brief

And see this explanation which is almost entirely accurate —

Read this excerpt from the CFPB Amicus Brief (Rosenfeld v. HSBC):
” If the court finds the consumer was entitled to rescind, it will order the procedures specified by 1635 and Reg. Z, or modify them as the case requires…Accordingly, if the court finds the consumer rescinded the transaction because she properly exercised a valid right to rescind under 1635, the lender must be ordered [by the court] to honor the rescission, even if the underlying right to rescind has expired.”
 
I needn’t go further…this is the CFPB talking…and they are the sole authority to promulgate the rules of rescission by Congress. They (the lender) must act within 20 days, regardless of the consumer’s perception of whether or not the rescission is timely. It would be up to a court to determine the exercise of the right…but the lender must be ordered by the court to follow the rules of rescission under TILA and the attendant time frames contemplated therein.
The rescission process is private, leaving the consumer and lender to working out the logistics of a given rescission.” McKenna, 475 F.3d at 421; accord Belini, 412 F.3d at 25. Otherwise, to leave the creditors in charge of determining timing, the creditors would no doubt stonewall until the time ran after receipt of the notice of rescission. Thus, even valid rescissions would result in creditors claiming that the time to file suit had run out and the statute is then moot. Congress recognized that TILA rescission is necessarily effected by notice and any subsequent litigation must be accomplished within restrictions set against the creditors…not the consumers. This is non-judicial action at its finest. Just like the non-judicial act of foreclosure (in such forums). 
Consummation is a question of fact that would be determined after the creditor performed its required obligations under 1635 (b)…unless suit is brought within 20 days of the notice of rescission…as is required.
“Everyone is a genius, but if one passes judgment on a fish trying to climb a tree, and then continues to tell him that he is stupid, the fish, and everyone else, will believe that, even though his genius has never been discovered.” Albert Einstein.

Gretchen Morgenson Weighs in On Wall Street Corruption: “Two Judges Who get It About Banks”

For more information on UNDOCUMENTED LOANS please call 954-495-9867 or 520-405-1688

================================

Competing Transactions:

The One Banks Use Which never Existed

vs

The Real Loan that was Undocumented

You may have noted that in response to my articles and briefs, banks don’t argue with the premise that they have no original money transaction; instead they argue that there doesn’t need to be one. I disagree. For those of you who have been reading my articles over the last week, you will see some familiar comments and facts in this New York Times article. The deeper questions have yet to be asked in mainstream media — why was it necessary for the banks to fabricate documentation — that is, if the transactions they are claiming to enforce were real? My only answer is that the transaction they are claiming to document never existed.

If the transactions represented by banks actually existed, they would never have needed to fabricate documents with forged, robosigned signatures. The fabricated, back-dated, forged, robosigned documents and now robo witnesses are corroboration for the irrefutable conclusion that there is no underlying transaction with the banks. This entire fiasco is simply based upon greed and opportunity.

The banks saw an opportunity to use other people’s money for their own benefit and to the detriment of everyone else involved. They converted themselves from intermediaries, which is their primary role for which they are licensed, to the principal. It is as simple as this: imagine your bank claiming to won your TV set because you signed a check payable to the store that sold it to you. The bank claims they were the real party in interest and they can enforce the warranty on the TV against the manufacturer and even take your TV away from you because “they own it.” What Judges are missing is that banks are intermediaries. They are a middleman not the actual player; but Banks have convinced the court that they are the principal player and that even if they are not the principal real party in interest, it is irrelevant. If we were to keep moving down this path, the entire fabric of our laws concerning contract and negotiable paper will be destroyed.

And the fact that their puppets happen to be named at the closing of the loan does not mean those puppets did anything except look cute. If the money came from someone else, then the paperwork should have disclosed that and more importantly the note and mortgage should have been made out in favor of the source of funds.

The assumption that it is none of anyone’s business how the banks securitized mortgage loans is just plain wrong, and just plain dangerous. It opens the door to far more trips into the moral hazard zone. Judges have been assuming that the note and mortgage were made out in favor of a properly constituted representative of the party who was the source of funds or they are assuming that the numerous parties involved in the loan closing were somehow in privity with the sources of funds. This is not true and obviously not based upon any evidence presented anywhere; but as Judges loosen the ropes that bind us and allow inquiry into the money trail, they will discover, to their horror, that the originating transaction was actually undocumented and the one described by the banks never existed.

The problem the Judges are having is an old one now — well if the party named on the note and mortgage didn’t loan money to the borrower, then who did loan money to the borrower? And the answer has been “I don’t know, but they are out there.” That has been an unsatisfactory answer caused by the failure of the same courts to enforce reasonable discovery requests seeking exactly that information. Hence the frustration of foreclosure defense work for lawyers.

When it comes to writing about Wall Street corruption, Gretchen Morgenson gets very little support from her Employer, the New York Times. If you want to give her more leverage to write more of these articles then start writing letters to the editor and comment on her articles when it deals with Wall Street corruption.

Here is the link to her article: Two Judges That Get It — Gretchen Morgenson

GUILTY! DOCX Defendants Plead in Fraud Cases

“Ms. Brown admitted to participating in the falsification of more than a million documents.”

What’s the Next Step? Consult with Neil Garfield

CHECK OUT OUR NOVEMBER SPECIAL

For assistance with presenting a case for wrongful foreclosure, please call 520-405-1688, customer service, who will put you in touch with an attorney in the states of Florida, California, Ohio, and Nevada. (NOTE: Chapter 11 may be easier than you think).

Editor’s Comment: A 2 year sentence can only be justified if she is cooperating with authorities, but he narrative coming out of this is that her “clients” didn’t know what she was doing. THAT is impossible.

“If citizens had filed these types of documents with a bank in an attempt to get a loan, the banks would have filed criminal cases against them,” Mr. Koster said. “The mortgage servicing industry has to be held to the same standard that the banks hold the rest of us to.”

The fact is that no bank would have accepted these documents if they came from a borrower and the deals would never have been done. Banks know when they are looking at fabricated documents and they know what questions to ask including requiring supporting documentation from the people who are “represented” on those one million falsified documents.

The real question is whether anyone in government is going to undo the damage caused by these practices. And perhaps even more important, why was it necessary to falsify documents if the deals were legitimate?

Think about it. If the origination of these loans had been proper, all the documents that were routinely required, verified and investigated would be present and accounted for. Instead the documents vanished, destroyed or lost 40%-80%  of them. That is no accident.

If the origination documents had been done properly, securitization could have been possible. But the banks were not interested in securitization, except as a buzz word to get investors to buy bonds. The origination documents would have named the REMICs as the payee and secured party. This is property law 101. If securitization was actually in action then the money from the investors would have been put in a trust account bearing the name of that REMIC. Neither one happened.

The Wall Street banks snookered the investors by diverting the money from the sale of bogus mortgage bonds from unfunded, incomplete common law trusts, which is to say, the trusts either held nothing or didn’t even exist for all practical purposes. They diverted the paperwork away from the REMIC so they could claim ownership of the loans for purposes of “trading” (tier 2 yield spread premium) and collecting the insurance, hedge proceeds and federal bailouts.

Here is what the “trading” looked like: The Wall Street Banks took let’s say $1 million from a pension fund (simplifying the situation) into numbers we can all grasp).

The pension fund was expecting a return of 5% or $50,000 per year in interest plus amortized principal. The banks put in the prospectus that the payments could come out of the money from the investing pension funds — the first red flag that a PONZI scheme was at work.

Then the Bank pulling the strings on thousands of puppets, the banks steered blacks, Latins and other unsophisticated, purposely uneducated borrowers into higher priced loans than they were qualified to receive. (I.e., predatory lending according to Federal and state deceptive lending laws).

For simplicity let’s say the loan was for $500,000 at 10%. The originator was representing several things that were not true to the borrower. First that they were the lender (violation of TILA), second that standard underwriting procedures were being followed including verification of income and verification of the value of the property (no such underwriting occurred because neither the originator nor the bank pulling the strings had any risk of loss — they were playing with investor — i.e., pension fund — money).

So they take the $500,000 loan at 10% which means that it would pay $50,000 per year in interest (just like the investor pension fund thought) but they did it knowing that the high price of the loan and the falsely appraised value of the property and false statement of income of the borrower would not repay the loan.

Now here comes the “trade”: They “sell” the loan to the investors for $1 million, the amount invested, because it produces $50,000 per year in interest income but that was contrary to the expectations and representations made to the investor who expected high quality mortgages in viable loans that would be repaid.

So the bank takes in $1 million, funds $500,000 and take the other $500,000 as a “trading profit,” without putting up a dime. And THAT is why the REMIC’s name was not put on the note and mortgage (or deed of trust). If the REMIC’s name had been put on the origination documents, the “trade could not exist because it would be selling the loan to itself.

The end result is that the Wall Street bank makes a $500,000 tier 2 yield spread premium trading profit by stealing the money of the pension funds. By not putting the name of the real source of funds on the origination documents, they raise another red flag showing that a PONZI scheme and a separate fraud were in play here.

And this is why I say you should FIRST FOLLOW the money using the DENY and Discover strategy. Once that order is entered requiring them to show the money trail they are dead in the water and you’ll either get the house or get a settlement in all likelihood — but you must present a credible, understandable threat to them.

And you must be as relentless in pursuing them as they are in pursuing the homeowner. The lawyers that have followed this advice or realized it on their own are picking up victory and after victory. The timid lawyers who for reasons unknown to this writer are afraid to deny the obligation, note and mortgage, lose almost every time.

Back in 2007 I told everyone that the defense was going to be plausible deniability on the part of the Wall Street banks — that they didn’t know of all the violations in the origination and assignments of the loans. That they deny knowledge is already established. That is plausible for them to deny it is impossible. It was the violations themselves that enabled the Wall Street banks to profit while the rest of the country was plunged into recession.

Guilty Pleas in Foreclosure Fraud Cases

By

The founder and former president of DocX, once one of the nation’s largest foreclosure-processing companies, pleaded guilty on Tuesday to fraud in one of the few criminal cases to have arisen out of the housing crisis.

The executive, Lorraine O. Brown, 56, entered a guilty plea in federal court in Florida and a plea agreement in state court in Missouri related to DocX’s preparation of improper documents used to evict troubled borrowers from their homes. Ms. Brown’s guilty pleas will lead to a prison term of at least two years, the Missouri attorney general said.

Foreclosure abuses, like the routine filing of apparent forgeries with the nation’s courts, gained widespread notoriety in 2010. Ms. Brown admitted to directing DocX employees, beginning in 2005, to sign other peoples’ names on crucial mortgage documents. Many of the documents, like assignments of mortgages and affidavits claiming that a borrower’s i.o.u. had been lost, were used by banks and their representatives to foreclose on homeowners. DocX also filed falsely notarized documents with county clerks across the country. These practices are now known as robo-signing. In her plea, Ms. Brown admitted to participating in the falsification of more than a million documents.

“We are sending a signal to the financial industry that these mortgage documents have meaning, they are legal documents and if you are going to file them in the courthouses of this country then they had better be honestly drafted,” said Chris Koster, the Missouri attorney general.

In a statement, Mark Rosenblum, a lawyer for Ms. Brown in Jacksonville, Fla., said: “By negotiating a settlement to her situation and entering her guilty plea, Lori has started the process of getting on with the rest of her life.”

Ms. Brown entered her pleas Tuesday afternoon. She pleaded to one count of mail fraud in federal court in Jacksonville and agreed to one count each of forgery and perjury in Missouri. The Missouri pleas follow a settlement last summer in which DocX agreed to pay the state $2 million and to cooperate with its investigation.

DocX, founded by Ms. Brown and later purchased by Lender Processing Services of Jacksonville, has executed and notarized millions of mortgage documents for big banks and loan servicers. Lender Processing closed the company in April 2010 after evidence of problems emerged.

According to her plea in Missouri, Ms. Brown said that in 2009 she directed a DocX employee to develop a surrogate signers program at the company because there were “too many documents to sign and not enough people with signature authority.”

Mr. Koster said he was unsure when Ms. Brown would be sentenced. In the federal case, she could face a minimum of probation and a maximum of five years in prison. In the Missouri matter, she could receive a sentence of two to three years. But if she receives a federal sentence of probation or fewer than two years in prison, Mr. Koster said, she would be obligated to serve at least two years in Missouri.

“If citizens had filed these types of documents with a bank in an attempt to get a loan, the banks would have filed criminal cases against them,” Mr. Koster said. “The mortgage servicing industry has to be held to the same standard that the banks hold the rest of us to.”

%d bloggers like this: