How to Follow the Money

Ultimately all debts, notes and mortgages (or deeds of trust) are about money. They are not about property. The property is incidental to the deal and ONLY comes about if there is a dispute in which there is a claim that you didn’t pay money that is owed to the owner of the mortgage deed or the beneficial owner of a deed of trust. The mortgage deed or deed of trust is conditional, not absolute like your deed to your property that names you as owner. There is no such thing as a fee simple absolute mortgage or encumbrance. It doesn’t exist in our jurisprudence or for that matter any jurisprudence. 

The ONLY reason your property can be legally sold, denying you future title and possession of the property is that you owe money to the party who foreclosed — or on whose behalf the foreclosure was initiated. Mastering this one fact will pull your head and that you attorney’s head out of the weeds. 

We take it as a given that you owe money. The question is whether there is a party that can be identified as the the one to whom the money is owed. If so, who is that? What is the identification, address and contact information for the party who is actually owed money from you.

Spoiler alert: So far the banks have successfully skirted the question of money. From funding of the initial loan to the proceeds of sale fo the property nobody has actually disclosed where the money came from and where the money went when payments were made or the property was liquidated.

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And the absolute immutable truth is that the so-called investors (i.e., the ones who bought “certificates” or “mortgage bonds”) do not receive your mortgage payments nor do they receive the proceeds of the sale your home. So who actually wants the foreclosure and why? The truth is that the investors get paid in the sole discretion of the underwriter of the “certificates.” Their payment is not conditioned upon your payment.

They get paid ONLY because the underwriter promised to pay them based upon certain conditions which does NOT include the receipt of mortgage payments. They do not get paid because you promised to pay the investors nor because your promise to pay was sold to either the investors or the trust. That sale never occurred. 

How do I know this? Because I have asked two questions thousands of times in the last 12 years. First, to whom were my payments forwarded by the self-proclaimed servicer? Answer: None of my business. Second, who received the proceeds of liquidation of the foreclosed property? Answer: none of my business. 

Knowing the banking industry as I do, there was only one possible conclusion: if they answered the question they would either perjury themselves or they would be admitting that the party named as being entitled to foreclosure was not really entitled to foreclosure. You see it is well established law — for centuries — that only the owner of a debt can foreclosure on collateral. 

For convenience sake a holder of a promissory note can enforce the note but only the owner of the debt is entitled to foreclose. If the foreclosing party claims a representative capacity the to establish a prima facie case it must disclose the party whom they claim to be representing and prove that the party being represented is the owner of the debt. 

So the one area, pointed out by Charles Koppa in So.Cal. a decade ago is what happens after the sale is authorized and the property is liquidated. He was figuring out the relationship between the bid amount and the amount the underwriter claimed as unpaid servicer advances (in the role of self-proclaimed master servicer for the nonexistent trust). Here we knew the answer but we were lucky enough to get hold of copies of a check made out to BONY/Mellon as trustee (Blah blah). BONY mailed it to the servicer and the servicer mailed it to Chase (i.e., the underwriter and master servicer doing business as the nonexistent trust, like a DBA.

No trust and no investor ever received the money. Chase got it and lest you forget, remember that Chase was all about selling loans and derivatives based upon loans and synthetic derivatives based upon the derivatives. It was never about actually making loans where Chase could lose money or buying loan as that were going to be worthless of worth less. It was about selling them. So the revelation is that BONY never had a claim to the money and either did the nonexistent trust that was ignored once the foreclosure court proceedings were over. 

Our investigations so far, with considerable help from Bill Paatalo, shows that multiple transfers of title occur AFTER the foreclosure sale or shortly before signaling the real player who is going to get the money. So you might want to think about the sale of your property title as the beginning rather than the end. It is the beginning of an action (lawsuit) to vacate the sale and award damages. 

Regulators Ask Banks to Re-check their Foreclosures

CHECK OUT OUR EXTENDED DECEMBER SPECIAL!

What’s the Next Step? Consult with Neil Garfield

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, Tennessee, Georgia, California, Ohio, and Nevada. (NOTE: Chapter 11 may be easier than you think).

Editor’s Comments: There are two ways of looking at this development. One is that the regulators are setting up the banks for failing to comply with the requirements of their regulators — and potentially extending the statute of limitations on Fed action against the banks.

The other is that the regulators are either politically motivated or so incredibly stupid that they are outsourcing the investigation of wrongful behavior of the banks to the potential defendants and respondents.

I can see a rationale in the first scenario but I am concerned that it is the second rationale that is at play here. The Paulson-Geithner doctrine of keeping the banks safe from collapse still appears to be guiding the regulators and law enforcement.

This isn’t really so difficult: first you ask those already in litigation to send in their papers. Second you ask the banks to show proof of payment and the entire money trail to show proof of loss. If the banks are able to show the actual proof of loss then the paperwork problems become less severe in terms of twisting the outcome. If the banks are not able to show they had any losses then it is true, all hell will break loose.

If the banks were in fact not using their own money on the loans that were originated, transferred and eventually offered for assignment into the loan pools, then their claims of loss to insurance companies and counter-parties to credit default swaps and other hedge products (and of course TARP) are subject to repayment to the insurers because the banks had no insurance interest and received the money anyway — not as agent for the investors who are the real losers, but for themselves. Having lied to the insurers, the ratings companies, and the investors, they were forced to lie to the government who gave them the TARP money to save the banks from going under as a result of huge losses in the credit markets.

A quick look at the 10K annual reports filed with the SEC will show that the banks were not showing any exposure to a risk of loss on the residential mortgage loans that were funded with investor money. Simple arithmetic would establish whether or not the total money given by investors was even close to the money used to fund actual loans.

One of two outcomes is possible if the banks were in fact lying to everyone. Either they owe back the insurance dollars they received and kept instead of passing it on to investor/lenders; or they owe the investor/lenders the money from insurance, credit default swaps etc. And THAT would reduce the loan receivable on the books of the investor/lenders. This in turn would reduce the amount due under the loan to homeowners, which in turn would flip the situation from homeowners being underwater to homeowners having equity.

Insurers and counter-parties in credit default swaps might have an unsecured claim for contribution from homeowners, but more likely they would be blocked by their own waiver of subrogation or extinguished in bankruptcy. The rest would be subject to negotiations on a level playing field whereby the investors could mitigate their damages while they recover the balance stolen from them by the banks.

It is difficult to imagine the banks reporting themselves for mistakes or criminal misbehavior. The regulators must know that. So there must be some plan working whereby the banks get further umbrella coverage from the Feds or where the Feds go into action against the banks. Only time will tell.

Feds to Banks: Double-Check Your Foreclosures for Errors

Independent review not working, so comptrollers go straight to banks

By Mark Russell,  Newser Staff

(Newser) – In the quest to right wrongful foreclosures, government regulators are turning to the last people on Earth one might expect—the unscrupulous lenders who did the foreclosing in the first place. An attempt to distribute billions of dollars in aid by independent consultants was shut down after it was found to be rife with delays and inefficiencies—consultants charged the government $2 billion in fees for 14 months of review, despite examining only a small number of the 500,000 complaints filed. So instead the Office of the Comptroller of the Currency is tapping the banks to re-evaluate their own foreclosures for errors, reports the New York Times.

Banks are to sort improper foreclosures according to degree of error, with the seriousness of the foreclosure error determining how much aid a homeowner might get. But critics say the new process is full of conflicts of interest and many loan files are in disarray. “The whole process has been a slap in the face to homeowners and a slap on the wrist to banks,” said one homeowner advocate. On the other hand, the federal comptroller’s office has asked the banks to self-regulate their foreclosure practices before.

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