Insider Lawsuit Summarizes the BIG LIE About “Securitization.”

This is an insider case filed in April 2018. The ironic aspect of this case is the probability that Nationstar probably does not have standing. But that aside, for those who remain skeptics about what I have been writing about, here is an unexpurgated recitation of all the ways that all the loans, debts, notes and mortgages were fabricated based upon pure lies, making foreclosure a legal impossibility.

This is a case where a servicer has sued various parties, some of whom are players in the securitization game. The allegation is that the documents and assertions made by the Defendants were completely false and that none of them, despite the documents, had any nexus, right, title or interest to any of the loans, debts, notes or mortgages.

Lawyers would be doing themselves and their clients a favor by using this case as a drafting guide. But they can only do so after they have a achieved a level of knowledge to make sense out of all the chaos. If they do study the issue, even for a little while, they will have that “AHAH” moment and realize that the entire playing field is low hanging fruit for various types of lawsuits for compensatory and punitive damages.

Hat Tip Bill Paatalo

Let us help you plan for trial and draft your foreclosure defense strategy, discovery requests and defense narrative: 202-838-6345. Ask for a Consult.

I provide advice and consultation to many people and lawyers so they can spot the key required elements of a scam — in and out of court. If you have a deal you want skimmed for red flags order the Consult and fill out the REGISTRATION FORM. A few hundred dollars well spent is worth a lifetime of financial ruin.

PLEASE FILL OUT AND SUBMIT OUR FREE REGISTRATION FORM WITHOUT ANY OBLIGATION. OUR PRIVACY POLICY IS THAT WE DON’T USE THE FORM EXCEPT TO SPEAK WITH YOU OR PERFORM WORK FOR YOU. THE INFORMATION ON THE FORMS ARE NOT SOLD NOR LICENSED IN ANY MANNER, SHAPE OR FORM. NO EXCEPTIONS.

Get a Consult and TERA (Title & Encumbrances Analysis and & Report) 202-838-6345 or 954-451-1230. The TERA replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).

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

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

See Complaint – Nationstar v Soria

Since the perspective is that of a claimed servicer that sometimes claims to be more than a servicer, you should remember that this is not 100% on point. Also not all of the Defendants are what they appear to be, so  don’t leap to conclusions about the specific actors named but rather recognize the truth when you read it. But it is very close. The allegations against these Defendants could just as well be used against all the securitization players.

And the knowledge that the lawyers for Nationstar had when writing this complaint clearly shows that Mr. Cooper and its lawyers had actual knowledge of the fictitious documents, entities and assertions made by the investment banks every day in court starting with “Good Morning your Honor, my name is John Smith and I represent the Plaintiff [a trust that does not exist]. This is a standard foreclosure case.”

Here are some interesting quotes from the allegations by Nationstar (now Mr. Cooper).

Who formed [West H&AJ]?
A: I did… .
Q: Has West H&A ever originated a single loan? A: Funded loan? . . . No. . . .

Q: [Y[ou were a complete stranger to this loan; correct?

A: Yeah. Suree……..

Q: [‘T]he assignment, who drafted it?

A: The assignment deed of trust, I wrote thatt…….. Q: Were you authorized by anyone other than yourself to assign this deed of trust? A: No.

“Defendants, strangers to the subject loans and having never lent a penny to anyone, created a criminal enterprise by which they hijacked ““thousands”” of mortgages via void assignments all in the name of ““helping”” borrowers.”

Q: [YJ]ou didn’t fund a single loan; correct?

A: No. Didn’t fund a single loan.

Q: [Y[ou were a complete stranger to this loan; correct?

A: Yeah, sure …

Q: The assignment, who drafted it?
A: The assignment deed of trust, I wrote that. …. . .

Q: Were you authorized by anyone other than yourself to assign this deed of trust?
A: No.

Over the last four (4) years, for the purpose of executing the scheme to 13 defraud, Defendants, together with others known and unknown, transmitted, and caused the transmission of, by means of wire and radio communication in interstate and foreign commerce, the following writings, signs, signals, and sounds which 16 constitute no fewer than thirty-eight (38) instances: …

Defendants falsely designated themselves as nominees for entities or sometimes used an outright fraudulent designation of another entity in order to gain credibility and trust, thus, purposely confusing the
public. Further, Defendants falsely advertised that they owned the hijacked properties for purpose of defrauding those individuals and creating confusion in the 6 marketplace. Finally, Defendants used the false claims to engage in deceptive practices to further their fraudulent acts. The following are no fewer than fourteen 8 (14) instances of the false information and deceptive acts perpetuated by Defendants.

 

Investigator Bill Paatalo: Nationstar Conducts “Bulk Note Sales” Without The “Notes?”

In 2013, investors in six “RALI Series” Trusts filed a complaint in New York against their Master Servicer (Nationstar Mortgage, LLC) for conducting “Bulk Note Sales” of non-performing loans owned by the trusts for its own benefit; specifically to recoup upwards of a billion-dollars worth of servicing advance receivables. The Plaintiff / Investors accused Nationstar of conducting these “Bulk Note Sales” without having any ownership or requisite authority to do so. (See: KIRP LLC V Nationstar Mortgage LLC).

Per the complaint:

“INTRODUCTION
1. KIRP is a significant investor in certificates issued by six residential mortgage backed security trusts sponsored by Residential Accredit Loans, Inc. (the “RALI Trusts”).  KIRP brings this action against Nationstar, the Master Servicer for the RALI Trusts, for its liquidating loans owned by the trusts through on-line auctions at fire sale prices without authorization and in  blatant abdication of its servicing duties under the governing contracts.
2. As the Master Servicer, the RALI Trusts pay Nationstar to “service” the mortgage loans owned by the trusts in the best interests of the trusts and their certificateholders.  This includes working to maximize the recoveries on each of the mortgage loans through enumerated actions detailed in Pooling and Servicing Agreements (the “Servicing Agreements”), which set forth the Master Servicer’s duties.  However, rather than fulfilling its responsibilities to maximize recoveries, Nationstar has recently embarked on a campaign to benefit its own interests at the expense of the RALI Trusts and their certificateholders, through auctioning off the trusts’ mortgage loans in bulk (“Bulk Note Sales”) for amounts that are a fraction of the loans’ unpaid balances or the value of the properties securing the loans.  While these Bulk Note Sales injure KIRP and the RALI Trusts’ other certificateholders by dissipating the assets of the RALI Trusts, they provide multiple benefits to Nationstar, including through allowing them to more quickly recoup certain advances they made on the mortgage loans as part of their servicing duties.  KIRP seeks to enjoin Nationstar from engaging in any further Bulk Note Sales in breach of its duties and to recover damages for the Bulk Note Sales that have already occurred.”
      When I read this complaint, a couple questions immediately jumped out at me regarding the so-called “notes” being auctioned off by a party that doesn’t own said notes. What did Nationstar disclose to the “purchasers” at auction as to their rights to sell the notes? And, were the “original notes” actually delivered to the bulk-sale purchasers by Nationstar as a non-owner of the notes?
 I went to the SEC and located the 424(B)(5) Prospectus filing for one of the named trusts in the lawsuit (RALI 2006-QO1). (See: http://www.secinfo.com/dsvRa.vC1.htm#7fll).
Here’s what the Trust disclosed as to the custody of the loan files on P.S-108:

Custodial Arrangements                                                          

      The trustee will appoint Wells Fargo Bank,  N.A., to 
serve as custodian of the mortgage  loans.  The  custodian is 
not an affiliate of the  depositor,  the master servicer or the 
sponsor. No servicer will have custodial  responsibility for 
the mortgage loans.  The custodian  will maintain mortgage 
loan files that contain  originals of the notes,  mortgages,  
assignments and allonges in vaults located at the sponsor's 
premises in Minnesota. Only the custodian has access to these 
vaults. A shelving and filing system segregates the files 
relating to the mortgage loans from other assets serviced 
by the master servicer.

 

 

      If Nationstar had no authority per the trust instruments to sell, liquidate, and convert the notes for its own personal gain, it’s hard to believe that Wells Fargo would release the “original” notes in bulk to Nationstar for these purposes. The likely scenario is that the bulk purchasers were delivered copies of the notes from Nationstar’s servicing system that were pawned off as “originals.”
     This goes to the heart of what I have suspected for years now in regards to these “bulk non-performing loan purchases” by debt buyers. The “Sellers” often have no rights to sell these loans, and the “Buyers” are purchasing bogus collateral files with no “original notes” and no verifiable chains of title.
 Judge Mosman Quote - Re-Default and Authentic Note
Contact Investigator Bill Paatalo at www.bpinvestigationagency.com
Private Investigator
BP Investigative Agency, LLC
bill.bpia@gmail.com

Federal Judge Compels Nationstar To Produce (False) Modification / Accounting Records

 http://bpinvestigativeagency.com/federal-judge-compels-nationstar-to-produce-false-modification-accounting-records/

Over the past couple of years, having investigated cases involving “Nationstar” as servicer in various cases throughout the country, a pattern has developed involving “Capitalization Modifications” on loans without borrowers’ knowledge or consent. Before I detail some of this evidence, here is a description of “Loan Modification and Refinance Fraud” and “Mortgage Servicing Fraud” provided at www.FFIEC.gov.

Per the Federal Financial Institutions Fraud Investigations Symposium’s 2009 “White Paper” titled, “The Detection and Deterrence of Mortgage Fraud Against Financial Institutions:  A White Paper,” (See: https://www.ffiec.gov/exam/mtg_fraud_wp_feb2010.pdf) the following is provided on P.27:

“Loan Modification and Refinance Fraud

With respect to any mortgage loan, a loan modification3 is a revision to the contractual payment terms of the related mortgage note, agreed to by the servicer and borrower, including, without limitation, the following:

  1. Capitalization of any amounts owed by adding such amount to the outstanding principal balance.

3 American Securitization Forum: Recommended Definitions and Investor Reporting Standards for Modifications of Securitized Residential Mortgage Loans, December 2007″

P.31:

“Mortgage Servicing Fraud

Mortgage servicing typically includes, but is not limited to, billing the borrower; collecting principal, interest, and escrow payments; management of escrow accounts; disbursing funds from the escrow account to pay taxes and insurance premiums; and forwarding funds to an owner or investor (if the loan has been sold in the secondary market).  A mortgage service provider is typically paid on a fee basis.  Mortgage servicing can be performed by a financial institution or outsourced to a third party servicer or sub-servicer.

Mortgage servicing fraud generally involves the diversion or misuse of principal and interest payments, loan prepayments, and/or escrow funds for the benefit of the service provider.”

Recently, I conducted an investigation for a client in Michigan which revealed that the servicer (Nationstar) was reporting to the investors of a REMIC trust that the loan/debt received a “Capitalization Modification” in the midst of foreclosure proceedings, and just prior to the Sheriff’s Sale of the property. (This isn’t the first time I have uncovered this fact pattern.)  This was news to the client, as she was never aware or privy to any such modification. With my client’s permission, the following excerpts are from my report:

“Attached within the loan level data zip File is a file titled “.MOD” which reveals the details of the modification as follows:

Modified Loan amount – $177,466.94

Loan Status – Current

Effective distribution Date – 03/25/2014

Capitalization – Y – (“Yes”)

Scheduled Balance = $180,134.10

Actual Balance – $180,400.81

Pre-Mod P&I – 963.46

Post-Mod P&I – $1,016.74

Capitalization amount – $2,667.11

These numbers are clearly inconsistent with the amounts declared in the default notices. In the Notice of Sale recorded on July 10, 2013, the amount declared as “unpaid” was “$251,943.71.” This is approx. $72k more than the amount shown internally a year later. The data shows that the loan/debt balance was in decline at the time of the Notice, and thus there was no default to the certificateholders of the FHAMS 2006-FA4 Trust. The monthly remittance report file for July 2013 (.REM1307) shows a “Beginning Balance of $170,259.75″ and “Ending Balance of $170,003.00.”

In addition, the Sheriff’s Deed dated April 2, 2014 states that the Trust was the highest bidder for “269,870.20.” This amount was approx. $100k more than the balance owed to the certificateholders at that time. The Covenant Deed issued on December 17, 2014 to “[REDACTED]” states that this party paid “$108,150.00″ for the purchase of the property. No such payments in either the Sheriff’s Deed or Covenant Deed are reflected in the remittance reports for the subject loan. In fact, attached within the loan level data is the “Loss File” titled “.LOS.” This filed shows the loan/debt was “paid off” on 01/25/2015 in the amount of “$180,400.80.” This number does not match-up with the deeds. This file shows continued amounts being applied to the loan/debt each month after the sale which means the account remained active after the sale right up until June 2016.”

As a result of these findings, a Motion to Compel was filed and granted on behalf of my client. (See: ecf143-order-on-mot-compel-modification-advances-by-nationstar).

Per the Order:

“IT IS HEREBY ORDERED that defendant shall produce remittance reports as to the two loans in question only, limited to the time period when Nationstar was acting as servicer on those loans, within 28 days of the date of this order.

IT IS FURTHER ORDERED that defendant will provide complete answers as described on the record to Interrogatory Nos. 6 and 7 within 28 days of the date of this order.

IT IS FURTHER ORDERED that defendant will produce copies of unredacted and redacted documents provided to plaintiff within seven days to determine whether attorney/client and/or attorney work product privileges were properly claimed.”

Here’s the Discovery Requests referred to in the Order. (See: discovery-requests-motion-to-compel-michigan-craigie)

There appear to be many layers to this servicing fraud scheme, one of which is the likely collection of modification stipends from the federal government for each reported modification. In this subject case, the borrower had no knowledge of any “Capitalization Modification” while the investors likely had no knowledge of any default by the borrower due to the advance payments and the reporting of the modification. After all, just prior to the Sheriff’s Sale, the loan was reporting as “current.”

This is why it is very important to have an investigation conducted to see what exactly is being reported in the internal loan level data to the investors. If these “false modifications” by Nationstar were legally on the “up and up,” there shouldn’t be this type of push-back.

Stay tuned for Nationstar’s response.  Investigator Bill Paatalo will join Neil Garfield on the next Neil Garfield Radio program to discuss his findings.

http://bpinvestigativeagency.com/federal-judge-compels-nationstar-to-produce-false-modification-accounting-records/

If you need assistance finding the issues in your mortgage documentation you can reach Investigator Bill Paatalo at:

Bill Paatalo – Private Investigator – OR PSID#49411

BP Investigative Agency

“Forensic “Securitization” Auditing, Chain of Title Analysis, Legal Support Services, Bonded & Insured”

Email: Bill.bpia@gmail.com

Call: (406) 328-4075

Another Ruse: Realtors Gleeful over Equator Short Sale Platform

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Editor’s Comment:

Banks have adopted a technology platform to process short sale applications. It is called Equator, presumably to imply that it equates one thing with another, and produces a result that either gives a pass or fail to the application. In theory it is a good thing for those people who want to save their homes, save their credit (up to a point) and move on. In practice it essentially licenses the real estate broker to take control over the negotiations and police the transactions so that the new “network” rules are not violated. This reminds me of VISA and MasterCard who control the payment processing business with the illusion of being a quasi governmental agency. Nothing could be further from the truth, but bankers react to net work threats as though the IRS was after them.

Equator is meant as another layer of illusion to the title problem that realtors and title companies are trying to cover up. The short sale is getting be the most popular form of real estate sale because it is a form of principal reduction where there is some face-saving by the banks and the borrowers. The problem is that while short sales are a legitimate form of workout,  they leave the elephant in the living room undisturbed — short sales approved by banks and servicers who have neither the authority nor the interest in the loan to even be involved except as an agent of Equator but NOT as an agent of the lenders,  if they even exist anymore.

So using the shortsale they get the signature of the borrower as seller which gives them a layer of protection if they are the bank or servicer approving the short-sale. But it fails to cure the title defect, especially in millions of transactions in which Nominees (like MERS and dummy originators) are in the chain of title. 

The true owner of the obligation is a group of investor lenders who appear to have only one thing in common— they all gave money to an investment bank or an affiliate of an investment bank, where it was divided up and put into various accounts, some of which were used to fund mortgages and others were used to pay fees and profits to the investment bank on the closing of the “deal” with the investor lenders. As far as the county recorder is concerned, those deposits and splits are nonexistent. 

The investor lenders were then told that their money was pooled in a “Trust” when no such entity ever existed or was registered to do business and no attempt was made to fund the trust. An unfunded trust is not a trust. This, the investor lenders were told was a REMIC entity.  While a REMIC could have been established it never happened  in the the real world because the only communications between participants in the securitization chain consisted of a spreadsheet describing “closed loans.” Such communications did not include transfer, assignment or even transmittal or delivery of the closing papers with the borrower. Thus as far as the county recorder’s office is concerned, they still knew nothing. Now in the shortsales, they want a stranger the transaction to take the money and run — with no requirement that they establish themselves as creditors and no credible documentation that they are the owner of the loan.

This is another end run around the requirements of basic law in property transactions. They are doing it because our government officials are letting them do it, thus implicitly ratifying the right to foreclose and submit a credit bid without any requirement of proof or even offer of proof.

It gets worse. So we have BOA agreeing to accept dollars in satisfaction of a loan that they have no record of owning. The shortsale seller might still be liable to someone if the banks and servicers continue to have their way with creating false chains of ownership. But the real tragedy is that the shortsale seller is probably getting the shaft on a false premise — I.e, that the mortgage or deed of trust had any validity to begin with. 

The shortsale Buyer is most probably buying a lawsuit along with the house. At some point, the huge gaps in the chain of title are going to cause lawyers in increasing numbers to object to title and demand that it be fixed or that the client be adequately covered by insurance arising from securitizatioin claims. Thus when the shortsale Buyer becomes a seller, that is when the problems will first start to surface.

Realtors understand this analysis whereas buyers from Canada and other places do not understand it. But realtors see shortsales as the salvation to their diminished incomes. Thus most realtors are incentivized to misrepresent the risk factors and the title issues in favor of controlling the buyer and the seller into accepting pre-established criteria published by the members of Equator. It is securitization all over again, it is MERS all over again, it is a further corruption of our title system and it is avoiding the main issue — making the victims of this fraud whole even if it takes every penny the banks have. Realtors who ignore this can expect that they and their insurance carriers will be part of the gang of targeted deep pockets when lawyers smell the blood on the floor and go after the perpetrators.

Latest Changes to The Bank of America Short Sale Process

by Melissa Zavala

When processing short sales, it’s important to know about how each of the lending institutions handles loss mitigation and paperwork processing. If you have done a few short sales in Equator with different lenders, you may see what while your same Equator account is used for all your short sales at all the lending institutions, each of the servicers uses the platforms in a different manner.

Using the Equator system

When processing short sales, it’s important to know about how each of the lending institutions handles loss mitigation and paperwork processing. Many folks already know that Equator is the online platform used by 5 major lenders (Bank of America, Wells Fargo, Nationstar, GMAC, and Service One). If you have done a few short sales in Equator with different lenders, you may see what while your same Equator account is used for all your short sales at all the lending institutions, each of the servicers uses the platforms in a different manner.

And, my hat goes off to Bank of America for really raising the bar when it comes to short sale processing online. And, believe me, after processing short sales with Bank of America in 2007, this change is much appreciated.

New Bank of America Short Sale Process

Effective April 13, 2012, Bank of America made a few major changes that may make our short sale processing times more efficient.  The goal of these changes is to make short sale processing through Equator (the Internet-based platform) at Bank of America so efficient that short sale approval can be received in less than one month.

First off, Bank of America now requires their new third party authorization for all short sales being processed through the Equator system. Additionally, the folks at Bank of America will be working to improve task flow for short sales in Equator by making some minor changes to the process.

According to the Bank of America website,

Now you are required to upload five documents (which you can obtain at http://www.bankofamerica.com/realestateagent) for short sales initiated with an offer:

  • Purchase Contract including Buyer’s Acknowledgment and Disclosure
  • HUD-1
  • IRS Form 4506-T
  • Bank of America Short Sale Addendum
  • Bank of America Third-Party Authorization Form

And, now, you will have only 5 days to submit a backup offer if your buyer has flown the coop.

The last change is a curious one, especially for short sale listing agents, since it often takes awhile to find a new buyer after you learn that the current buyer has changed his or her mind.

Short sale listings agents should be familiar with these changes in order to assure that they are providing their client with the most efficient short sale experience possible.


FORMS: Kentucky RICO Class Action v MERS, GMAC, DEUTSCH, Nationstar, Aurora, BAC, Citi, US Bank, LSR, DOCX, LPS, and attorneys

SERVICES YOU NEED

“To the judges throughout the Commonwealth and to the homeowners, the foreclosing Plaintiff, a servicing company or “Trust” entity appears to be a bank or lender.    This falsity is due to its name in the style of the case.    They are not banks or lenders to the loan.    They are not a beneficiaries under the loan.    They do not possess a Mortgage in the property.    They will never have a right to posses a mortgage in the property.    It would have been a more honest representation for the foreclosing entity to called itself something like “Billy Bob’s Bill Collectors,”

10.03.10KENTUCKY RICOClassActionComplaint

Salient allegations in very well written complaint, although I still have some doubts about whether they will get the class certified. Kentucky is a non-judicial state”

“Come the Representative Plaintiffs, by counsel, on behalf of themselves and others so situated as putative class members pursuant to Fed. R. Civ. P. 23.    and for their Class Action Complaint against the name Defendants and yet to be named Defendants, make their claim for treble and punitive damages, costs and attorneys fees under 18 U.S.C. 1962 and 1964, otherwise known as the “racketeer Influenced and Corrupt Organizations Act,” hereinafter (“RICO”) and for all violations of law heretofore claimed.

An ongoing criminal investigation has been in place in the state of Florida by both the Florida Attorney General and the Justice Department.    Upon information and belief, a parallel investigation is ongoing in the state of Kentucky and at least three other states.

Defendant Merscorp, Inc., is a foreign corporation created in or about 1998 by conspirators from the largest banks in the United States in order to undermine and eventually eviscerate long-standing principles of real property law, such as the requirement that any person or entity who seeks to foreclose upon a parcel of real property: 1) be in possession of the original note, 2) Have a publicly recorded mortage in the name of the party for whom the underlying debt is actually owed and who is the holder of the original Promissory Note with legally binding assignments, and 3) possess a written assignment giving he, she or it actual rights to the payments due from the borrower pursuant to both the mortgage and note.

MERS is unregistered and unlicensed to conduct mortgage lending or any other type of business in the Commonwealth of Kentucky and has been and continues to knowingly and intentionally illegally and fraudulently record mortgages and conduct business in Kentucky on a large scale and systematic fashion..

LSR Processing LLC, is a document processing company, based in the state of Ohio to generate loan and mortgage documents.    Upon information and belief it is owned by one or more of the partners of LSR law firm.    LSR Processing was created in order to facilitate the conspiratorial acts of the Defendants in relation to the creation of fraudulent Promissory Notes, Note Assignments, Affidavits and Mortgage Assignments LSR Processing has a pattern and practice of drafting missing mortgage and loan documents and in turn, having them executed by their own employees.

This case arises due to the fact that for the Class Plaintiff and the members of this putative class, their Mortgages and in some cases, the foreclosures that followed, were and will be based upon a mortgage and a note in the mortgage that are not held by the same entity or party and are based upon a mortgage that was flawed at the date of origination of the loan because Mortgage Electronic Registration Systems (“MERS”) was named as the beneficiary or nominee of the lender on the mortgage or an assignee and because the naming of MERS as the beneficiary was done for the purpose of deception, fraud, harming the borrower and the theft of revenue from in all one hundred (120) Kentucky Counties through the illegal avoidance of mortgage recording fees. (e.s.)

In the case where a foreclosure has been filed, the entity filing the foreclosure has no pecuniary in the mortgage loan.    The foreclosing entity is a third party.    The entity lacks standing, and most times, the capacity to foreclose.    The entity has no first hand knowledge of the loan, no authority to testify or file affidavits as to the validity of the loan documents or the existence of the loan. The entity has no legal authority to draft mortgage assignments relating to the loan.    The foreclosing entity and its agents regularly commit perjury in relation to their testimony.

The “lender,” on the original Promissory Note was not the lender. The originators of the loan immediately and simultaneously securitized the note.    The beneficial interest in the note was never in the lender.    MERS, acting as the mortgagee or mortgage assignee, was never intended to be the lender nor did it represent the true lender of the funds for the mortgage. The Servicer, like GMAC Mortgage, or some party has or is about to declare the default, is not in privity with the lender.    The true owner or beneficiary of the mortgage loan has not declared a default and usually no longer have an interest in the note. The Servicer is not in privity nor does it have the permission of the beneficial owners of the Note to file suit on their behalf.

The obligations reflected by the note allegedly secured by the MERS mortgage have been satisfied in whole or in part because the investors who furnished the funding for these loans have been paid to the degree that extinguishment of the debts has occurred with the result that there exists no obligations on which to base any foreclosure on the property owned by the Class Plaintiffs. Defendants have and will cloud the title and illegally collect payments and attempt to foreclose upon the property of the Plaintiffs when they do not have lawful rights to foreclose, are not holders in due course of the notes.
42.    Any mortgage loan with a Mortgage recorded in the name of MERS, is at most, an unsecured debt.    The only parties entitled to collect on the unsecured debt would be the holders in due and beneficial owners of the original Promissory Note.
43.    The loan agreements were predatory and the Defendants made false representations to the Class Plaintiffs which induced the Class Plaintiffs to enter into the loans and the Defendants knew the representations were false when they were made.

In these cases, the property could be foreclosed by default, sold and transferred without ANY real party in interest having ever come to Court and with out the name of the “Trust” or the owners of the mortgage loan, ever having been revealed. Many times the Servicer will fraudulently keep the proceeds of the foreclosure sale under the terms of a Pooling and Servicing Agreement as the “Trust” no longer exists or has been paid off.    The Court and the property owner will never know that the property was literally stolen.
52.    After the property is disposed of in foreclosure, the real owners of the mortgage loan are still free to come to Court and lay claim to the mortgage loan for a second time.    These parties who may actually be owed money on the loan are now also the victims of the illegal foreclosure.    The purchaser of the property in foreclosure has a bogus and clouded title, as well as all other unsuspecting buyers down the line.    Title Insurance would be impossible to write on the property.

Although the Plaintiffs attempting to foreclosure refer to themselves as “Trustees” of a “Trust,” the entities are not “Trustees” nor “Trusts” as defined by Kentucky law.    Neither are the entities registered as Business Trusts or Business Trustees as required by Kentucky law. In every case, where one of these MBS have come to a Kentucky Court the entity foreclosing lacked capacity sue to file suit in the State of Kentucky.    There is no “Trust Agreement” in existence.    The entity filing has utilized a Kentucky legal term it has no right to use for the sole purpose of misleading the Court.
55.    Although the “Trust” listed may be registered with the Securities and Exchange Commission (“SEC”) and the Internal Revenue Service (“IRS”) as a Real Estate Mortgage Investment Conduit (“REMIC”), more often than it is not properly registered in any state of the union as a Corporation, Business Trust, or any other type of corporate entity.    Therefore, the REMIC does not legally exist for purposes of capacity for filing a law suit in Kentucky or any other State.

The transfer of mortgage loans into the trust after the “cut off date” (in the example 2006), destroys the trust’s REMIC tax exempt status, and these “Trusts” (and potentially the financial entities who created them) would owe millions of dollars to the IRS and the Kentucky Revenue Cabinet as the income would be taxed at of one hundred percent (100%).
64.    Subsequent to the “cut off date” listed in the prospectus, whereby the mortgage notes and security for these notes had to be identified, and Note and Mortgages transferred,    and    thereafter, the pool is permanently closed to future transfers of mortgage assets.
65.    All Class members have mortgage loans which were recorded in the name of MERS and/or for which were attempted through a Mortgage Assignment to be transferred into a REMIC after that REMIC’s “cut off” and “closing dates.”
66.    In all cases, the lack of acquisition of the Class Members’ mortgage loans violates the prospectus presented to the investors and the IRS REMIC requirements.
67.    If an MBS Trust was audited by the IRS and was found to have violated any of the REMIC requirements, it would lose its REMIC status and all back taxes would be due and owing to the IRS as well as the state of Kentucky.    As previously stated, one hundred percent (100%) of the income will be taxed.

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