Same Old Story: Paper Trail vs, Money Trail (Freddie Mac)

Payment by third parties may not reduce the debt but it does increase the number of obligees (creditors). Hence in every one of these foreclosures, except for a minuscule portion, indispensable parties were left out and third parties were in reality getting the proceeds of liquidation from foreclosure sales.

The explanations of securitization contained on the websites of the government Sponsored Entities (GSE’s) clearly demonstrate what I have been writing for 11 years and reveal a pattern of illusion and deception.

The most important thing about a financial transaction is the money. In every document filed in support of the illusion of securitization, it steadfastly holds firm to discussion of paper instruments and not a word about the actual location of the money or the actual identity of the obligee of that money debt.

Each explanation avoids the issue of where the money goes and how it was “processed” (i.e., stolen, according to me and hundreds of other scholars.)

It underscores the fact that the obligee (“debt owner” or “holder in due course” is never present in any legal proceeding or actual transaction or transfer of of the debt. This leaves us with only one  conclusion. The debt never moved, which is to say that the obligee was always the same, albeit unaware of their status.

Knowing this will help you get traction in the courtroom but alleging it creates a burden of proof for you to prove something that you know is true but can only be confirmed with access to the books, records an accounts of the parties claiming such transactions ands transfers occurred.

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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.

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

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For one such example see Freddie Mac Securitization Explanation

And the following diagram:

Freddie Mac Diagram of Securitization

What you won’t find anywhere in any diagram supposedly depicting securitization:

  1. Money going to an originator who then lends the money to the borrower.
  2. Money going to a named REMIC “Trust” for the purpose of purchasing loans or anything else.
  3. Money going to the alleged unnamed beneficiaries of a named REMIC “Trust.”
  4. Money going to the alleged unnamed investors who allegedly purchased “certificates” allegedly issued by or on behalf of a named REMIC “Trust.”
  5. Money going to the originator for sale of the debt, note and mortgage package.
  6. Money going to originator for endorsement of note to alleged transferee.
  7. Money going to originator for assignment of mortgage.
  8. Money going to the named foreclosing party upon liquidation of foreclosed property. 
  9. Money going to the homeowner as royalty for use of his/her/their identity forming the basis of value in issuance of derivatives, hedge products and contract, insurance products and synthetic derivatives.
  10. Money being credited to the obligee’s loan receivable account reducing the amount of indebtedness (yes, really). This is because the obligee has no idea where the money is coming from or why it is being paid. But one thing is sure — the obligee is receiving money in all circumstances.

Payment by third parties may not reduce the debt but it does increase the number of obligees (creditors). Hence in every one of these foreclosures, except for a minuscule portion, indispensable parties were left out and third parties were in reality getting the proceeds of liquidation from foreclosure sales.

Vulture Firms: The Last Step in a Chain of Illegal Paper, with the Debt Long Gone

The key element of the paper strategy has been to create the illusion of transfers of assets, thus supporting the erroneous narrative that with all those parties purchasing the loans, a lot of due diligence MUST have been done and therefore the screaming defense of homeowners (attacking ownership) is nothing but a dilatory stall tactic.

What is consistently missed, even by people who are completely fed up with the banks and regulatory agencies that have given a wink and nod at plainly fraudulent practices, is that the only “asset” is the paper, and that the debt itself has never moved. In a true securitization the debt would indeed be transferred. But all claims of securitization of debt that are based upon CLAIMS of ownership rather than the ownership itself are groundless. Thus neither Vulture Firms nor any of their predecessors ever owned the debt.

This is why we have lawyers go to law schools. Such convoluted schemes are not easily deciphered without experts and lawyers. Lawyers understand the distinction between the debt, the note and the mortgage. But lawyers forget and lay people never knew about the distinction. It isn’t technical. It is all about keeping transactions on paper honest.

And right now nearly all of the hundreds of millions of documents are being used around the world to foreclose, or support the sale of the paper note and mortgage and derivatives based upon the value of those millions of documents containing false recitations and inferences of fact.

So borrowers, whether their payments (to the wrong party) are “current” or not, like the one in the story found in the link below are stuck in the very place that legislators and regulators have said could never happen in a legal mortgage lending situation: no knowledge about the identity of the obligee of the debt. Foreclosure defense lawyers who win cases punch holes in the foreclosure case simply by knowing they are not dealing with anyone who owns the debt nor anyone who is representing the obligee in the underlying debt (i.e., the real world).

Let us help you plan your discovery requests and defense narrative: 202-838-6345. Ask for a Consult.
Purchase now Neil Garfield’s Mastering Discovery and Evidence in Foreclosure Defense webinar including 3.5 hours of lecture, questions and answers, plus course materials that include PowerPoint Presentations. Presenters: Attorney and Expert Neil Garfield, Forensic Auditor Dan Edstrom, Attorney Charles Marshall and and Private Investigator Bill Paatalo. The webinar and materials are all downloadable.
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).
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THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
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Hat tip Eric Mains and Bill Paatalo

see Vulture Firms Must Clean Up the Mess

So people ask me the obvious question, to wit: “If the paper didn’t transfer the debt because the seller, assignor or endorser never owned the debt, where is the debt now?”

The answer is simpler than you might imagine. The only two parties are the obligor (the person who took the money) and the obligee (the person who gave the money). The current obligee (owner of the debt) in most instances is a group of investors who are beneficiaries of multiple paper trusts that have never existed nor been active. THAT is why you never see any assertion that the debt has been purchased.

No money has exchanged hands in any of the transfers except in the case of vulture firms who pay fractions of a cent on the dollar for the paper. They don’t buy the debt because the seller of the paper doesn’t own the debt.

The one simple law school issue taught repeatedly in several classes — Contracts, Bills and Notes etc. — is that the debt arises no from paper but from action. There is no debt if there is no money exchanged between the parties claiming to be part of the transaction.

The debt arises by operation of law without  and even despite the existence or nonexistence of any written instruments — virtually all of which are subject to hearsay objections and lacking in factual foundation, to wit: an actual transaction in the real world in which reciprocal consideration was exchanged between the obligor and the obligee.

If the written instrument recites or assumes that the parties to the instrument are in fact identical to the parties to the real world transaction, then the parties to the debt would be identical to the parties on the written instrument. So keep this in your bonnet while you are planning defense strategy: at some point, usually at origination, a debt was created, separate and distinct from the recitals on the note and mortgage.

If the written instrument recites or assumes that the parties to the instrument are in fact identical to the parties to the debt, but the recital or assumption is untrue. Assumptions and presumptions are based upon one singular doctrine — they are used for judicial economy only where the the presumption clearly is true and where no contest to the presumption is introduced by the defense.

If the defense asserts and gives some argument or evidence that is inconsistent with the presumed “fact,” then the burden shifts back to the party who claimed the benefit of the presumption — i.e. they must prove the real world transaction that was being presumed. There is no prejudice to forcing such a party to prove the fact that they wished to be presumed — unless they were lying to begin with.

 

How to Use MERS on Deed of Trust or Mortgage

Many Thanks to Sal for pointing out the statute from California.

It is time to use the presence of MERS on the originating loan paperwork as an OFFENSIVE TACTIC. Most states have some version of the statute below. It is simply common sense. A creditor is not a creditor unless they are owed something. A beneficiary is not a beneficiary unless they are a creditor. In the case of a mortgage note, a beneficiary is not a creditor unless it is the obligee on the note (i.e., the one to whom the note directs payment). There is no escaping this logic.

The point is that designating MERS as beneficiary or mortgagee is the same as designating nobody at all. The range of options for the Judge include several possibilities. But the one I think we should concentrate on is that an ambiguity has been raised on the face of every Deed of Trust or Mortgage Deed naming MERS as the beneficiary or mortgagee.  That being the case, it MUST BE JUDICIALLY DETERMINED by a trier of fact (Judge or Jury). Without having a benficiary or mortgagee identified, there obviously can be no enforcement.

So the strategy here would be to force the would-be forecloser (pretender lender) to file a lawsuit establishing the note and mortgage (or deed of trust) by identifying the beneficiary or mortgagee. It would also enable you, in the face of a reluctant judge, to press for expedited discovery for information that the would-be foreclosing trustee or attorney should have had before they started. And this leads to a request for an evidentiary hearing — the kiss of death for pretender lenders unless you don’t know your rules fo evidence (a subject covered in depth in our courses currently in development).

California Mortgage and Deed of Trust Practice § 1.39 (3d ed Cal CEB 2008)

§ 1.39 (1) Must Be Obligee

The beneficiary must be an obligee of the secured obligation (usually the payee of a note), because otherwise the deed of trust in its favor is meaningless. Watkins v Bryant (1891) 91 C 492, 27 P 775; Nagle v Macy (1858) 9 C 426. See §§ 1.8-1.19 on the need for an obligation. The deed of trust is merely an incident of the obligation and has no existence apart from it. Goodfellow v Goodfellow (1933) 219 C 548, 27 P2d 898; Adler v Sargent (1895) 109 C 42, 41
P 799; Turner v Gosden (1932) 121 CA 20, 8 P2d 505. The holder of the note, however, can enforce the deed of trust
whether or not named as beneficiary or mortgagee. CC § 2936; see § 1.23.

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