Attorney Linda Tirelli Defines Robo-Signing for Clueless Steven Mnuchin

http://www.huffingtonpost.com/entry/attorney-linda-tirelli-defines-robo-signing-for-clueless_us_59824797e4b0396a95c8747e

It seemed like the Treasury Secretary doth protest a bit too much as a Shakespearean drama unfolded at a July 27th meeting of the House Financial Services Subcommittee . Steven Mnuchin, like some wayward damsel in distress, took deep umbrage at Representative Keith Ellison’s (D-MN) suggestion that he was anything but an honest, ethical banker; albeit one who headed up the hyper-controversial OneWest Bank.

The ghosts of banking’s past seemed to surface with a vengeance when the term “robo-signing” — a foreclosure short-cut liberally used by OneWest — was hurled his way by the Congressman. This, in turn, proved too much for the normally passive Treasury boss who decided, like Network’s, Howard Beale, he was angry, really angry and wasn’t going to take it any more.

In prickly fashion he loaded up his blunderbuss and unloaded some lead balls Ellison’s way:

Do you even know what Robo-signing is?

The die was cast and the stage set for a few minute’s worth of parrying, ducking and sparring. Ellison, citing the documented work of OneWest robosigner Erica Johnson-Seck in helping to expedite the foreclosure process, was met by Mnuchin’s spiteful refusal to accept this truth.

Earlier on, and without any prompting from the committee, the Treasury Secretary had also surfaced a bit of Hamlet-style guilt; offering this pronouncement:

I take great offense to anybody who calls me the foreclosure king,

His anger towards Ellison was so palpable that Representative Maxine Waters (D-CA) asked the Treasury Secretary to apologize.

Mnuchin refused to back down; instead, donning a Crown of Thorns, he portrayed himself as an innocent being lead to the slaughter.

I’m not apologizing to anybody because robo-signing is not a legal term and I was being harassed

This got me thinking: why not test the veracity of the Treasury Secretary’s statement by running it by an old acquaintance, Linda Tirelli, a bankruptcy attorney in White Plains, N.Y., who knows a great deal about the subject. In a 2012 post for American Banker I referenced her keen sense for sniffing out fraudulent foreclosure documents.

In my opinion — and in this realm — she ranks as a lawyer of Wonder Woman stature.

Seeing this as a teachable moment Tirelli graciously offered to respond directly to the Treasury Secretary:

Secretary Munchin: I do know what robo-signing is and while you don’t think it’s a “legal” term all you need to do is enter the term “robo-signer“ into a search engine and, lo and behold, discover it’s a widely used and accepted term found in legal documents, deposition transcripts, and judicial opinions throughout the country.

I’ve spent the last ten years of my legal career calling out the systemic fraud that is robo-signing; a practice that’s been adopted as a “business as usual model” by the largest financial institutions in our country.

Just for fun, Secretary Munchin, please Google “Linda Tirelli robo signer” and you’ll find no less than eight hundred and forty hits highlighting my work as a consumer advocate exposing the fraud that is robo-signing and document fabrication.

Next: Google “Steven Mnuchin robo signer” and you’ll come up with nearly the same number of results; essentially, pointing out your rationalizing the practice.

Some background: falsified documents are routinely robo-signed by low-income wage earners trying to make ends meet. In depositions (I dare you to ask me for transcripts) they freely admit that they aren’t the person whose name is on the document, be it the VP of CitiBank, Bank of America, Wells Fargo,Chase or any other financial institution, Many admit to signing or notarizing hundreds of documents per day.

In one case involving Bank of America I discovered three robo-signed documents purporting to assign a homeowners note and mortgage and it was signed by the same person, David Perez, on the same day, in front of the same notary; with the signatory claiming to be a Vice-President with authority to sign as an agent for three different banks. In fact — not mentioned in any of these assignments — was he was working for just one bank: the aforementioned Bank of America.

Linda Tirelli
David Perez, GFI Mortgage Bankers, Inc.

Linda Tirelli
David Perez, Weichert Financial Services

Linda Tirelli
David Perez, Countrywide Bank, NA

I was also instrumental in uncovering the Wells Fargo Attorney Foreclosure manual. Have you read it Secretary Mnuchin? I’ve got twelve different editions if you’re interested and only one has been made public. It isn’t very long but it reads like a blueprint for fraud. There’s no provision in this manual that allows Wells Fargo lawyers to admit any wrong-doing no matter how legally defective they find the documentation to be. The manual simply white washes any notion that Wells Fargo may not have the right to enforce a mortgage lien or foreclose on a property.

I no longer count how many cases I see involving fraud against unsuspecting homeowners. Just to remind myself that a fraudulent document I’m reading is just that I went on-line and for $9.99 bought my own rubber stamp (with a red-ink pad).

What does it say? “WTF!” in big letters.

Now, before you dismiss me as a fanatic Hillary supporter, let me disabuse you of that notion. I don’t wear pussy-hat caps nor Birkenstocks and I don’t scarf down granola. I’m not a bleeding heart liberal. I’m a well educated lawyer and successful business owner who is also a registered Republican and Trump supporter. I call it like I see it and as I see it the Mega-Banks and servicers sold out and gave up any semblance of integrity. They went down the very wrong path of lies and deception and, in the process, wreaked havoc with Main Street. As a hard working conservative, I come from a place where I acknowledge a problem when I see it, and do whatever I can to fix it.

Secretary Mnuchin: pull your head out of the sand and admit the problem of robo-signing exists and persists. Stand up to those who want to give the financial services industry a free pass — like former AG, Eric Holder — allowing them to buy their way out of jail with some “settlement money.” As recent history demonstrates, that does nothing to fix the problem.

I encourage you to take a stand and hold the corporate blood sucking thieves accountable. I’m not a proponent of over-regulation because I believe it does hurt smaller local banks and credit unions. However, I do want the sleazy predatory Mega-Banks — the ones that continue to engage in practices like robo-signing — to be held accountable and, for Pete’s sake, let’s stop trying to emasculate the one Federal agency that is the consumer’s watch-dog: the Consumer Financial Protection Bureau (CFPB).

As far as taking offense at being called a “Foreclosure King?” Grow up. Your July 27th appearance before the House Financial Services Committee made you look like a pompous jerk.

Wipe the smirk off your face, roll up your sleeves and go do something to restore Main Street’s confidence in our financial institutions.

If you need further input and suggestions I might be able to find some time in my schedule.

Joel Sucher, along with Steven Fischler, is a founder of Pacific Street Films (note: check out the new website) and has written for a number of platforms including American Banker, In These Times, HuffPost and Observer. com. Sucher is currently working on a memoir, An Outsider’s Guide to Inside Goldman Sachs.

Perils of Pooling: OneWest

Apparently my article yesterday hit a nerve. NO I wasn’t saying that the only problems were with BofA and Chase. OneWest is another example. Keep in mind that the sole source of information to regulators and the courts are the ONLY people who understand mergers and acquisitions. So it is a little like one of those TV shows where the only way they can get an arrest and conviction is for the perpetrator or suspect to confess. In this case, they “confess” all kinds of things to gain credibility and then lead the agencies and judicial system down a rabbit hole which is now a well trodden path. So many people have gone down that hole that most people that is the way to get to the truth. It isn’t. It is part of a carefully constructed series of complex conflicting lies designed carefully by some very smart lawyers who understand not just the law but the way the law works. The latter is how they are getting away with it.

Back to OneWest, which we have detailed in the past.

The FDIC has posted the agreement at http://www.fdic.gov/about/freedom/IndyMacMasterPurchaseAgrmt.pdf

OneWest was created almost literally overnight (actually over a weekend) by some highly placed players from Wall Street. There is an 80% loss sharing arrangement with the FDIC and yes, there appears to be some grey area about ownership of the loans because of that loss sharing agreement. But the evidence of a transaction in which the loans were actually purchased by a brand new entity that was essentially unfunded is completely absent. And that is because OneWest and Deutsch take the position that the loans were securitized despite IndyMac’s assurances to the contrary. The only loans in which OneWest appears to be a player are those in which the loan was subject to (false) claims of securitization. No money went to the trustee, no money went to the trust, no assets went into the pool because the REMIC asset pool lacked the funding to purchase any assets.

Add to that a few facts. Deutsch is usually the “trustee”of the REMIC asset pool, but Reynaldo Reyes says he has nothing to do. He has no trust accounts and makes no decisions and performs no actions. Sound familiar. I have him on tape and his deposition has already been taken and publicized on the internet by others. Reyes says the whole arrangement is “counter-intuitive” (a very creative way of saying it is a lie). It is up to the servicer (OneWest) to decide what loans are subject to modification, mediation or even reinstatement. It is up to the servicer as to when to foreclose. And the servicer here is OneWest while the Master Servicer appears to be the investment banking arm of Deutsch, although I do not have that confirmed.

The way Reyes speaks about it the whole thing ALMOST makes sense. That is, until you start thinking about it. If Deutsch Bank has an extensive trust subsidiary, which it does, then why is a VP of asset management in control of the trust operations of the REMIC asset pools. Answer: because there are no funded trusts and there are no asset pools with assets. Hence any statement by OneWest that it is the owner of the loan is untrue as is the allegation that Deutsch is the trustee because all trustee duties have been delegated to the servicer. That leaves the investor with an empty box for an asset pool and no trustee or manager or even an agent to to actually know what is going on or who is monitoring their money and investments.

Note that like BOfA using Red Oak Merger Corp., there is the creation of a fictional entity that was not used by the name of, no kidding, “Holdco.” This is to shield OneWest from certain liabilities as a lender. Legally it doesn’t work that way but practically it generally does work that way because judges listen to bank lawyers to tell them what all this means. That is like asking a 1st degree murder defendant to explain to the jury the meaning of reasonable doubt.

Now be careful here because there is a “loan sale” agreement referenced in the package posted by the FDIC. But it refers to an exhibit F. There is no exhibit F and like the ambiguous agreements with the FDIC in Countrywide and Washington mutual, there are words there, but they don’t really say anything. Suffice it to say that despite some fabricated documents to the contrary, there is no evidence I have seen that any loan  receivable was transferred to or from a REMIC asset pool, Indy-mac, or Hold-co.

These people were not stupid and they are not idiots. And their lawyers are pretty smart too. They know that with the presumption of a funded loan in existence, the banks could pretty much get away with saying anything they wanted about the ownership, the identity of the creditor and the ability to make a credit bid at the auction of a property that should never have been foreclosed in the first instance — and certainly not by these people.

But if you dig just a little deeper you will see that the banks are represented to the regulatory authorities that they own the bonds (not true because the bonds were created and issued to specific investors who bought them); thus they include the bonds as significant items on their balance sheet which allows them to be called mega banks or too big to fail when in fact they have a tiny fraction of the reserve requirements of the Federal Reserve which follows the Basel accords.

Then when you turn your head and peak into courtrooms you find the same banks claiming ownership of the loan receivable, which was created when the funding occurred at the “closing” of the loan. They know they are taking inconsistent positions but most judges lack the sophistication to pinpoint the inconsistency. And that is how 5 million people lost their homes.

On the one hand the banks are claiming there was no fraud in the issuance of mortgage backed bonds by a REMIC asset pool formed as a trust. In fact, they say the loans were transferred into the REMIC asset pool. Which means that ownership of the mortgage bonds is ownership of the loans — at least that is what the paperwork shows that was used to sell pension funds on buying these worthless bogus bonds. Then they turn around and come to court as the “holder” and get a foreclosure sale in which the bank submits the credit bid and buys the property without spending one dime. What they have done is, in lay terms, offered the debt to pay for the property. But the debt, according to the same people is owned by the investors or the REMIC trust, not the banks.

Then they turn to the insurers and counterparties on credit default swaps, and the Federal reserve that is buying these bonds and they say that the banks own the bonds, have an insurable interest, and should receive the proceeds of payments instead of the investors who actually put up the money. And then they say in court that the account receivable is unpaid, there is a default, and therefore the home should be foreclosed. What they have done is create a chaotic complex of lies and turn it into an illusion that changes colors and density depending upon whom the banks are talking with.

There is no default on the account receivable if the account was paid, regardless of who paid it — as long as it was really paid to either the owner of the loan receivable or the authorized agent of the owner (i.e., the investor/lender). And so it is paid. And if paid, there can be no action on the note because the loan receivable has been satisfied. There can be no action on the mortgage because it was never a perfected lien and because the loan receivable was extinguished by PAYMENT. You can’t use the mortgage to enforce the note which is evidence for enforcement of a debt when the debt no longer exists.

Judges are confused. The borrower must owe money to someone so why not simply enter judgment and let the creditors sort it out amongst themselves. The answer is because that is not the rule of law and if a creditor has a claim against the borrower it should be brought by that creditor not some stranger to the transaction whose actions are stripping the real creditor of lien rights and collection rights over the debt. What the courts are doing, by analogy, is saying that you must have killed someone when you fired that gun so we will dispense with evidence and a jury and proceed to sentencing. We will let the people in the crowd decide who is the victim who can bring a wrongful death action against you even if we don’t even know when the gun was fired and who pulled the trigger. In the meanwhile you are sentenced to death or life in prison under our rocket docket for murders of unknown persons.

 

 

BILLIONS MADE AS HOUSING GOES DOWN UNDER SWEETHEART FDIC LOSS SHARING DEAL

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EDITOR’S COMMENT: On the IndyMac portfolio alone, they made billions while the investors and homeowners got crammed down with double-talk about where the money went. I have been saying for years that there is far more money to be made by banks, servicers, Wall Street insiders and investors by foreclosing than by modifying.

Despite hundreds of thousands of applications where the offer from the borrower was far better than the apparent results from foreclosure, they were turned down without a single thought. Why? Because the FDIC is paying off the losses and there is the nub of the question: When will the Federal Government stop encouraging foreclosures when the entire country is in crisis because of the foreclosures?

This FDIC-Sponsored Scheme Lets Loss-Share Lenders Get Rich Off Foreclosure

Mike “Mish” Shedlock

Mike “Mish” Shedlock Mish is an investment advisor at Sitka Pacific Capital. He writes the widely read Mish’s Global Economic Trend Analysis.

A couple of readers asked me to comment on the Sun Sentinel article Are loss-share lenders gouging us?

November 27, 2011

In the wake of the recent real-estate meltdown, the borrower of a nonperforming loan called his lender with promising news: “I have a buyer looking to make an all-cash offer for my Florida property. Will you meet with us tomorrow?” The lender’s answer: “No.”

Disturbingly, this implausible response is not uncharacteristic of lenders who exploit FDIC loss-share agreements by seeking to foreclose on nonperforming loans, even when prudent business judgment calls for short sale or loan modification solutions. By perverting the terms and spirit of loss-share agreements, these lenders are reaping windfalls while prolonging the foreclosure crisis, depressing real-estate values and sticking taxpayers with the bill.

FDIC Sponsored Fraud

Rather than comment directly, I asked Patrick Pulatie at LFI Analytics to chime in. Pulatie writes ….

I wrote an article about IndyMac and the Shared Loss Agreement (SLA) two years ago, before I quit working with most homeowners. Essentially, here is what is going on.

Shared Loss Agreements were executed by the FDIC with the banks that took over failed institutions. Some had the terms that the author describes. Others did not have the same terms, and were much more restrictive. The author is referring to the Shared Loss Agreements similar to OneWest Bank/IndyMac, which I wrote about.

The SLA for OneWest Bank worked in the following manner:

• It only applied to the Portfolio Loans being purchased. It did not apply to servicing rights. 1st Mortgage Loans were purchased for 70% of the original balance. Second Mortgage Loans were purchased at a much lower rate, at 55% or lower at times. I shall only mention First’s from here on out, but Seconds apply as well.

IndyMac had a large portfolio of Neg Am loans, so the 70% purchase price of individual loans might be “lower” if the loan had accrued a Neg Am balance above the original loan amount. If there were a large number of 30 year fully amortized loans, then there might be a greater than 70% purchase price. There is no way to break down the proportion of each.

• The first 20% of losses on the “Total Portfolio” purchase would be absorbed by OneWest Bank. There would be no reimbursement on those losses.

• The next 10% of losses, up to 30%, are reimbursed at 80%. So to begin to make claims, the 20% level must be reached.

• From 30% on, the reimbursement rate is 95%. But the 30% loss level must be reached before the 95% can be claimed.

• The total purchase of Portfolio loans was approximately $12.5 billion, so a 20% loss would be $2.5 billion before claims could begin.

• If every single loan (first mortgage) had defaulted on the first day of purchase, and after reimbursement, the agreement, every $.70 spent would have resulted in $.745 being returned. Not bad! But that is not all.

Most of the loans were not in default. Therefore, interest would continue to be earned until the loan refinanced, or defaulted, so they were making a profit, and as their filings have shown, they made very good profits on these loans.

As you can see, it is always in the best interests of OneWest Bank to foreclose on defaulted properties. The sooner that the 20% loss is reached, then the quicker that they can make claims for reimbursement.

Has OneWest Bank reached the 20% threshold? That has not been announced. However, it has been 2.75 years since the Shared Loss Agreement went into effect in March 09. One would think that the 20% level has been reached.

In Feb 2010, a person I know claimed to have seen the paperwork on one loan showing that reimbursement had occurred on that loan. I did not see the paperwork, but since this person did the Good Bank/Bad Bank scenario for the FDIC in the early 90’s, I have to accept that he knew what he was looking at.

Who Benefits: George Soros, Michael Dell, John Paulson

Pulatie referred to an article he wrote on December 1, 2009: Anatomy of a Government-Abetted Fraud: Why Indymac/OneWest Always Forecloses

OneWest Bank and its Sweetheart Deal

OneWest Bank was created on Mar 19, 2009 from the assets of Indymac Bank. It was created solely for the purpose of absorbing Indymac Bank. The principle owners of OneWest Bank include Michael Dell and George Soros. (George was a major supporter of Barack Obama and is also notorious for knocking the UK out of the Euro Exchange Rate Mechanism in 1992 by shorting the Pound).

When OneWest took over Indymac, the FDIC and OneWest executed a “Shared-Loss Agreement” covering the sale. This Agreement covered the terms of what the FDIC would reimburse OneWest for any losses from foreclosure on a property. It is at this point that the details get very confusing, so I shall try to simplify the terms. Some of the major details are:

  • OneWest would purchase all first mortgages at 70% of the current balance
  • OneWest would purchase Line of Equity Loans at 58% of the current balance.
  • In the event of foreclosure, the FDIC would cover from 80%-95% of losses, using the original loan amount, and not the current balance.

How does this translate to the “Real World”? Let us take a hypothetical situation. A homeowner has just lost his home in default. OneWest sells the property. Here are the details of the transaction:

  • The original loan amount was $500,000. Missed payments and other foreclosure costs bring the amount up to $550,000. At 70%, OneWest bought the loan for $385,000
  • The home is located in Stockton, CA, so its current value is likely about $185,000 and OneWest sells the home for that amount. Total loss for OneWest is $200,000. But this is not how FDIC determines the loss.
  • ‘FDIC takes the $500,000 and subtracts the $185,000 Purchase Price. Total loss according to the FDIC is $315,000. If the FDIC is covering “ONLY” 80% of the loss, then the FDIC would reimburse OneWest to the tune of $252,000.
  • Add the $252,000 to the Purchase Price of $185,000, and you have One West recovering $437,000 for an “investment” of $385,000. Therefore, OneWest makes $52,000 in additional income above the actual Purchase Price loan amount after the FDIC reimbursement.

At this point, it becomes readily apparent why OneWest Bank has no intention of conducting loan modifications. Any modification means that OneWest would lose out on all this additional profit.

Meet IndyMac’s New Owners

Flashback March 20, 2009: IndyMac Bank’s new name: OneWest Bank

The sale of IndyMac Federal Bank was concluded Thursday, and the new owners wasted no time in ditching its tainted name. Starting today, IndyMac is OneWest Bank.

The Pasadena bank’s new owners, organized under OneWest Bank Group, bought the bank’s $20.7 billion in loans and other assets for $16 billion. That includes $9 billion in financing from the Federal Deposit Insurance Corp. and the Federal Home Loan Bank.The ownership group is led by Steven Mnuchin of Dune Capital Management in New York. The bank’s investors include J. Christopher Flowers, who has specialized in distressed bank purchases, and hedge fund operators George Soros and John Paulson.

Check out the last line and primary lie in the above article:

The management team has been working with the FDIC on a loan modification program to attempt to keep people in their homes.

OneWest bank profit: $1.6 billion

On February 20, 2010, the Los Angeles Times reported OneWest bank profit: $1.6 billion

The billionaires’ club of private financiers who took over the remains of IndyMac Bank from the Federal Deposit Insurance Corp. turned a profit of $1.57 billion last year on the failed mortgage lender — more than they invested less than a year ago.

Yet under the sale agreement, the federal deposit insurance fund still could lose nearly $11 billion on bad loans that the Pasadena institution made before it was sold last March and renamed OneWest Bank.

In taking over IndyMac’s assets, the investor group, led by Steven Mnuchin of Dune Capital Management, put up $1.55 billion to revitalize the bank. Other investors included hedge-fund operators George Soros and John Paulson, bank buyout expert J. Christopher Flowers and computer mogul Michael S. Dell.

OneWest’s financial results were filed with regulators Friday. Regulators and the investors declined to comment on the profit.

As much as $11 billion is set to go straight into the hands of the desperately needy: George Soros, John Paulson, Michael Dell, and Christopher Flowers. The regulators and the investors parasites declined to comment.

Boycott Dell

If you are thinking about buying a new computer, and you are considering Dell, you may wish to reconsider.

Mike “Mish” Shedlock
http://globaleconomicanalysis.blogspot.com
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TAPE Recording Shows “Trustee” is NOT the party with Fiduciary Powers or Obligations

One of the interesting things about Arizona Law is that it is perfectly legal to tape record a telephone conversation without the knowledge or consent of the parties to that call.

I have a tape recording of a conversation between a borrower up in Scottsdale and an officer of Deutsch bank who is in charge of “Asset Acquisition.” His name might well be on the documents in your case. In that conversation he says that Deutsch is the “beneficiary”.. “for the “benefit of the investors”. He says that the whole arrangement is “counter-intuitive” (used that word more than once). Although the beneficiaries are the investors and Deutsch is named as Trustee, the Trustee has nothing to do. That is because the servicer (One West in the conversation) actually has complete discretion on all issues including modification. As to whether the loan was modifiable he explicitly deferred to the servicer.

Thus he is saying that notwithstanding appearances and what would be logical the ACTUAL arrangement is that the servicer has all power over the assets that have been conveyed to investors. He never mentioned the “Trust” (remember my contention is that there is no trust, that the SPV is merely a conduit vehicle for aggregating the assets and revenue streams from borrowers, insurers, counterparties on CDS etc.) He even refers to the servicer as having “fiduciary” obligations but shies away from any reference to Deutsch having fiduciary duties.

In my opinion, this tape both confirms my opinion and supplements it with a surprising detail, to wit: the servicer is the one with the power of a “Trustee” and not the named “Trustee” (in this case Deutsch). But the power of the real trustee (servicer) is limited to the provisions of the note, excludes third party payments from insurers, counterparties and federal bailouts, and is without reference to the encumbrance allegedly created by the Deed of Trust (Mortgage).

Boiling this down to its essential elements, the owner of the “asset” (the loan) is a group of investors who accepted certificated or non-certificated interests conveying to them a percentage interest in the flow of funds (principal and interest) and ownership of the note. The reference to a “Trust” is nominal (in name only) and the reference to a “Trustee” is both nominal and misleading. The beneficiary under the Deed of Trust, as seen by this representative of Deutsch is also the investor in that Deutsch is only named as a straw man for the investors as a convenience and with the result that the true beneficiaries are not disclosed.

Therefore, on its face, the beneficiary on the original Deed of Trust, the beneficiary named in the instruments used to securitize the loan, and the beneficiary in fact are all different. The original note also names a payee that is different from the payee under the assignments, which is different from the payee under the instruments of securitization and different from the actual party (the servicer) who receives those payments. In practice, according to this officer, the actual payee under the securitization documents (the investors) is different than the parties receiving payment and enforcing payment.

The effect of this “counterintuitive” arrangement is that the beneficiary and the party who represents themselves as the proper holder in due course or owner of the loan are different. All of this presumes that the loan was in fact properly, legally and successfully assigned and securitized — a question of fact since there are multiple conditions to acceptance of the assignment and multiple conditions subsequent (replacement of loan with another, buy back of the loan etc.), which are also questions of fact as to whether those conditions subsequent did or did not occur. In addition there are subsequent events (third party payments in accordance with insurance contracts, credit default swaps and other credit enhancements written into the securitization documents) that are also questions of fact.  And in either related or non-related context, there is the fact that many of these special purpose vehicles (“Trusts”) have been dissolved with the “assets” resecuritized into brand new securities sold to new investors.

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