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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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.

Why do we need to force the banks to accept more money in modification?

Selecting a forensic analyst or a lawyer to represent you in a mortgage dispute. You need to look at their credentials rather than listen to their sales pitch. And you need people who really believe that you can and SHOULD win. For our services and products call our customers service numbers at 520-405-1688 on the West Coast, and 954-495-9867. Or visit http://www.livingliesstore.com. Don’t waste your money if the people lack the credentials and experience and commitment to make things work out the way you want it. Everyone promises the world. We promise expertise and guidance on how to use it in court.

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It seems obvious. And if you are a lawyer practicing in real estate, you have probably attending CLE seminars about mortgage lending requirements and what to do when the borrower is in default or claimed to be in default. The answer is always a “workout” wherever possible. And the reason is that you get more from a workout than the proceeds from a foreclosure and all the financial requirements of ownership like maintenance, taxes, insurance and the expenses of selling, repairs etc. It really is that simple.

But Banks don’t want workouts or modifications. They only want to use the illusory promise of modification to get the borrower in so deep he sees no way out when the application is eventually denied. Why are so many trial modifications now in court because the bank denied the permanent modification after the trial modification as approved and the borrower met all the requirements including payments? why are the banks pursuing a strategy where they are guaranteed far less money than ramping up the “workout” programs. Maybe because if they did, they would be admitting that the loan was defective in the first place, the appraisal was inflated, the viability of the loan was zero, and the borrower had been tricked.

So why do the Banks need to be forced to take more money and less responsibility for the property? It seems obvious that they would want a workout rather than a foreclosure because it will end up with more money in their pockets and the whole mortgage mess behind them with a nice clean note and mortgage.

The answer can only be that the Banks oppose such efforts because the rational strategy of a true lender won’t end up with more money in THEIR pockets. And THAT can only be true if they are working off some different business model than a lender. It means by definition in a rational world, as Greenspan likes to say, that they could not possibly be the lender or working for the lender.

It can only be true if they are protecting the fees they are earning on nonperforming loans and justifying their stubborn resistance to modification and principal reduction by showing that the foreclosure was the only way out even though it wasn’t. The destruction of tens of thousands of homes in various cities shows that the net value of the foreclosure was zero even while the homeowners were applying for modifications that, if approved, would have not only saved individual homes, but entire neighborhoods.

The other reason of course is that the banks don’t own the loans and they did receive multiple payments on the loans from multiple sources. A foreclosure hides these payments.

So the practice hint is to be persistent and insistent on following the money trail. What the San Francisco study revealed as well as other similar studies and are own study here at livinglies is that the courts are rubber stamping foreclosures that are in favor of complete strangers tot he transaction. They don’t have a dime in the deal. But they are being given judicial nod that they are the creditor even though they are clearly not the creditor. This false creditor now has authority to claim the status of creditor and to buy property worth millions of dollars with a non-monetary credit bid in the amount of their claim, thus “out bidding” any conceivable competition and guaranteeing their ownership of the property, or allowing someone else to outbid them and taking the money from the sale even though everything they had done up to that point was false.

So you have these people and companies in a cloud of false claims of securitization selling the loan multiple times through insurance and other gimmicks making a ton of money assuming the identity of the investors and assuming ownership over the borrower’s identity and trading on that all for the purpose of ill-gotten gains. It is fraud, identity theft, RICO and Ponzi Schemes all rolled into the fog that comprises the false claims of securitization.

PRACTICE HINT: Test each transaction claimed to see if money exchanged hands and if so between what parties. You will find that the money transactions — that is the reality of what was going on bears no resemblance to the paper trail. The paper trail is meant to lead you down the rabbit hole. First establish what is in the paper trail, then establish what transactions actually occurred and then compare the two and show that the paper trail is a trail of lies.

THE KEY TO THIS MESS IS TO REPLACE OR SUBSTITUTE THE CURRENT SYSTEMS OF SERVICERS WITH AN ENTIRELY DIFFERENT SYSTEM OF SERVICING AND A DIFFERENT SET OF SERVICERS TO REPLACE THOSE WHO ARE BLOCKING THE DIALOGUE BETWEEN LENDERS AND BORROWERS.

Mortgage borrowers get more foreclosure protection from Mass. bank regulators
http://www.bizjournals.com/boston/news/2013/10/17/mortgage-borrowers-get-more.html

The Very Worst Thing About Foreclosures Today Is Watching Consumers That You Know Could be Helped Standing in Court Without An Attorney
http://ireport.cnn.com/docs/DOC-1050081/

 

The Real Deal and How to Get There

Internet Store Notice: As requested by customer service, this is to explain the use of the COMBO, Consultation and Expert Declaration. The only reason they are separate is that too many people only wanted or could only afford one or the other — all three should be purchased. The Combo is a road map for the attorney to set up his file and start drafting the appropriate pleadings. It reveals defects in the title chain and inferentially in the money chain and provides the facts relative to making specific allegations concerning securitization issues. The consultation looks at your specific case and gives the benefit of litigation support consultation and advice that I can give to lawyers but I cannot give to pro se litigants. The expert declaration is my explanation to the Court of the findings of the forensic analysis. It is rare that I am actually called as a witness apparently because the cases are settled before a hearing at which evidence is taken.
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The Real Deal and How to Get There

If you read the Glaski case any of the hundreds of other decisions that have been rendered you will see one glaring error — failure to raise an issue or objection in a timely manner. This results from ignorance of the facts of securitization. So here is my contribution to all lawyers, wherever you are, to prosecute your case. I would also suggest that you use every tool available to disabuse the Judge of the notion that your goal is delay — so push the case even when the other side is backpedaling, ask for expedited discovery. Act like you have a winning case on your hands, because, in my opinion, you do.

The key is to attack the Judge’s presumption whether stated or not, that a real transaction took place, whether at origination or transfer. Once you let the Court know that is what you are attacking the Judge must either rule against you as a matter of law which would be overturned easily on appeal and they know it, or they must allow penetrating discovery that will reveal the real money trail. The error made by nearly everyone is that the presumption that the paperwork tells THE story. The truth is that the paperwork tells a story but it is false.

Nevertheless the burden is on the proponent of that argument to properly plead it with facts and as we know the facts are largely in the hands of the investment banker and not even the servicer has it. My law firm represents clients directly in Florida and provides litigation support to any attorney wherever they are located. We now send out a preservation letter (Google it) as soon as we are retained. We send it to everyone we know or think might have some connection to the file. If they can’t find something, the presumption arises they destroyed it if we show that in the ordinary course of business they would keep records like that. We also have a computer forensic analyst who is a lawyer that can go into the computers and the data and see when they were created, by whom and reveal the input that was done to create certain files and instruments.

Once the facts are properly proposed, then the proponent still has the burden of proving the allegations through discovery. That is because the paperwork raises a rebuttable presumption of validity. The Glaski case gives lots of hints as to how and when to do this. Neither judicial notice of an instrument nor the rebuttable presumption arising out of an instrument of commerce gives the bank immunity. And the requests for discovery should attack the root of their position — that the foreclosing party is true beneficiary or mortgagee.

With the Glaski Case in California and we have one just like it in Florida, the allegation must be made that the transaction is void as to the transfer to the Trust. You have a related proof challenge when they insist that the loan was not securitized. You say it was subject to claims of securitization. That puts you in a he said she said situation — which puts you in the position of the Judge ruling against you because you have not passed the threshold of moving the burden back to the Bank. What penetrates that void is the allegation and proof of the absence of any actual transaction — i.e., one in which there was an offer, acceptance of the offer and consideration. The UCC says an instrument is negotiated when sold for value. You say there was no value. Proving the loan is subject to claims of securitization may require discovery into the accounting records of the parties in the securitization chain. What you are looking for is a loan receivable account or account receivable that is owned by the party to whom the money is owed. At the servicer this does not exist, which is why the error in court is to go with the servicer’s records, which are incomplete because they do not reveal the payments OUT to third party creditors or others, nor other payments IN like from the investment bank who funds continued payment to the creditors to keep them ignorant that their portfolio is collapsing.

The transaction is void if there was an attempt to assign the loan into the trust. First, it violated the instrument of the trust (PSA) because of the cutoff rule. The court in Glaski correctly pointed out that under the circumstances this challenge was valid because of the prejudice to the beneficiaries of the trust. They use discretion to assert that there is prejudice to the beneficiaries because of the economic impact of losing their preferential tax status. They did not add (because nobody raised it), that the additional prejudice to the beneficiaries is that it is usually a loan that is already declared in default that is being assigned. Judge Shack in New York has frequently commented on this.

Hence the proposed transfer violates the cutoff date, the tax status and the requirement that the loan be in good standing. Sales of the bonds issued by the trust were based upon the premise that the bonds were extremely low risk. Taking defaulted loans into the trust certainly  violates that and under federal and state regulations the pension funds, as “Stable managed funds” can ONLY invest in extremely low risk securities.

Hence the possibility of ratification is out of the question. First, it is isn’t allowed  under the IRC and the PSA and second, it isn’t allowed under the PSA because the investors are being handed an immediate loss — a purchase with their funds (which you will show never happened anyway) of a defaulted loan. But to close the loop on the argument of possible ratification, you must take the deposition of the trustee of the trust.

Without the possibility of ratification, the transaction is definitely void. In that depo it will be revealed that they had no access or signature authority to any trust account and performed no duties. But they are still the party entrusted with the fiduciary duties to the beneficiaries. So when you ask whether they would allow the purchase of a bad loan or any loan that would cause the REMIC to lose its tax status they must answer either “no” or I don’t know. The latter answer would make appear foolish.

A note in the Glaski case is also very revealing. It is stated there that BOTH sides conceded that the real owner of the debt is probably unknown and can never be known. So tread softly on the proposition that the real owner of the loan NOW is the investor. But there is a deeper question suggested by this startling admission by the Court and both sides of the litigation. If the facts are alleged that a given set of investors somehow pooled their money and it was used to fund the loan origination or to fund the loan acquisition, what exactly do the investors have NOW? It would appear to be a total loss on that loan. They paid for it but they don’t own it because it never made it into the trust.

The alternative, proposed by me, is that this conclusion is prejudicial to the beneficiary, violates basic fairness, and is contrary to the intent of the real parties in interest — the investors as lenders and the homeowners as borrowers. The proper conclusion should be, regardless of the form of transaction and content of instruments that were all patently false, that the investors are lenders and the homeowner is a borrower. The principal is the amount borrowed. The terms are uncertain because the investors were buying a bond with repayment terms vastly different than the repayment terms of the note that the homeowner signed. Where this occurs the note or obligation is generally converted into a demand obligation, which like tender of money in a loan dispute, is enforced unless it produces an inequitable result, which is patently obvious in this case since it would result in a judgment and judgment lien that might be foreclosed against the homeowner.

With the assignment to the trust being void, and the money of the investor being used to fund the loan, and there being no privity between the investor and the homeowner, the only logical conclusion is to establish that the debt exists, but that it is unsecured and subject to the court’s determination to fashion the terms of repayment — or mediation in which the unsecured loan becomes legitimately secured through negotiations with the investors.

Since the loan was not legally assigned into the trust and the trust did not fund the origination of the loan, the PSA no longer governs the transaction; thus the authority of the servicer is absent, but the servicer should still be subpoenaed to produce ALL the records, which is to say the transactions between the servicer and the borrower AND the transactions between the servicer and any third parties to whom it forwarded the payment, or with whom it engaged in other receipts or disbursements related to this loan.

Since the loan was not legally assigned into the trust, the trustee has no responsibility for that loan, but the investment bank who used the investors money to fund the the loan is also a proper target of discovery as is the Maser Servicer and aggregators, all of whom engaged in various transactions that were based upon the ownership of the loan being in the trust. Now we know it isn’t in the trust. The Banks have used this void to jump in and claim that they own the loan, which is obviously inequitable (if not criminal). But the equitable and proper result would be to establish that the investors own an account receivable from borrowers in this type of situation since they were the ones who advanced the money, not the banks.

Since the loan was not legally assigned into the trust, the servicer has no  actual authority or contract with the investors who are now free to enter into direct negotiations with the borrowers and avoid the servicers who are clearly serving the interest of the parties in the securitization chain (which failed) and not the investors. Thus any instrument executed using the securitization or history of “assignments” (without consideration) as the foundation for executing such an instrument is void. That includes substitutions of trustees, assignments, notices of default, notices of sale, lawsuits to foreclose or any effort at collection.

Note that without authority and based upon intentionally false representations, the servicers might be subject to a cause of action for interference with contractual rights, especially where a modification proposal was “turned down by the investor. “ If the investor was not the Trust and it was the Trust allegedly who turned it down (I am nearly certain that the investors are NEVER contacted), then the servicer’s push into foreclosure not only produces a wrongful foreclose but also interference with the rights and obligations of the true lenders and borrowers who are both probably willing to enter into negotiations to settle this mess.

The second inquiry is about the balance of the account receivable and the obvious connection between the account receivable owned by the investors and the account payable owed by the homeowners. I don’t think there is any reasonable question about the initial balance due, because that can easily be established and should be established by reference to a canceled check or wire transfer receipt. But the balance now is affected by sales to the Federal Reserve, insurance, bailouts and credit default swaps (CDS).

Since the loan was not assigned to the trust then the bond issued by the trust that purports to own the loan is wrong. The insurance, CDS, guarantees, purchases and bailouts were all premised on the assumption that the false securitization trail was true, then it follows that the money received by anyone represents proceeds that does not in any way belong to them. They clearly owe that money to the investor to the extent of the investors’ advance of actual money, with the balance due to the homeowner, as per the agreement of the parties at the closing with the homeowner. But the payors of those moneys also have a claim for refund, buy back, or unjust enrichment, fraud, etc.

Those payors have one obvious problem: they executed agreements that waived any right to collect from the borrower. Thus they are stuck with the bond which is worthless through no fault of the beneficiaries. So their claim, I would argue, is against the investment bank. The guarantors (Fannie, Freddie et al) have buyback rights against the parties who sold them the loans they didn’t own or the bonds representing ownership that was non-existent. Here a fair way of looking at it is that the investors are credited with the third party mitigation payments, the account payable of the borrower is reduced proportionately with the reduction of the account receivable (by virtue of cash payment to their agents which reduces the account receivable because the money should be paid to and credited to the investor) and the balance of the money received should then go to the guarantor to the extent of their loss, and then any further balance left divided equally amongst the investors, borrowers and guarantors.

To do it any other way would either leave the banks with their ill-gotten gains and unjust enrichment, or over payment to the investors, over payment to the borrowers who are entitled to such proceeds as per most statutes governing the subject, or over payment to the guarantors. The argument would be made that the investors, borrowers and guarantors are getting a windfall. Yes that might be the case if the over payments resulting from multiple sales of the same loan exceeded all money advanced on the actual loan. But to leave it with the Banks who were never at risk and who are still getting preferential treatment because of their shaky status would be to reward those who intended to be the risk takers, but who masked the absence of risk to them through false statements to the parties who all collectively advanced money and property to this scheme without knowing that they were all doing so.

 

The question is on what basis should the banks be rewarded with the windfall. I can find no support for that proposition. But based upon public policy or other considerations regarding the nature of the hedge transactions used to sell the same loan over and over again, it might be argued that the investment bank is entitled to retain SOME money if the total exceeds the full balances owed to the investors (thereby extinguishing the payable from the borrower), and the full balances owed to the guarantors.

“Conversion” of the Note to a Bond Leaves Confusion in the Courts

If you are seeking legal representation or other services call our South Florida customer service number at 954-495-9867 and for the West coast the number remains 520-405-1688. In Northern Florida and the Panhandle call 850-765-1236. Customer service for the livinglies store with workbooks, services and analysis remains the same at 520-405-1688. The people who answer the phone are NOT attorneys and NOT permitted to provide any legal advice, but they can guide you toward some of our products and services.

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The selection of an attorney is an important decision  and should only be made after you have interviewed licensed attorneys familiar with investment banking, securities, property law, consumer law, mortgages, foreclosures, and collection procedures. This site is dedicated to providing those services directly or indirectly through attorneys seeking guidance or assistance in representing consumers and homeowners. We are available to any lawyer seeking assistance anywhere in the country, U.S. possessions and territories. Neil Garfield is a licensed member of the Florida Bar and is qualified to appear as an expert witness or litigator in in several states including the district of Columbia. The information on this blog is general information and should NEVER be considered to be advice on one specific case. Consultation with a licensed attorney is required in this highly complex field.

Brent Bentrim, a regular contributor to the dialogue, posed a question.

I am having some trouble following this.  The note cannot be converted any more than when a stock is purchased by a mutual fund (trust) it becomes a mutual fund share.

You’re close and I understand where you seem to be going…ie, the loans were serviced not based on the note and closing documents, but on the PSA.  What I do not understand is the assumption that the note was converted.  From a security standpoint, it cannot.

You are right. When I say it was “converted” I mean in the lay sense rather a legal one. Of course it cannot be converted without the borrower signing. That is the point. But the treatment of the debt was as if it had been converted and that is where the problem lies for the Courts — hence the diametrically opposed appellate decisions in GA and MA. Once you have pinned down the opposing side to say they are relying on the PSA for their authority to bring the foreclosure action, and relying on the “assignment” without value, the issue shifts —- because the PSA and prospectus have vastly different terms for repayment of interest and principal than the note signed by the borrower.There are also different parties. The investor gets a bond from a special purpose vehicle under the assumption that the money deposited with the investment bank goes to the SPV and the SPV then buys the mortgage or funds the origination. In that scenario the payee on the note would either be the SPV or the originator. But it can’t be the originator if the originator did not fulfill its part of the bargain by funding the loan. And there is no disclosure as to the presence of other parties in the securitization chain much less the compensation they received contrary to Federal Law. (TILA).

Under the terms of the PSA and prospectus the expectation of the investor was that the investment was insured and hedged. That is one of the places where there is a break in the chain — the insurance is not made payable to either the SPV or the investors. Instead it is paid to the investment bank that merely created the entities and served as a depository institution or intermediary for the funds. The investment bank takes the position that such money is payable to them as profit in proprietary trading, which is ridiculous. They cannot take the position that they are agents of the creditor for purposes of foreclosure and then take the position that they were not agents of the investors when the money came in from insurance and credit default swaps.

Even under the actual money trail scenario the same holds true — they were acting as agents of the principal, albeit violating the terms of the “lender” agreement with the investors. Here is where another break occurred. Instead of funding the SPV, the investment bank held all investor money in a commingled undifferentiated mega account and the SPV never even had any account or signatory on any account in which money was placed.

Hence the SPV cannot be said to have purchased the loan because it lacked the funding to do it. The banks want to say that when they funded the origination or acquisition of the loan they were doing so under the PSA and prospectus. But that would only be true if they were following the provisions and terms of those instruments, which they were not. The banks funded the acquisition of loans directly with investor money instead of through the SPV, hence the tax exempt claims of the SPV’s are false and the tax effects on the investors could be far different — especially when you consider the fact that the mega suspense account in the investment bank had funds from many other investors who also thought they were investing in many different SPVs.

The reality of the money trail scenario is that the SPV can’t be the owner of the note or the owner of the mortgage because there simply was no transaction in which money or other consideration changed hands between the SPV and any other party. The same holds true for all the parties is the false securitization trail — no money was involved in the assignments. Thus it was not a commercial transaction creating a negotiable instrument.

In both scenarios the debt was created merely by the receipt of money that is presumed not to be gift. The question is whether the note, the bond or both should be used to re-structure the loan and determine the amount of interest, principal, if any that is left to pay.

The further question is if the originator did not loan any money, how can the recording of a mortgage have been proper to secure a debt that did not exist in favor of the secured party named on the mortgage or deed of trust?
And if the lender is determined by the actual money trail then the lenders consist of a group of investors, all of whom had money deposited in the account from which the acquisition of the loan was funded. And despite investment bank claims to the contrary, there is no evidence that there was any attempt to actually segregate funds based upon the PSA and prospectus. So the pool of investors consists of all investors in all SPVs rather just one — a factor that changes the income and tax status of each investor because now they are in a common law general partnership.

Thus the “conversion” language I have used, is merely shorthand to describe a far more complex process in which the written instruments were ignored, more written instruments were fabricated based upon nonexistent transactions, and no documentation was provided to the investors who were the real lenders. That leaves a common law debt that is undocumented by any promissory note or any secured interest in the property because the recorded mortgage or deed of trust was filed under false pretenses and hence was never perfected.

The conversion factor comes back in when you think about what a Judge might be able to do with this. Having none of the documentation naming and protecting the investors to document or secure the loan, the Judge must enter judgment either for the whole amount due, if any (after deductions for insurance and credit default swap proceeds) or in some payment plan.

If the Judge refers to the flawed documentation, he or she must consider the interests and expectation s of both the lender (investors) and the borrower, which means by definition that he must refer back to the prospectus and PSA as well as the promissory note.
The interesting thing about all this is that homeowners are of course willing to sign new mortgages that reflect the economic reality of the value of their homes, and the principal balance due, as well as money that continued to be paid to the creditor by the same same servicer that declared the default (and was therefore curing the default with each payment to the creditor).
The only question left is where did the money come from that was paid to the creditor after the homeowner stopped making payments and does that further complicate the matter by adding parties who might have an unsecured right of contribution against the borrower for money  advanced advanced by an intermediary sub servicer thereby converting the debt (or that part that was paid by the subservicer from funds other than the borrower) from any claim to being secured to a potential unsecured right of contribution from the borrower.
To that extent the servicer should admit that it is suing on its behalf for the unsecured portion of the loan on which it advanced payments, and for the secured portion they claim is due to other parties. They obviously don’t want to do that because it would focus attention on the actual accounting, posting and bookkeeping for actual transfers or payments of money. The focus on reality could be devastating to the banks and reveal liabilities and reduction of claimed assets on their balance sheets that would cause them to be broken up. They are counting on the fact that not too many people will understand enough of what is contained in this post. So far it seems to be working for them.Remember that as to the insurance and credit default swaps there are express waivers of subrogation or any right to seek collection from the borrowers in the mortgages. The issue arises because the bonds were insured and thus the underlying mortgage payments were insured — a fact that played out in the real world where payments continued being made to creditors who were advancing money for “investment” in bogus mortgage bonds. This leaves only the equitable powers of the court to fashion a remedy, perhaps by agreement between the parties by which the lenders are made parties to the action and the borrowers are of course parties to the action but he servicers are left out of the mix because they have an interest in continuing the farce rather than seeing it settled, because they are receiving fees and picking up property for free (credit bids from non-creditors).

This is precisely the point that the courts are missing. By looking at the paperwork first and disregarding the actual money trail they are going down a rabbit hole neatly prepared for them by the banks. If there was no commercial transaction then the UCC doesn’t apply and neither do any presumptions of ownership, right to enforce etc.

The question of “ownership” of the note and mortgage are a distraction from the fact that neither the note or the mortgage tells the whole story of the transaction. The actions of the participants and the real movement of money governs every transaction.

Whether the courts will recognize the conversion factor or something similar remains to be seen. But it is obvious that the confusion in the courts relates directly to their ignorance of the the fact that the actual money transaction is not brought to their attention or they are ignoring it out of pure confusion as to what law to apply.

Now UCC Me, Now You Don’t: The Massachusetts Supreme Judicial Court Ignores the UCC in Requiring Unity of Note and Mortgage for Foreclosure in Eaton v. Fannie Mae
http://4closurefraud.org/2013/05/20/now-ucc-me-now-you-dont-the-massachusetts-supreme-judicial-court-ignores-the-ucc-in-requiring-unity-of-note-and-mortgage-for-foreclosure-in-eaton-v-fannie-mae/

High court rules in favor of bank in Suwanee foreclosure case
http://www.gwinnettdailypost.com/news/2013/may/20/high-court-rules-in-favor-of-bank-in-suwanee/

Wells Fargo slows foreclosure sales, BofA not so much
http://www.bizjournals.com/orlando/morning_call/2013/05/wells-fargo-slows-foreclosure-sales.html

INVESTMENT OPPORTUNITY: Why Do Banks Walk Away When Proof is Required?

FOR QUALIFIED INVESTORS ONLY:

HEDGE FUND TO

CALL THE BLUFF OF PRETENDER LENDERS

LISTEN TO NEIL GARFIELD INTERVIEW ON PIGGYBANK
http://piggybankblog.com/2010/09/09/donations/

see https://livinglies.wordpress.com/2013/04/29/hawaii-federal-district-court-applies-rules-of-evidence-bonymellon-us-bank-jp-morgan-chase-failed-to-prove-sale-of-note/

If you are seeking legal representation or other services call our South Florida customer service number at 954-495-9867 and for the West coast the number remains 520-405-1688. In Northern Florida and the Panhandle call 850-296-1960. Customer service for the livinglies store with workbooks, services and analysis remains the same at 520-405-1688. The people who answer the phone are NOT attorneys and NOT permitted to provide any legal advice, but they can guide you toward some of our products and services.

SEE ALSO: http://WWW.LIVINGLIES-STORE.COM

The selection of an attorney is an important decision  and should only be made after you have interviewed licensed attorneys familiar with investment banking, securities, property law, consumer law, mortgages, foreclosures, and collection procedures. This site is dedicated to providing those services directly or indirectly through attorneys seeking guidance or assistance in representing consumers and homeowners. We are available to any lawyer seeking assistance anywhere in the country, U.S. possessions and territories. Neil Garfield is a licensed member of the Florida Bar and is qualified to appear as an expert witness or litigator in in several states including the district of Columbia. The information on this blog is general information and should NEVER be considered to be advice on one specific case. Consultation with a licensed attorney is required in this highly complex field.

THEY DON’T HAVE THE PROOF, THEY DON’T OWN THE LOAN, THEY DON’T HAVE A PENNY INVESTED IN THE ORIGINATION OR ACQUISITION OF THE LOAN — SO WHY DO WE LET THEM COLLECT, FORECLOSE OR SUE?

Editor’s Analysis: If you loaned money to someone and you lost the note or correspondence reflecting the terms of the loan would you forget about getting the loan repaid? Of course not. You would sue anyway and proves that you either directly loaned the money to them or that you paid real money to acquire the debt. You would get a judgment and you would record that judgment in the county records as a lien against any real property in the name of the borrower.

In the states that have passed laws and regulations regarding the collection of debt and the foreclosure of mortgages requiring the party seeking to collect on the debt or foreclose on a mortgage to show that they in fact own the debt and requiring the attorney to verify the debt, note, mortgage, and default, foreclosure activity and collection activity has dropped like a stone. This corroborates the basic premise of this blog.  Despite all efforts to create the appearance to the contrary, there is no debt, note, mortgage or default —  at least in terms of seeking collection and foreclosure.

The apparent presence of money arriving at the loan closing is a red herring that has thrown off the borrowers, their attorneys, and the courts. But the money never came from anyone with whom the borrower was led to believe to be the source of funding of the loan. Therein lies the problem for the Wall Street banks. If you follow the money trail it simply does not and cannot match up with the paper trail. That is why we have consistently told attorneys to hit hard and hit fast with subpoenas directed at producing competent witnesses and real proof that the loan was funded or acquired by anyone in what we now know is a false securitization chain.

As a trial lawyer with decades of experience I can tell you with great assurance that most cases are decided on the basis of who controls the narrative. It is through that lens that all of the so-called facts are perceived by the court. If you failed to object or moved to dismiss pleadings that omit any allegations or attachments showing financial injury to the party initiating collection or foreclosure proceedings, then you are allowing the narrative to slip away from you. The pretender lenders will fill the void you have created with proffers of facts and conclusions that are unsupported by anything in the record.

Analyzing the foreclosure activity on a national basis clearly shows that those states which require the actual proof and verification by the attorney have eliminated the logjam in the courts because there are no claims. There is only one satisfactory explanation for this phenomenon. If the claimants had anything resembling a canceled check, a wire transfer receipt, an ACH confirmation, or a check 21 confirmation, the change in the laws and regulations of those states requiring proof of payment and proof of loss (which are the elements of proof of ownership) would have produced no result in terms of the number of foreclosures filed or the number of servicers claiming to have the authority to collect monthly payments.

Therefore the only logical conclusion is that they do not have anything resembling proof of payment, proof of loss or proof of ownership. This leaves them in the naked possession of attempting to collect or foreclose on a nonexistent or unenforceable debt, note, mortgage or default.  it looks like criminal fraud and civil fraud to me.

 As for collection, the servicers are clearly relying upon the paper trail in the so-called securitization chain.  If the debt cannot be established through proof of payment and proof of risk of loss than the paper trail in the securitization chain is  a sham.  If the debt is not established there is no payment due.  if the debt is not established and there is no payment due, the claim of status as a sub servicer or Master servicer is without merit.  For these reasons  it is incumbent upon the attorney for the borrower to submit a challenge either in court or in accordance with federal law governing collections,  mortgages and foreclosures.

HEDGE FUND TO CALL THE BLUFF OF PRETENDER LENDERS

This is why I have suggested the business plan wherein investors produce hard money offering same to the court registry in bankruptcy or civil litigation. The investor(s) would offer to refinance the entire mortgage balance if the claimant can prove title to the loan — which means that the claimant, starting with origination of the loan would be required to show proof of payment all the way through the assignment or “securitization chain” in order to determine which party should be paid off and which party therefore could execute a release or satisfaction of the loan and mortgage. It’s no bluff on the part of the investor or the homeowner who jointly present the offer to pay off the debt in full. It is calling the bluff of the pretender lender.

If the claimant is able to do so, then they get every penny demanded. If they are not able to produce such elemental proof, the case is still over because they have admitted lack of standing, lack of subject matter jurisdiction, and lack of a qualified party to submit a credit bid at auction. In that case, the homeowner’s agreement with the investor is to execute a note and mortgage in an amount not exceeding 50% of fair market value of the real property at a fixed rate with 30 year amortization.

The return on investment is nearly infinite. GTC|Honors, a trade name of General Transfer Corporation owning this blog, will provide the legal work and packaging of the loans for resale into the secondary market. Since no more than $3 million is required to start this project space is limited to only qualified investors. This is not a formal offering but merely a solicitation of those who may want to receive a prospectus which they can review and decide whether or not to invest. The name of the Hedge Fund will be revealed only to those who request the prospectus and those who demonstrate in advance that they are qualified investors. Management will be by and through GTC|Honors (“Workouts with Honor”) which will receive a fee of 20% of the net profits after payment of all legal, accounting and other professional fees, costs and expenses. By way of full disclosure, the law firm of Garfield Gwaltney, Kelley and White will be getting part of the legal fees.

Proceeds of investment will be used strictly for formation and operation of the Hedge fund, and shall not be used for any salaries paid to management directly or indirectly. Management includes Neil F Garfield, and such other persons designated by him to share in management responsibilities. Do not send money without first receiving the prospectus and consulting with an attorney, accountant or other professional trusted adviser.

California Homeowner Bill of Rights blocks BofA foreclosure
http://www.housingwire.com/news/2013/05/08/california-homeowner-bill-rights-blocks-bofa-foreclosure

Nevada maintains familiar perch atop foreclosure rankings
http://www.vegasinc.com/news/2013/may/08/nevada-maintains-familiar-perch-atop-foreclosure-r/

Mass. AG Coakley unveils anti-foreclosure program
http://bostonherald.com/business/real_estate/2013/05/mass_ag_coakley_unveils_anti_foreclosure_program

Massachusetts foreclosure filings drop 82% in March
http://www.housingwire.com/news/2013/05/13/massachusetts-foreclosure-filings-drop-82-march

Drastic Drop in Mass. Foreclosure Activity in March
http://rismedia.com/2013-05-13/drastic-drop-in-mass-foreclosure-activity-in-march/

Fla. foreclosures up as lenders speed up process
http://www.floridarealtors.org/NewsAndEvents/article.cfm?id=291115

The Constitutionality of Colorado Foreclosure Law: US Bank Walks Away from Foreclosure on Aurora Woman
http://4closurefraud.org/2013/05/12/the-constitutionality-of-colorado-foreclosure-law-us-bank-walks-away-from-foreclosure-on-aurora-woman/

Aurora foreclosure halted; constitutionality issue unresolved
http://www.denverpost.com/breakingnews/ci_23242542/foreclosure-halted-constitutionality-issue-unresolved

Mortgages are investment du jour for hedge funds – The Term Sheet: Fortune’s deals blogTerm Sheet
http://finance.fortune.cnn.com/2013/05/13/mortgages-salt-hedge-funds/

14 American Housing Markets Struggling With Foreclosures
http://www.businessinsider.com/us-cities-with-most-foreclosures-2013-5

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