Posted on April 22, 2014 by Neil Garfield
The secured party, the
identified creditor, the payee on the note, the mortgagee on the
mortgage, the beneficiary under the deed of trust should have been the
investor(s) — not the originator, not the aggregator, not the servicer,
not any REMIC Trust, not any Trustee of a REMIC Trust, and not any
Trustee substituted by a false beneficiary on a deed of Trust, not the
master servicer and not even the broker dealer. And certainly not
whoever is pretending to be a legal party in interest who, without
injury to themselves or anyone they represent, could or should force the
forfeiture of property in which they have no interest — all to the
detriment of the investor-lenders and the borrowers.
There are two fatal flaws in the origination of the loan and in the origination of the assignment of the loan.
As I see it …
The REAL Transaction is between the investors, as an unnamed group,
and the borrower(s). This is taken from the single transaction rule and
step transaction doctrine that is used extensively in Tax Law. Since the
REMIC trust is a tax creature, it seems all the more appropriate to use
existing federal tax law decisions to decide the substance of these
transactions.
If the money from the investors was actually channeled through the
REMIC trust, through a bank account over which the Trustee for the REMIC
trust had control, and if the Trustee had issued payment for the loan,
and if that happened within the cutoff period, then if the loan was
assigned during the cutoff period, and if the delivery of the documents
called for in the PSA occurred within the cutoff period, then the
transaction would be real and the paperwork would be real EXCEPT THAT Where the originator of the loan was neither legally the lender nor
legally a representative of the source of funds for the transaction,
then by simple rules of contract, the originator was incapable of
executing any transfer documents for the note or mortgage (deed of trust
in nonjudicial states).
If the originator of the loan was not the lender, not the creditor,
not a party who could legally execute a satisfaction of the mortgage
and a cancellation of the note then who was?
Our answer is nobody, which I know is “counter-intuitive” — a
euphemism for crazy conspiracy theorist. But here is why I know that the
REMIC trust was never involved in the transaction and that the
originator was never the source of funds except in those cases where
securitization was never involved (less than 2% of all loans made,
whether still existing or “satisfied” or “foreclosed”).
The broker dealer never intended for the REMIC trust to actually own
the mortgage loans and caused the REMIC trust to issue mortgage bonds
containing an indenture for repayment and ownership of the underlying
loans. But there were never any underlying loans (except for some trusts
created in the 1990′s). The prospectus said plainly that the excel
spreadsheet attached to the prospectus contained loan information that
would be replaced by the real loans once they were acquired. This is a
practice on Wall Street called selling forward. In all other
marketplaces, it is called fraud. But like short-selling, it is
permissible on Wall Street.
The broker dealer never intended the investors to actually own the
bonds either. Those were issued in street name nominee, non objecting
status/ The broker dealer could report to the investor that the investor
was the actual or equitable owner of the bonds in an end of month
statement when in fact the promises in the Pooling and Servicing
Agreement as to insurance, credit default swaps, overcollateralization
(a violation of the terms of the promissory note executed by residential
borrowers), cross collateralization (also a violation of the borrower’s
note), guarantees, servicer advances and trust or trustee advances
would all be payable, at the discretion of the broker dealer, to the
broker dealer and perhaps never reported or paid to the “trust
beneficiaries” who were in fact merely defrauded investors. The only
reason the servicer advances were paid to the investors was to lull them
into a false sense of security and to encourage them to buy still more
of these empty (less than junk) bonds.
By re-creating the notes signed by residential borrowers as various
different instruments, and there being no limit on the number of times
it could be insured or subject to receiving the proceeds of credit
default swaps, (and with the broker dealer being the Master Servicer
with SOLE discretion as to whether to declare a credit event that was
binding on the insurer, counter-party etc), the broker dealers were able
to sell the loans multiple times and sell the bonds multiple times. The
leverage at Bear Stearns stacked up to 42 times the actual transaction —
for which the return was infinite because the Bear used investor money
to do the deal.
Hence we know from direct evidence in the public domain that this was
the plan for the “claim” of securitization — which is to say that there
never was any securitization of any of the loans. The REMIC Trust was
ignored, thus the PSA, servicer rights, etc. were all nonbinding, making
all of them volunteers earning considerable money, undisclosed to the
investors who would have been furious to see how their money was being
used and the borrowers who didn’t see the train wreck coming even from
24 inches from the closing documents.
Before the first loan application was received (and obviously before
the first “closing” occurred) the money had been taken from investors
for the expressed purpose of funding loans through the REMIC Trust. The
originator in all cases was subject to an assignment and assumption
agreement which made the loan the property and liability of the
counter-party to the A&A BEFORE the money was given to the borrower
or paid out on behalf of the borrower. Without the investor, there would
have been no loan. without the borrower, there would have been no
investment (but there would still be an investor left holding the bag
having advanced money for mortgage bonds issued by a REMIC trust that
had no assets, and no income to pay the bonds off).
The closing agent never “noticed” that the funds did not come from
the actual originator. Since the amount was right, the money went into
the closing agent’s escrow account and was then applied by the escrow
agent to fund the loan to the borrower. But the rules were that the
originator was not allowed to touch or handle or process the money or
any overpayment.
Wire transfer instructions specified that any overage was to be
returned to the sender who was neither the originator nor any party in
privity with the originator. This was intended to prevent moral hazard
(theft, of the same type the banks themselves were committing) and to
create a layer of bankruptcy remote, liability remote originators whose
sins could only be visited upon the aggregators, and CDO conduits
constructed by CDO managers in the broker dealers IF the proponent of a
claim could pierce a dozen fire walls of corporate veils.
NOW to answer your question, if the REMIC trust was ignored, and was a
sham used to steal money from pension funds, but the money of the
pension fund landed on the “closing table,” then who should have been
named on the note and mortgage (deed of trust beneficiary in
non-judicial states)? Obviously the investor(s) should have been
protected with a note and mortgage made out in their name or in the name
of their entity. It wasn’t.
And the originator was intentionally isolated from privity with the
source of funds. That means to me, and I assume you agree, that the
investor(s) should have been on the note as payee, the investor(s)
should have been on the mortgage as mortgagees (or beneficiaries under
the deed of trust) but INSTEAD a stranger to the transaction with no
money in the deal allowed their name to be rented as though they were
the actual lender.
In turn it was this third party stranger nominee straw-man who
supposedly executed assignments, endorsements, and other instruments of
power or transfer (sometimes long after they went out of business) on a
note and mortgage over which they had no right to control and in which
they had no interest and for which they could suffer no loss.
Thus the paperwork that should have been used was never created,
executed or delivered. The paperwork that that was created referred to a
transaction between the named parties that never occurred. No state
allows equitable mortgages, nor should they. But even if that theory was
somehow employed here, it would be in favor of the individual investors
who actually suffered the loss rather than the foreclosing entity who
bears no risk of loss on the loan given to the borrower at closing. They
might have other claims against numerous parties including the
borrower, but those claims are unliquidated and unsecured.
The secured party, the identified creditor, the payee on the
note, the mortgagee on the mortgage, the beneficiary under the deed of
trust should have been the investor(s) — not the originator, not the
aggregator, not the servicer, not any REMIC Trust, not any Trustee of a
REMIC Trust, and not any Trustee substituted by a false beneficiary on a
deed of Trust, not the master servicer and not even the broker dealer.
And certainly not whoever is pretending to be a legal party in interest
who, without injury to themselves or anyone they represent, could or
should force the forfeiture of property in which they have no interest —
all to the detriment of the investor-lenders and the borrowers.
Why any court would allow the conduits and bookkeepers to take over
the show to the obvious detriment and damage to the real parties in
interest is a question that only legal historians will be able to
answer.
Spread the word
[sidebar: CRIMINAL FRAUD. In the reality of the words, RICO as an institutionalized system of retirement. The retirees are supposedly the legal power of higher intelligence, convincing the mind, the brain, that there is only the choice to commit CRIMINAL FRAUD. In one word, suicide.]
Thankfully RUSSIA has stopped the killing fields forever and ever, and now time to stop the killers that have also killed the American 'Dream' over and over, just like what gets done everywhere: dark ages
ReplyDeleteFraud, did the criminally insane commit fraud! REALLY
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