This week we are examining the consequences of the proposition that the entire securitization chain is in fact a fabrication. I have likened the situation to a trust, interestingly enough, that has never been funded. The intent to fund the trust does not justify treating the asset as owned by the trust. The intent to execute a deed does not justify the intended grantee claiming the property as LEGALLY his. And the INTENT to assign or indorse or deliver a note, does not justify treating it as though the act was completed. Anyone who has been active in the field of mortgage examination, analysis or litigation knows that they have been frustrated in their attempts to receive actual documentation demonstrating the assignment, endorsement, and delivery of the evidence of the obligation that arose when the borrower executed the closing documentation.
In case after case we find that the status of the obligation is at best questionable. The assignment of the note does not appear to be in existence. No evidence appears showing an endorsement of the note. No evidence appears showing that these security instrument has in any way been transferred, nor has such a transfer been recorded. The only time we see such documentation is in the course of litigation. As long as the party making the representation has the word “Bank” in its name the Judges are understandably influenced to believe that such a party would not take the risk of misrepresenting their status intentionally. But they are wrong, as many recorded cases have shown as reported on this blog.
There is a steadfast refusal to respond appropriately to a qualified written request or a debt verification letter. Even when a case goes to litigation, there is a steadfast refusal to respond to discovery. It is only when a court has ordered the showing code actual executed, notarized documentation that these documents of transfer miraculously appear.
The only way we know that a loan has been allegedly securitized news if someone makes that representation in court, usually without the slightest presentation of evidence in support of the representation. We must believe the representation. The courts are inclined to believe the representation; but in case after case, where a judge has taken the time to actually examine the documentation closely, it has repeatedly been shown that the intermediary parties in securitization have clearly fabricated the documents of transfer solely for the purpose of supporting their position in litigation.
This means that at the time a default is declared, or a notice of default is delivered, it is on behalf of an entity with which the borrower has never done business. These entities suddenly flood the room claiming they are part of a securitization chain when no prior notice has been given in any manner, shape or form, despite vigorous attempts on the part of the borrower to discover the identity of the parties involved and the status of their obligation after third-party payments have been recorded and allocated to the loan.
The intermediary securitization parties steadfastly refused to account for third-party payments and affirmatively represent that such payments are irrelevant to the balance of the obligation. Examination of the facts indicates that their reason for taking that position is that they have kept the third-party payments and neither distributed same to investors who advanced to the pool of money from which the loans were funded nor did they even give notice to those investors that they had received such payments.
In fact, there is ample evidence to suggest that the servicers are in many if not most cases simply keeping the money they receive from borrowers and neither forwarding it to the original “lender” on record (the originating lender) nor to any other party.
Therefore we have actual facts emanating from both sides of this confrontation that suggests a legal paradox. On the one hand, it is apparent that the originating lender has been paid in full but remains on record where it is public notice to all interested parties that the originating lender legally owns the obligation, note and security instrument (deed of trust or mortgage). On the other hand, it is equally apparent that the originating lender did not in fact fund the loan made to the borrower. In virtually all cases the loan was a table funded loan as a matter of practice. Under regulation Z a of the Federal Reserve, this is presumptively a predatory lending practice, giving rise to a variety of remedies under the Federal Truth in Lending Act, which the courts have been reluctant to enforce. The act has teeth, and so does the RESPA, but the courts have mistaken the status of the parties and regard those remedies as windfall to the borrower when they are in fact providing a windfall to disinterested parties.
I am now of the opinion that virtually every document executed after the closing that recites some provision for assignment or transfer of the obligation, note or security instrument is void. The substitution of trustee, the notice of default, the introduction of previously unknown parties are all without substance.
Filed under: foreclosure
