My
focus is on cases pending in the judicial branch of government. Our
system of government was designed to insert the judicial branch into
disputes so that fractures in public policy do not cheat citizens out of
their basic rights. In this case, the failure of the other two branches
of government to include the rights of homeowners is damaging both to
the society generally and producing millions of cases of unjust
enrichment and displacement of millions of people from their homes in
cases, where if all facts were known two facts would be inescapably
accepted: (1) mortgages filed as encumbrances against real property were
fatally defective and unenforceable and (2) the balance owed on the
debt is either impossible to ascertain or zero, with a liability owed to
homeowners on the overpayments received in the midst of that opaque
cloud we are calling "securitization."
The
trigger for the writing of this article is once again coming from BANK
OF NEW YORK MELLON as the "Trustee" of vast numbers of REMIC Trusts.
Bill Paatalo, a private investigator, uncovered an officer of BONY who
is very frustrated with BOA and others who are telling borrowers that
BONY is the owner of their loan. Indeed, suits have been brought in the
name of BONY without any reference to the trust; and of course suits
have been brought in the name of BONY as Trustee of a REMIC Trust, which
represents but does not own the loans (the ownership interest being
"conveyed" with the issuance of the mortgage bond to investors who were
duped into thinking they were buying high grade investments. BONY and
DEUTSCH both say such suits are brought without their authorization and
have instructed servicer's to cease and desist using the name of Deutsch
of BONY MELLON in foreclosure suits.
The
problem revealed is contained in an email Paatalo posted from an
officer of BONY MELLON, who wants BOA to stop telling people that BONY
is the owner of their loans. He says BONY doesn't own the loans and has
no right, power or obligation to modify or mitigate damages caused by
the borrower failing or stopping payments on the loan they
unquestionably received. He says BONY is the Trustee for the loan and
denies ownership and further denies the ability or right to modify.
What
he doesn't say is what he means by "Trustee for the loan" and why the
"trust" should be considered real as a legal person when there is no
financial account or assets held in the name of the Trust. Like Reynaldo
Reyes at Deutsch Bank, he is basically saying there are no trust
assets, there never was any funding of the trust, and there never was an
assignment or purchase of the loan by the trust --- for the simple
reason that the Trust never had a bank account much less the money to
buy loans or anything else.
So
Reyes and this newly revealed actor from BONY are saying the same
thing. They are Trustees in name only without any duties because no
money or assets are in the trust. Which brings us back to the beginning.
If the loan was securitized, the Trust would have had a bank account to
receive money advanced by investors who were purchasing alleged
mortgage bonds that promised that the investor also was an owner of the
loans --- an undecided percentage interest in the loans.
That
money in the Trust account would have been used to fund or purchase the
loan to the borrower. And the Trust would have been the mortgagee or
beneficiary on the mortgage or deed of trust. There would have been no
need for MERS, or originators or any of the countless sham corporations
that are now out of business and who supposedly loaned money to
borrowers. If it was real, the records would show the Trust paid for the
loan and the recorded documents from the loan closing would clearly
show the Trust as the lender.
It
is really a very simple deal, if it is real. But complexity was
introduced by Wall Street, the effect of which was that the lenders
didn't get the loans they were expecting, didn't get the collateral they
thought they were getting and didn't even get named as lenders despite
the fact that it was investor money that was used to make and acquire
the loans. Like the borrowers, investors were stepping into a cloud that
intentionally obscured the ownership of the loan.
On
the one hand, the Banks covered ownership by the issuance and execution
of an Assignment and Assumption Agreement, but that was before any loan
applications existed, just like the prospectus and sale of the bonds
--- a process known as selling forward on Wall Street. On the other
hand, the bonds were issued in the name of the investment banks, a
process called Street Name on Wall Street. On the third hand, the loan
documents showed neither the investment banks nor the investors or even
the REMIC Trusts. instead they showed some other entity as the lender
even though the "lender" had advanced mooney whatsoever --- a process
later dubbed as "pretender lenders" by me in in my writing and seminars.
By
pushing title through pretender lenders and private exchanges that
registered title that was never published (like the county recorders'
offices publish recorded deeds, mortgages and liens), the Banks created a
Cloud which by definition created clouded title to the property, the
loan and created a mortgage document that was recorded despite naming
the wrong terms and the wrong payee.
Pushing
title away from the investors who advanced the money and toward
themselves, the Banks were able to play with the money as if it were
their own, and even purchase insurance and credit default swaps payable
to the banks, who were clearly the intermediary agents of the investors.
And the Banks even got the government to guarantee half the loans even
though the underwriting standards were ignored --- since the banks had
no risk of loss on the loans (they were using investor money and they
were getting the right to receive third party payments from the
government and private parties). Eventually after the meltdown, the
Banks became part of a program where tens of billions of dollars worth
of the bogus mortgage bonds owned by the investors were sold to the
Federal government (some $50 Billion per month).
Through
their creation of the Cloud, the banks were able to take the money of
the investors and receive it as their own, concealing the initial theft
(skimming) off the top by creating sham proprietary trades. Now they are
receiving judgments and deeds from foreclosure auctions based upon
their submission of a credit bid that clearly violates the very specific
provisions of state statutes that identify who can submit a credit bid
rather than cash at the auction. Only the actual owner of the unpaid
account receivable has the right to submit a credit bid.
And
by the creation of the Cloud judges and lawyers missed the point
completely. The result is stripping the investors of value, ownership
and right to collect on the loans they advanced. At no time has any
Servicer filed a foreclosure in the name of the investors whose money
was used to fund the deal. In no case is there any underlying real
transaction in which real money was paid and something was received in
exchange. The Courts are now the vehicle of public policy and manifest
injustice by enforcement of unenforceable mortgages for fabricated notes
referring to non existent debts.
The net result is that public policy and government action is contrary to the rule of law.
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