How and Why is US Bank becoming the trustee of all the REMIC Trusts?

Great question, seeings how they now have mine. Chase , is up to its neck in this one.

US bank is popping up as the substitute Plaintiff in cases I have where BOA claimed to be the trustee of the REMIC Trust by virtue of being a "successor by merger." Now I see them popping up where Chase was the Plaintiff. In all cases the bank originally filed under an assumed name by renting the name of someone else or by claiming to own the loan themselves. Now they are under the administration and under the coordination of what I believe to be the Chicago law firm that coordinated the first burst of Aurora strawmen when Aurora itself was a strawman for Lehman Brothers. The object I suspect is centralization of all the trustee positions into US Bank.

The next logical step would be bankruptcy to end of the claims for breach of fiduciary duty. But that option won't work because of the amount of assets and income US Bank is claiming now. So the only thing left for them to do is dilute the liability into virtually nothing. And the only way to do that is package up the income streams and, as you might have guessed, securitize those packages and sell the securitized packages with insurance and indemnification --- the same way they layered over the sale of the trustee positions from BOA. The object I can tell you from experience is to make it so complex that they create a grey area in the law or rather the appearance of a gray area just like they are doing successfully with the mortgages and the Foreclosures. They are nothing if not consistent.

There is, so far, one chink in the armor that I have detected or maybe two. The first is that the PSA does not generally give the Trustee of the REMIC Trust the power or even the right to inquire about Foreclosures although that hasn't stopped US bank from claiming to be the Plaintiff in foreclosure actions. The second is the issue of whether the sale of the trustee's position is allowed under the governing law (New York usually) since it is contrary to the express terms of provisions in the PSA. Those provisions identify the trustee and allow only for succession by merger, which is why the banks were all claiming that. The question of law that will be the battleground is whether homeowners have standing to challenge that sale and whether the courts are going to take a disliking to the sale by the trustee of its duties and revenue. As I explained yesterday, such a precedent will cause uncertainty and chaos in the marketplace not only with trusts. It will also be used to commoditize other things that we take for granted are not for sale.

All of this relates to an earlier post I made about the Pope's comment about the idolatry of money. His point is well taken. Instead of actions being taken that are acceptable under moral standards or legal standards, these banks have us thinking that somehow the world will be better if we put a metric or value on everything and anything, thus raising moral hazard as a goal rather than a limit on human behavior. And you might find them arguing that none of it matters because the trustee has no powers anyway. This would be a foolish argument that might invite the ire of the judiciary.

The bottom line is that they are trying to undermine the whole standing issue and the relevance of ownership of the loan. Under the standards being set by the banks if you can find any debtor then anyone can collect from the debtor if they get to him first. In short, this is nuts.

 by Neil Garfield

Wamu, Chase and the decision that can change lives

Sadly I have said this all along.

Shack Blasts Chase, Fannie Mae for Bad Faith on Wamu Merger

It is obvious that documents were produced for Shack to issue these rulings. The affidavits to which he refers should be obtained in their entirety. There is lots to take away from this decision, but most important, is that Chase never acquired the loans from WAMU. The loans originated or acquired by WAMU were already sold to investors, trusts and Fannie or Freddie. The issue with Fannie and Freddie of course is that they were merely fronting for "private label" securitizations hiding behind the veil of the GSE's who were mere guarantors and not lenders. I'd like to see any agreement and transactional documents showing the alleged purchase by Fannie, but it is presumed in the Shack Order and Findings.

It is also obvious that the finding that Chase was not the owner of the debt at any time came from an admission from both a Fannie Mae representative in an affidavit from an alleged Fannie Mae representative. We should direct discovery in Chase cases to that person in Fannie Mae who says they acquired the subject debt and that Chase merely received the servicing rights in the Chase-WAMU merger.

Note that Fannie Mae is considered by Shack to have acted in bad faith, and that Fannie was less than forthcoming in its description of itself stating that they might be the owner or they might be the trustee (pursuant to the Master Trustee Agreement published in 2007) for a securitized trust. Note also that Fannie at no time was chartered as a lender. Thus it could not originate any loans and never did so. The vagueness with which Fannie Mae addresses the issue of ownership shows that the hiding and non-disclosure in bankruptcy courts and state courts continues across the country.

The admission from Fannie that they "might" be the Master trustee for allegedly securitized assets (debts arising out of fictitious transactions on paper that looked like mortgage loans) is both alarming and encouraging. The rush to foreclosure is partially explained by this chaotic pile of fraudulent paper trails.

When you take into account the non stop servicer advances, you can see what the parties are hiding --- that the real creditor on those debts, has been paid all the interest they were expecting, that the principal is being paid in settlements with pennies on the dollar, and that the default alleged in notices from servicers and informing the borrower of the right to reinstate were defective, to wit: that the amount stated as required to cure the alleged default was and remains incorrect. The amount should have been reduced by third party payments including but not limited to the servicer advances which were not loans, and thus could only be characterized as PAYMENT, which is the ultimate defense against a lawsuit or any enforcement mechanism designed to collect a debt.

The dirty little secret is that they diverted title and money from the investors and converted what could have been a secured loan into an unsecured loan. The advances and payments by third parties satisfied the debt that arose when the borrower took the loan. They in turn MIGHT have claims for contribution or unjust enrichment but they are most certainly not protected by a pledge of collateral either as mortgage or assignment of rents or anything else.

Note that it could not have acquired loans except with money from what were represented as securitized trusts with Fannie as master Trustee. Therefore there are no circumstances under which Fannie or Freddie could be owners of the the debt with rights to enforce except upon the only event in which money is paid by Fannie for the loan --- a guarantee payment AFTER FORECLOSURE) that is the only transaction permitted under its charter. This point was missed by Shack or ignored by him, because he had bigger fish to fry --- the lawyers for Chase itself with a copy of the order to be served upon Jamie Dimon, the head of Chase.
The fact is that with the WAMU bankruptcy, seizure by OTS and appointment of FDIC, there were no assignments, agreements of sale or even a permission slip under which Chase could or did acquire loans from WAMU. But that didn't stop Chase from claiming exactly that in tens of thousands of foreclosures.
In cases where Chase is allegedly at the root of title through the merger with WAMU, it would be appropriate to site to the Shack case, get the case documents, get a Title and Securitization report (see http://www.livingliesstore.com) and lawyers should look into a motion for summary judgment, or a motion for involuntary dismissal with prejudice. Even where Chase might allege that it is filing the foreclosure as a representative of Fannie or Freddie, the basis for that allegation needs to be in their pleading or it is not an ULTIMATE fact upon which relief could be granted. Discovery should be aimed at getting the documents upon which Chase allegedly relies in showing that it has the authority to represent Fannie --- and don't stop there. The truth is that nearly all the so-called Fannie and Freddie loans were veils for the private label securitization in which the money was diverted from the trust, as was the title, leaving Fannie and Freddie as well as the investors and the buyers holding nothing.

In cases where the statute of limitations has already run, the dismissal of the foreclosure action, is barred in most cases from ever being brought again by anyone. But the dismissal against Chase should be with prejudice in all events because it isn't the creditor and therefore does not satisfy the statutory requirements in Florida, and I presume all other states, to submit a credit bid at auction in lieu of cash.
The Judges are beginning to understand that by applying basic contract law, they can clear their dockets. It is up to us to help them. The offer of a loan was met with acceptance by the borrower but the loan never occurred. The transfers also had offer and acceptance but again no money because the investors' money was used (outside the trust) directly to fund the origination or acquisition of the loan. This was part of a larger scheme to defraud to investors whose money was to have been deposited into the trust and then used to fund origination or acquisition of the he loans within 90 days (the cutoff).

The investment bank fraudulently induced (see complaints filed by investors, insurers, government guarantee entities etc.) the investors to give them money for an investment into a controlled trust when in fact they diverted the money for their own purposes, taking outsized fees for themselves as the toxic loans materialized to "support" the alleged investment into loans. That is the "mismanagement" part of investors' allegations --- diversion of money into a PONZI scheme.

The investment bank fraudulently diverted title to the loans to strawman entities or were --- sometimes even by name (see American Brokers Conduit) --- mere conduits for undisclosed third party lenders. The argument that the parties managed to hide this from the borrower long enough for the statute of limitations to run out on TILA claims is an affront to the court system and to the statutory scheme enacted by Congress to protect borrowers from predatory lenders and "steal" deals where huge fees were taken, rather than earned, without disclosure to the Borrower.

So the first element of fraud alleged by investors is diversion of the the money. The second is diversion of the paperwork that would have protected the investors at least to some extent. In this scheme title to the loan papers was intentionally diverted from the owners of the the debt, thus rendering the so-called mortgage documents unenforceable --- all alleged by investors, insurers and other co-obligors who have discovered to their chagrin that each of them paid the investment bank 100 cents on the the dollar on each loan multiple times.

And yet borrowers continue to seek modifications, which means they are not looking for free houses. Even knowing they are dealing with criminals the borrowers are willing to start paying these thieves if the terms can be adjusted to give them the benefit of the bargain that was intended at origination of the purchase money mortgage or refinancing or second mortgage or HELOC.

That leaves the servicers and their lawyers being the only ones who want Foreclosures because they want a free house and/or they want the foreclosure to recapture Servicer advances to the creditors --- advances that vastly reduce the amount owed and which cure the alleged borrower default. That has now become a foreclosure folly in which the servicers and their lawyers are the only parties who want it. The investors don't care because they are getting settlements for the fraud of the investment banks for creating unenforceable loan documents (that are frequently enforced anyway because of judicial ignorance) and diversion of investor money.

In the end, the "clean hands" that Shack talks about are clearly absent from both Servicer and government sponsored entities and as judge Shack states in his decision, wrongdoers should not be permitted to profitf or their wrongdoing. If that means a windfall to the borrower, so be it. It can be likened to the old usury laws and the current usury laws where the principal of the debt is wiped out and the fraudster is hit with a judgment for three times the principal, three times the interest or both.