|Forensic Loan Audits, Mortgage Compliance Audits|
Did a Securitization Trust
Purchse Your Note Directly?
Fraud to Get a Trust Deed for a Security?
|SHARED LOSS AGREEMENTS:
Most LOAN MODS FAIL Because
FDIC Agreements Pay More
for Short Sales & Foreclosures
|LEHMAN BROTHERS COLLAPSED:
Many Banks Failed Because
After Securitization Failed
They weren't able to Lend
Asset-Backed Investment Securities = Fraud?
Asset-Backed Security Trusts purchased Notes = not a "Loan" with Trust DeedMost purported "loans" by Washington Mutual, Indymac, Countrywide, and many other "lenders" in the past 5 years were actually disguised purchases of Notes by Pools or "Special Purpose Vehicles" (SPV) created by Lehman Brothers. These SPVs , as fronts for Securitization Trusts were pre-funded by investors for the express purpose of purchasing said Notes to enable the Trust to be the holder of Asset Backed Securities.
The "Lender" named in the Note and Deed of Trust or Mortgage (e.g. Washington Mutual, Indymac, Countrywide, etc) did not fund the transaction, and therefore was not really the "Lender" at all. They acted only as a "Nominal Lender", named in the Note only to facilitate the creation of a Deed of Trust or Mortgage to secure the Note as an alleged "Loan", when it was not a "Loan", but rather the receptacle for an Asset-Backed Investment Security. Frank J. Fabozzi and Vinod Kothari, in their book "Introduction to Securitization" state on page 5 "The asset securitization process transforms a pool of assets into one or more securities that are referred to as Asset-Backed Securities."
The ramifications of this process are that there was no "loan" funded by the "Nominal Lender". In fact, it can be alleged in court that the "Nominal Lender" was paid in full, plus a commission. Also, the Deed of Trust or Mortgage can't secure an Asset-Backed Investment Security or a Financial Asset directly purchased by a Trust (Security), and the Homeowner was tricked into thinking he was a "Borrower" of a "Loan", when he was actually a Seller of a Note to a Securitization Trust or SPV. The Trust or SPV had no right to a Deed of Trust or Mortgage to a purchased Note that was not evidence of a debt or obligation - it can't be a Secured Transaction covered under UCC 9,when it's an Investment Security covered under UCC 8. The "Nominal Lender" shouldn't be able to foreclose on an asset in an Investment Security with an invalid Deed of Trust or Mortgage, fraudulently procured under the guise of a "Loan", when it wasn't a Loan, but rather the "Purchase of a Note" into an Asset-Backed Investment Security, and the "nominal Lender" was paid in full, plus a commission for something it did not fund.
Can a "nominal Lender" that didn't fund the transaction, but rather fraudulently allowed its name to be put on a Note and Deed of Trust or Mortgage to trick a Homeowner into signing a Deed of Trust or Mortgage to secure an Investment Security, assign a Beneficial Right it never had to another Beneficiary?
WaMu almost never Assigns the Deed of Trust or Mortgage, but forecloses directly or through Chase, its new owner.
WaMu is the Servicer, and Trust wording also calls it the Originator, but the Trustee for the Trust or SPV purchased the Notes directly - WaMu did not fund the loan.
The Trust was fully formed before the purchase, and its Trustee wired the funds into escrow. The originator almost never funds directly to sell it.
Fraud can be alleged that the Borrower was tricked into believing it was a loan to procure a Deed of Trust or Mortgage, and the true nature of the Transaction was not disclosed.
Fraud can also be alleged (after research) that the Pool Insurance paid the Investors after multiple Defaults and Foreclosures. If they were paid, why the foreclosure?
Further, fraud can be alleged that the Deed of Trust (UCC 9) is invalid for an Investment Security/Commercial Paper (UCC 8) (you can't have both). A foreclosure is improper, and should be voidable.
The direct purchase of the Note by the Trustee for the Trust or SPV appears to violate the procedures specified in FAS 140 - "Statement of Financial Accounting Standards 140" by the Financial Accounting Standards Board (FASB).
The Bank signs a Mortgage Loan Purchase Agreement with a Representative of the Trust and/or SPV, yet the Bank doesn't fund the purchase of the note, and can't sell what it hasn't bought.
The Pooling and Servicing Agreement clarifies all the fine points they don't want you to know. The Assignment and Assumption Agreement clarifies further.
Credit Enhancement is used to sweeten securitization trusts. Trusts containing Sub-Prime Notes usually have Pool Insurance to cover Defaults and foreclosure. If enough Notes go into Default and Foreclosure, the Insurance pays off the Investors. The Servicer usually continues to foreclose, even though the investors were paid poff.
Other insurance is often procured for fraud arising in the origination process - if you win for fraud, they can collect that insurance, as well.
Indymac was foreclosing itself, but now it often forecloses through either OneWest Bank, its new owner, or through Deutsche Bank, trustee for the Asset-Backed Security.
The Uniform Commercial Code (UCC) separates the different transactions into different divisions:Division 3 is for Negotiable Instruments.
Division 9 is for Secured Transactions (Negotiable Instruments that are Secured fall exclusively within this Division, if not an Investment Security)
Division 8 is for an Investment Security (a transaction that is part of an asset-backed Investment Security can't also be a Secured Transaction covered under Division 9.)
How do some lawyers fight this Fraud?1) the "nominal Lender", who didn't fund the transaction and was paid in full plus a commission, has nothing to Assign, but rather it can be alleged in court that the Homeowner was tricked into signing a Deed of Trust or Mortgage to secure an Investment Security, which it could not be legally used to secure, under the fraudulent misrepresentation that it was a Loan.
2) when the "nominal Lender" loses its Beneficiary status (see above #1), the Trustee for the asset-backed security usually takes up the fight, alleging that the asset-backed security is the owner of the debt. Many lawyers are alleging that the investor is the Beneficiary, as Certificate Holder, and that the trust was just a vehicle. Essentially, the "nominal Lender" and the Trustee are not the proper party to sue or foreclose.
Is this Legitimate or Contrived? - Are Lawyers actually alleging this?Neil Garfield is one of the foremost lawyers teaching other lawyers about the process. Some of his links are;
Asset Securitization Comptrollerís Handbook ,
Another Resource Corroborating Our Securitization Model ,
Trustee for Investors: Powers and Limitations (with livinglies annotations)ó Critical in Your Presentation in Court
Another prominent lawyer working in this process is Michael T. Pines in Encinitas, CA:
Pines and Associates.com
The Comptroller of the Currency issued a Handbook for Asset Securitization:
You can download the Cover Letter at Cover Letter
The Comptroller's Website shows the Handbook as "Out of Print".
Attorney Neil Garfield provides a PDF of the Handbook at Handbook
Quote p. 11: "Third-party credit support is often provided through a letter of credit or surety bond from a highly rated bank or insurance company."
Quote p. 21: "Surety bonds. Guarantees issued by third parties, usually AAA-rated mono-line insurance companies. Surety bond providers generally guarantee (or wrap) the principal and interest payments of 100 percent of a transaction."
Quote p. 39: "Most prospectuses on asset-backed securities issued by banks clearly state that the offering is not an obligation of the originating bank."
Quote p. 41: "In addition to loan quality problems, poorly designed automated underwriting and scoring systems can adversely affect some borrowers or groups of borrowers."
Reference p. 89, et al. : 12 CFR 3, Minimum Capital Ratios; Issuance of Directives (including Appendix A)
Specifically, what can be done?:1) Get a Loan Audit from a company that also looks at improper document signing and recordings, and will investigate the securitization process to find the problems that you can then have a lawyer use a the basis for letter writing and/or incorporate into a complaint. We are American Loan Audits.com
2) Get the Loan Auditor to write Qualified Written Requests (QWRs under RESPA) early to get more ammo from the Lender/Servicer and other parties. It can take 60days. Here at American Loan Audits.com, we prepare great QWR's.
3) Find out if Pooling Insurance was already collected on for the Pool, and how much.
4) Hire a Lawyer to pursue the results from the Loan Audit (#1) and QWR (#2) to stop the foreclosure with Letters and a Complaint with request for Injunction. In non-judicial foreclosure states, if you stop the Foreclosure, you won't have to fight eviction. In judicial foreclosure states, the lawyer can help you fight their judicial foreclosure.
Structured Finance and Collateralized Debt Obligations: New Developments in Cash and Synthetic Securitization (Wiley Finance)
The 2 Best Books:
Structured Finance and Collateralized Debt Obligations:
New Developments in Cash and Synthetic Securitization
Just Published late 2008