It isn’t clear why the American Securitization Forum decided to walk into a buzzsaw, but the carnage is proving to be an amusing spectacle.
For readers who have not followed this wee saga, mortgage securitization abuses are increasingly looking to be a mess of Titanic proportions. The securitization industry created complex and specific procedures for getting the loans into the securitization legal vehicle, a trust. (The loan, meaning the borrower IOU, is called the note; confusingly, the lien is separate and called a mortgage or in some states, a deed of trust).
These procedures were complex for very good legal reasons. These securitizations had to pick their way very carefully through a thicket of issues: state-based real estate law; the Uniform Commercial Code; the desire to create bankruptcy remoteness (so if the originator went bust, the investors would not be exposed to the risk of lenders to the originator trying to get the notes back out of the trust); securities regulations; tax law; trust law.
These provisions were adhered to for nearly two decades. But sometime in the early 2000s, it appears that the industry simply quit observing the requirements of its own contracts, called pooling and servicing agreements. And the worst is that there are no simple fixes for the resulting mess.
If the breakdown was as widespread as it appears to be, at a minimum, in the overwhelming majority of states, it will become more and more difficult to foreclose as consumer lawyers and judges wise up to these issues. And in a worst case scenario, it is entirely possible in some, perhaps many cases, no assets got the the trusts by closing, which would make them void under New York law, which governs virtually all mortgage securitization trusts (even if true, investors may choose not to pursue that theory in a lawsuit, but more evidence of pervasive problems may lead investors use related theories to press to have the deal unwound, which is still a pretty dire outcome).
The American Securitization Forum which represents originators (it also has investors as members, but investors and independent observers see the ASF as very much originator-oriented) has decided to come out guns-a-blazing against critics. The problem is, however, that it has neither the law or facts on its side. Its strident attacks are looking a wee bit desperate.
In recent Congressional hearings, the ASF executive director Tom Deutsch provided testimony that was truly astonishing (see here and here). It asserted, in effect, that extremely clear and easy to interpret language in the PSA about how the notes were to be conveyed to the securitization meant the opposite of what they said. The contracts call for a “complete” or “unbroken” chain of endorsements. The ASF testimony argued that that very same language meant the very opposite, that no such thing needed to happen. And the testimony peculiarly personalized the attack, fixating on Georgetown law professor Adam Levitin. Even though he has almost become a fixture on Congressional panels on this topic, he is far from the only expert to have argued for this interpretation.
Levitin deigned to address the ASF argument, and his post, “Fisking the American Securitization Forum’s Congressional Testimony,” is engaging. I suggest you read it in its entirely. Here are some of the key bits:
My first thought was “gosh, ASF’s awfully defensive. They sure seem spooked.” And on looking at the details of the ASF’s rebuttal, my sense is they’re on very shaky ground if these are the best arguments they have….
ASF takes me to task because the argument I make about PSAs is not supported by caselaw. Duh. Of course it isn’t. These issues have never been litigated. The whole point I’ve been making is that there are a bunch of unresolved legal issues. I’m not the one who decides what the outcome is. I can only offer my semi-learned opinion. But just as my argument lacks caselaw support, so too does that of the ASF. At least I’m not the one who built a $1.2 trillion dollar private label residential mortgage securitization industry hinging on uncertain law…..
ASF argues that the language in many PSAs requiring a “complete” or “unbroken” chain of endorsements only means that there must be a chain of endorsements legally sufficient to effectuate the transfer of the note to the trust…
There are a few problems with this argument. First, if the ASF is correct in its claim that the loans are transferred by sale under Article 9 of the UCC, the legal sufficiency of the endorsements should simply be irrelevant. In making this claim, ASF seems to be conceding that PSAs are the governing law for RMBS transactions.
Second, it’s worth looking at the entire language used in PSAs, not the selectively quoted language referred to by the ASF. For example, consider the PSA for Securities Asset Backed Receivables LLC Trust 2005-FR3, dated July 1, 2005, § 2.01(b), July 1, 2005. It provides that the depositor will deliver to the trust:
“the original Mortgage Note bearing all intervening endorsements showing a complete chain of endorsement from the originator to the last endorsee, endorsed ‘Pay to the order of _____________, without recourse’ and signed (which may be by facsimile signature) in the name of the last endorsee by an authorized officer.”
Note the bold language (my emphasis; the italics are original). There can be no question that this language is calling for every endorsement from the originator to the trust, and cannot be satisfied with a single endorsement in blank. For deals with this language, at least, ASF’s testimony is demonstrably wrong.
Now, it is important to note that not every PSA has such language…The incidence of various PSA language is unknown, but certainly there are a good number of PSAs where there has to be a complete chain of endorsements.
Another inconvenient fact is, contrary to the ASF assertions, that judges are also looking for the chain of endorsements to make sense, without reference to the PSA. By happenstance, April Charney sent a Florida decision today which illustrates how the lack of proper endorsements derailed a foreclosure (April has graciously included me in her frequent updates to various groups of lawyers involved in foreclosure defense).
Order for BAC Home Loans Servicing v. Stentz
This order is short and make for instructive reading. The note in question was indorsed (bankruptcy courts use “indorse” for “endorse”) in blank, something the ASF says is perfectly kosher. The Florida judge is not entirely comfortable with that, noting that Florida law requires that the party prosecuting a foreclosure both own and be the holder of the note. He dismissed the case without prejudice, but notice the requirements he stipulates for any amended complaint (boldface mine):
1. Allege additional facts, not conclusions of law, that specifically set forth the and identify the present owner of the note and mortgage and the present holder of the note and mortgage and in so doing deraign the chain of ownership/holdership since the loan’s inception.
2. Allege additional facts why the note is indorsed in blank and specifically deny, if that be the case, that it or an interest has been pledged to another….
5. Allege and identify all documents, by attachment, upon which Plaintiff relies to establish ownership of the note and mortgage.
Now look at the mess we have here. How, pray tell, are the plaintiffs going to prove how the note traveled from originator to its purported current owner in the absence of having the note endorsed with a full and unbroken chain of assignments? How are they going to prove a negative (as in 2, that it wasn’t pledged to another party? How will the plaintiffs prove the transfers? A basic feature of negotiable instruments like mortgage notes is that they are transferred by delivery, not by contract or assignment, AND that the party making the transfer must endorse the instrument so that it is payable to the recipient (or it can be endorsed in blank).
Oh, and if the borrower’s attorney is at all savvy, he will find the PSA for this loan. If the plaintiffs try to claim the conveyance chain was different than that stipulated in the PSA (something the ASF also tried to argue was fine), and the borrower’s counsel points out the discrepancy. This judge looks to be the sort that would find it troubling.
Here, again by virtue of synchronicity via April Charney yesterday, is another example of a judge, this time in Ohio, refusing to foreclose. One of the reasons is the chain of assignments is broken (see the part I boldfaced):
Case: CV-09-706959
Case Caption: PROVIDENT FUNDING ASSOCIATES, L.P. vs. TAMARA TURNER, ET AL
Judge: TIMOTHY MCCORMICK
Room: 20C JUSTICE CENTER
Docket Date: 11/09/2010
Notice Type: (JEPC) JOURNAL ENTRY NOTICE
Notice ID/Batch: 16552802 – 875214To: JAMES R DOUGLASS
MOTION OF THE DEFENDANTS PHILLIP TURNER AND TAMARA TURNER TO DISMISS FOR PLAINTIFF’S LACK OF STANDING TO FILE THE FORECLOSURE IS GRANTED. PLAINTIFF DID NOT PRESENT EVIDENCE TO THE COURT THAT IT OWNED THE SUBJECT PROMISSORY NOTE AS OF THE DATE OF THE FILING OF ITS COMPLAINT IN THIS CASE AND COULD NOT, THEREFORE, PROVE THAT IT HAD STANDING TO FILE THIS CASE. SEE WELLS FARGO BANK V. JORDAN, 2009 OHIO 1092 (8TH DIST. CT. APP., MAR. 12, 2009). MERS COULD NOT ASSIGN THE NOTE AS IT NEVER HELD THE PROMISSORY NOTE. THERE IS NO EVIDENCE THAT THE ALLONGE WAS EVER AFFIXED TO THE NOTE. VIRTUAL BANK PURPORTS TO INDORSE THE NOTE TO THE PLAINTIFF, BUT THERE IS NO EVIDENCE THAT VIRTUAL BANK HELD THE NOTE AT THE TIME OF THE INDORSEMENT. VIRTUAL BANK IS ALSO NOT THE PAYEE ON THE NOTE. COMPLAINT DISMISSED WITHOUT PREJUDICE. AS PLAINTIFF DID NOT HAVE STANDING TO FILE THIS CASE, THE COUNTERCLAIM IS ALSO DISMISSED WITHOUT PREJUDICE. (FINAL)
COURT COST ASSESSED TO THE PLAINTIFF(S).CLDLJ 11/09/2010
NOTICE ISSUED
Ohio and Florida require that the party foreclosing be the owner of the note. But even in states like California, which appear merely to require that the foreclosing party be a holder, “holder” signifies more than mere possession. In IndyMac Federal v. Hwang, the judge cites the California Commercial Code (3301 (a) and 1201 (20)) and UCC (3-301 (a) and 1-201 (20)):
For an instrument payable to an identified person (such as a note in this case), there are two requirements for a person to qualify as a holder: (a), the person must be in possession of the instrument and (b) the instrument must be payable to that person.
These examples prove a basic point. There is good reason why the PSAs stipulated a complete, unbroken chain of endorsements. The absence of them creates huge problems, independent of the requirements of the PSA, in enforcing the note.
As we said in our New York Times op-ed,
The people who so carefully designed the mortgage securitization process unwittingly devised a costly trap for people who ran roughshod over their handiwork. The trap has closed — and unless the mortgage finance industry agrees to a sensible way out of it, the entire economy will be the victim.
The ASF, perversely or perhaps predictably, is persisting in being part of the problem rather than part of the solution.
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I don’t like to see reporting like this that does not at the same time advocate possible solutions, remedies in the largest sense of the term, for our social fabric is at risk of permanent damage.
For me, that the lender or holder in due course doesn’t have its documents in order does should not also mean that the borrower gets to repudiate the obligation. Underscore not. And the time it takes for the creditor side to figure out how to get its documents in order or whatever should not also mean that the debtor gets a payment holiday. This is true for holders of sovereign debt and bank bonds as well.
The basic relationship between lender and borrower, and by implication landlord and tenant, seller and buyer, etc. is at risk. It’s a two way street. The lender has an obligation to behave impeccably, even as the borrower must perform or face the consequences–loss of property, euthanasia.
It’s not that I’m a fan of the banks and the securitization industry. On the contrary. (And I’m deeply unhappy that abundant credit has promoted mere speculation and an explosion of instruments that abet speculation. Phooey. Capital is a scarce resource, or ought to be, hard to come by, worthy of preservation and care.
Let me put it this way. In some parts of the world, many in fact, if you buy something you are stuck with it. It can’t be returned. Chances are high that the goods will be defective and that you will have to spend something for repairs. You may or may not be lucky, perhaps the repair will be cheap, but there will have to be a repair for sure. All across the supply chain, this is true. Where this is the case, there are other observable conditions: the politicians are admittedly corrupt, transactions are payable solely in cash, the majority of the populace is impoverished.
If the law nullifies an asset (the note receivable) if the paperwork isn’t in order, then so be it: business relationships are structured by and in reliance on the law, so rule of law here is paramount. And if banks lose out as a result, so be it; it’ll be a good lesson for future transactions.
The real risk here is that rule of law is bent in order to accommodate parties that didn’t give it due respect. If future contracting parties can’t rely on the law being the same tomorrow as it is today, it would be disastrous.
Disasterous is overstated – we’d have commerce by relationship, ultimately by relationship to the Leader, which may be the most common form of commerce on Earth. For a long time commerce in the US was sufficiently codified so that the economy as a whole could arguably pose as an exception to this rule. A danger is that the Banksters have destroyed the sufficiency of the codification and that American commerce will devolve to the level of, say, Liberia.
By the way, “Pay your mortgages” sentiment deserves to be roundly condemned. Those who may ultimately end up with a roof for free can have it. Sure there were some speculators who deserve debtors’ prison but they are definitely small change in comparison to the capital crimes committed by the banksters.
Here’s the solution — you’re wrong. The major banks are bankrupt, and the bondholders need to lose. Forced haircuts are in order, and all we need are some dismissals with prejudice. If you could declare bankruptcy and get your house free and clear because of bad securitizations, who needs credit for 7 years? This is what keeps banksters up at night — mass rejections of their bogus contract terms.
Who cares about the owners of these mortgage securities. Suckers who bought into the greatest fraud ever. The failed banks still own a large percentage, nobody would buy them. Bernanke eventually will, that’s why he’s there. Pension funds have demonstrated themselves to be the worst investors ever. From Quadrangle to CALPERS, it was (is?) total corruption. Blow them all to hell. They weren’t funded in the boom times, what makes anyone think they’ll be funded in crash times? That money is gone.
No pensions, no jobs, and the failed banks end up owning all the homes. Wrong. Start turning homes over to Americans free and clear of the bank, and you’ve unleashed the greatest stimulus program ever. All we need is a few prejudiced dismissals, and let the Great American Jubilee begin.
“I don’t like to see reporting like this that does not at the same time advocate possible solutions, remedies in the largest sense of the term, for our social fabric is at risk of permanent damage.”
Your argument is well articulated. However, if you’ve been following this blog for any period of time you would already understand that granting significant loan modifications on a grand scale has been the solution advocated by this site for a number of years. Prior to the recent turmoil created by public disclosure of the failed conveyance process of legal docs pertaining to a good many of the mortgage pools created during the middle part of this decade, it was asserted here that this solution was the only sane response to resolve the problem, stabilize the real estate market and get the economy going again. Of course that meant that the banks would have to recognize large losses immediately. It’s now becoming obvious to everyone that significant loan mods are the only sane response left.
The problem has been that the dynamics between originators/lenders /servicers/investors have been such that there has been no incentive for them as a group pursue significant mods on a large scale. What’s worse is that, as things have turned out, rather than loan mods, servicers have pursued foreclosure on a grand scale. This without even having legal standing to do so. So you can think of the reporting being done at this site as having been the only way to establish leverage with those who otherwise essentially control government and regulators.
An attorney I work with formerly was helping homeowners with loan mods BEFORE he really started looking at the massive frauds that were occuring. A year and a half ago, he helped a couple receive a “permanent mod.” No late payments. For a YEAR AND A HALF they were making their payment. This couple just received a letter from the bank telling them the bank has rescinded the mod and are foreclosing.
So much for “permanent mods.” The banks are running roughshod, it is up to the homeowners to stand up and tell them to F*** OFF. We won’t take your mods. We will fight you until you cry “UNCLE.”
“We will fight you until you cry “UNCLE.”
Oh how brilliant. Why hasn’t anyone else considered that alternative? Thanks so much for your eloquent contributions both above and further below.
Perhaps these foreclosure proceedings should be done in criminal court instead of foreclosure courts. That way not only would the borrower be foreclosed upon, but all parties involved in the mortgage fraud would also be sentenced to serve time in prison for that fraud.
Would that outcome relieve your concern for maintaining the “social fabric”? I’ll bet that the number of foreclosures goes down very quickly after the first couple of cases.
This is beyond naive. Any homeowner who can’t afford to pay is doing their community a great fabor by remaining in their homes, and by no means is this “free”. Ignorance, propaganda creates a tapestry of moral failing on behalf of the sinner, the technique is ancient.
Many borrowers continued to pay until they simply could no longer do so, seeing their housing values plummet sometimes more then 40%, and coming to the realization that their purchases were mistakes, understanding that housing prices were manipulated unlike at any other time in history. These folks are sometimes “already in” for 100Ks.
Once the initial indoctrinated guilt is dispensed with, the borrower should feel a sense of pride, and fight the thieves who have destroyed lives, communities and futures. Like marketing arms for pathetic loansharkers, we hear a sermon that reads like ‘Little Bo Peep’ during Apocalypse Now.
I advocate a possible solution.
http://attempter.wordpress.com/2010/10/22/jubilate-mortgages-and-property/
http://www.nakedcapitalism.com/2010/12/will-thousands-of-foreclosures-be-voided-because-non-lawyers-prosecuted-them.html#comment-247132
So far nobody seems to like it, though. But then, it was just a year ago that so-called “strategic defaults” seemed outrageous to most people.
Your argument suggests that you feel the land records fraud is okay by you? Really?
It is my feeling that the banks ran roughshod over the origination of these loans, over the securitization of these loans and over the foreclosure of these loans…..and your argument says, “NO PROBLEM, I’m okay with forged documents, I’m okay with no clear chain of endorsements, and furthermore, the banks should be paid for these frauds.” F*** THAT!
This was a ponzi scheme. Devised by the banks, for the banks to defraud people of their money, their livlihood and leave them homeless with no means to feed, clothe and house themselves. And the banksters making money hand-over-fist with this fraud. And seems to be all okay by you.
You are an !d!ot!
Sorry, but what you’re proposing is exactly what you say we should avoid. That is, changing the inconvenient property laws.
PSAs and securitization contracts were written as they were written – and by parties who could freely chose how to word them. They wrote it that way because it conveyed certain advantages to them (such as beneficial tax treatment, bankruptcy remoteness etc.). Then they choose to act ignoring all of the above.
The law is there ultimately as much as to provide clear framework to avoid uncertainty as anything else – what you advocate would mean that any and all contracts can be re-written in future, introducing untold uncertainty.
hey, way to rationalize and minimize the massive, systemic, pernicious financial fraud perpetrated by banks and our politicians, frank!
I have the original NOTE endorsed in Blank,” Pay To The Order of __________.”with out recourse, signed by the Senior VP of RBMG. I have a sworn affidavit that states a written assignment of the note was never prepared and the SELLER into the securities stated that they WARRANT AND REPRESENT IT HAS NEVER BEEN SOLD TO ANY OTHER ENTITY.EMC(seller) was to sell the note to Bear Stearns which was the depositor into the Bear Stearns Asset Backed Securities,inc. Asset Backed certificate series 2003-2. Bear Stearns was to sell/ assign the Note to JP MORGAN CHASE as trustee of the Trust. There has been a foreclosure started on the mortgage on March, 3 2009 by The Bank OF New York Mellon as successor trustee for JP MORGAN CHASE who claims to be the owner and holder of the note. By way Of an assignment which was recorded at the ROD on March 19, 2009, 16 days after the LIS-PENDENS , and the summons and complaint . I have a letter dated July 13 2002 from Mers that states the loan has been removed from the MERS system and the MIN# deactivated. Mers had no authority to do an assignment and the assignment was done by a known “robo-signor” and in the Corporate name of RBMG that not only deactivated the MIN # but also removed the loan from MERS. RBMG was also defunct and has been since 2005 when it was aquired by NETBANK and subsequently shut down by the FDIC in 2007. The BANK OF NEW YORK MELLON produced in discovery two allonges the first was from RBMG to EMC and the second was an allonge directly to JP MORGAN CHASE from EMC. First thing is the PSA ( pooling and service agreement) the governing document of the securities describes in detail the percise chain of title it also describes who is the seller ,the depositor ,the master servicer and the trust. Even though the sworn affidavit produced by the successor trustee stated no written assignment was ever prepared, so the allonges was a direct attempt to decieve the investors and knowingly a misrepresentation which is fraud. BEAR STEARNS was the depositor into the securities. First let start with the allonges both are undated and one is not even signed: according to the UCC an allonge is only used when there is NO ROOM ON THE ORIGINAL NOTE FOR ENDORSEMENT and must be firmly attached as to become a part of the note. AN ALLONGE cannot be used to transfer interest and is invalid if there is room on the note for endorsements and is invalid it not attached. A lost note was produced from EMC but not anywhere in the document is there a conveyance, it is not a valid assignment. Here is an excerpt from the PSA;BEAR STEARNS ASSET BACKED SECURITIES, INC., Depositor EMC MORTGAGE CORPORATION, Seller and Servicer WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION, Master Servicer and Securities Administrator and JPMORGAN CHASE BANK Trustee
POOLING AND SERVICING AGREEMENT Dated as of June 1, 2003
BEAR STEARNS ASSET BACKED SECURITIES TRUST 2003-2 ASSET-BACKED CERTIFICATES, SERIES 2003-2
(DD) The assignment of Mortgage with respect to a Mortgage Loan is in recordable form and is acceptable for recording under the laws of the jurisdiction in which the Mortgaged Property is located.
Proper perfected chain of title:
Originator to seller:RBMG to EMC
seller to depositor: EMC to Bear STEARNS
depositor to the trust:Bear Stearns to JP Morgan
I have smiliar wording in the PSA ““the original Mortgage Note bearing all intervening endorsements showing a complete chain of endorsement from the originator to the last endorsee, endorsed ‘Pay to the order of _____________, without recourse”
I also have PROPER transfer of the NOTE to me as it was sent by US MAIL .
A similar fact pattern arose in New Haven Savings v Follins. The bank was unable to provide it was a holder of the negotiable instrument: “Here, Pacific has failed to produce documentary evidence of the required chain of endorsements. While a copy of the original Note has been provided, no copy of an endorsement of either Aetna/ITT or TFS has been offered by Pacific. As such, Pacific cannot establish status as holder of the Follinses’ Note.”
New Haven argued in the alternative that it had purchased the note. The court noted that UCC 3 transfers via negotiation require a higher standard of proof, and that New Haven was able to prove it was the owner via sale. The court:
“It follows then, as the cases demonstrate, that the favored position of holder in due course mandates a higher threshold of evidence for establishing holder status, whereas, a claimant asserting “owner” status does not have to satisfy as high a burden of production. Therefore, the Follinses’ interchangeable use of the terms “holder” and “owner” incorrectly gives the impression that evidence of all purchase documentation must be presented to prove either owner or holder status. (# 57, ¶ 5) That simply is not the case.”
Based on the holding of this decision, Levitin has the better of the argument re: endorsement, the ASF has the better of the argument re: sale of notes.
The case jse cites is:
New Haven Savings Bank v. Follins, No. 1:03-cv-12634-RBC, 431 F. Supp. 2d 183 (D. Mass. 2006).
http://scholar.google.com/scholar_case?case=15565963325878860507.
The other defendants were Aetna Finance Company d/b/a ITT Financial Services, Second Federal Funding, United States of America, Bay State Gas and involved property in Massachusetts and concerned the claim of a junior lien holder to the excess from a foreclosure that had already taken place. The foreclosure of the first lien was not in dispute.
The case was decided by a U.S. Magistrate Judge, and involved, a dispute as to a surplus resulting from the foreclosure of a first mortgage, after the Follins’ twice filed for bankruptcy.
Although the Magistrate was supposed to be relying upon Massachusetts law, the case relied mostly on a Texas case, NCNB Texas Nat. Bank v. Johnson, 11 F. 3d 1260 -(5th Cir. 1994) for the holding cited by JPE. That case involved an action upon a guaranty of a note, and not in a mortgage foreclosure case.m
The Magistrate also relied upon a First Circuit Case interpreting Massachusetts law: In re Gavin, 319 BR 27 ( Bankr. Appellate Panel, 1st Cir. 2004.) But, that case directly contradicts the assertion of jpe. Here, Premier was claiming to be a secured creditor in bankruptcy. The decision states this at page 32:
“Here, Premier has produced the original Note as executed with Fleet, and the assignment of the Note by Sovereign to Premier, but failed to produce any evidence of an assignment of the Note by Fleet to Sovereign. Moreover, Premier failed to produce either evidence of the endorsements required to establish its ownership of the Note or substitute evidence permitted under applicable state law. To the contrary, Premier admitted at trial and at oral argument that it had no direct evidence of an assignment of the Note from Fleet to Sovereign. Absent such evidence, Premier has failed to establish title to the Note, and thus has no enforceable obligation against the Debtor. Without an enforceable obligation Premier has no claim, and therefore is not a creditor for purposes of Bankruptcy Rule 4007(a). Accordingly, it has no standing to bring a § 523(a)(2)(A) action against the Debtor.”
http://scholar.google.com/scholar_case?case=848893905865215486
The issue remains as to what is “substitute evidence.”
jpe: watch what you cite, and not not build an empire on the decision of a US Magistrate interpreting state law.
Also, be sure to read a case for its findings, not holdings, and read the cases upon which the decision is based, particularly as to unappealed cases by US Magistrate judges. It would be nice to know what actually happened in the case after the decision. The docket shows that the Follins’ filed notices of appeal, but, then they were withdrawn. Perhaps there was a settlement. After all, the banks got a good decision, and it was worth $100,000 for the case not to be appealed to the District Court Judge of to the First Circuit.
ps – The case is ry cited rarely.
What New Haven tells us that is that breaks in the endorsement chain aren’t fatal to a claim against the debtor. In re Gavin doesn’t contradict that; it just tells us that where evidence of sale isn’t introduced a court won’t find that the asset wasn’t transferred. The New Haven court:
jpe:
Sure, in re Gavin did statement there falls into a category of dicta – it held out the possibility that one could prove something, but, it is not a case that one should properly cite as to when and how and what extraneous proof might work – and indeed did not find that any specific proof would work. Read this again: “he Court did not need to consider whether to adopt the reasoning in NCNB Texas.”. So the court DID NOT CONSIDER what you want to cite it for and what New Haven cited it for.
New Haven is weak authority for building a house of cards.
Hope you have something better from the Commonwealth of Mass. higher courts.
Whoever copied the requirements for an amended complaint from the Florida court order made an inadvertent but substantive typo. What reads:
“1. Allege additional facts, not conclusions of law, that specifically set forth the and identify the present owner of the note and mortgage and the present **owner** of the note and mortgage and in so doing deraign the chain of ownership/holdership since the loan’s inception.”
Should read:
1. Allege additional facts, not conclusions of law, that specifically set forth the and identify the present owner of the note and mortgage and the present **holder** of the note and mortgage and in so doing deraign the chain of ownership/holdership since the loan’s inception.
I enjoy this blog immensely, but to those families headed to the homeless shelter, counsel cannot be had. Housing, like counsel requires cash. The “put option” is to ignore the loser, and quickly help them to obscurity, financial ruin. It’s too grim to consider, let’s pontificate about the mechanisms of securitization while the damned sleep under the bridges.
Nice to see the judge bring this up. As these security positions unwind and we start to see notes pledged more than once to different CDOs the fraud becomes extremely visible.
“”2. Allege additional facts why the note is indorsed in blank and specifically deny, if that be the case, that it or an interest has been pledged to another….””
The notes won’t be directly assigned to other securitization vehicles; rather, the trust securities will. ie, it’s the trust securities, not the underlying notes, that are sliced and diced.
jpe:
I agree with there is some confusion as to the notes being “sliced and diced”, and so absent fraud or gross error, you are probably correct.
But, the related problem is that the payment stream from the notes in a single MBS is frequently sliced and diced into tranches – so in an under-water situation there are conflicts-of-interest between the junior and senior tranches. This is why this result of financial engineering is anti-social – for any loan modification is at the expense of one tranche over another, so loan modifications cannot be done since it is not in the interest of junior tranche holders to concur. This is the same conflict that exists where the servicer is owned by a junior lien holder.
Face it, jpe, these structured investments only work well in a rising real estate market and also where the loan was properly originated – so, take that away and prime and sub-prime mortgages show all of the ill conceived assumptions inherent in these structures. We are better off to force these sociopathic structures to be reformed, rather than stretching the law to sanction the continuation of these structures.
Isn’t it possible that if the notes weren’t being physically transferred and the ‘electronic intent to transfer’ circumventing rigid county processes of following the note left the door open for these notes to be assigned more than once before the slicing and dicing process…?
Who has any faith at all in political leadership? It has been years and years of this crisis, huge unemployment numbers and the dumbshits on the Hill continue to say that “those who are in trouble through no fault of their own” are the ones “worthy” of saving. I suspect this is how wars, with real violence, begin. First off, there is a signifigant number of US pigs who aren’t paying their taxes and never will, rarely is spending on armaments ever relayed into signifigant social violence (which is what these foreclosures are), these staged hearings have only come about because others within the moneyed class have decided to send up some of the lenders and their cohorts. Where’s Tom Dillion? Long gone like John Yoo?
‘The trap has closed — and unless the mortgage finance industry agrees to a sensible way out of it, the entire economy will be the victim.’
Based on the TARP travesties, it’s a good bet that Congress, spurred on by a scrum of lobbyists as well as Goldman Sachs moles in the administration, will ride to the rescue.
That’s the beauty (from their perspective) of federal supremacy — just another mundane override of state sovereignty. All in a day’s work!
As Jim Rogers used to say when stymied by corrupt bureaucrats on his round-the-world jaunt, ‘Isn’t there some fee we could pay to resolve this matter?’ ;-)
Can we surmise that the current rush to foreclosure is a desperate attempt to reap as much ill-gotten gain as possible before the barn door is slammed shut on this issue?
The M.O. all along has seemed indicative of the banks’ intention to pretend to own the notes whenever they wished to foreclose, using fabricated documents, and relying on their presumed propriety to fool the courts.
What still amazes me, though it shouldn’t, is the banks and their foreclosure mills being too cheap and careless to pay competent people to match up dates and notary stamps, and that this simple ‘technicality’ is what gave the scam away.
Now the question is: How co-opted are the courts and the regulators?
From the Sarasota Herald-Tribune:
Twelfth Circuit Chief Judge Lee Haworth said judges must remain neutral in court, and cannot raise possible defenses — such as bad paperwork — on behalf of homeowners who choose not to fight, or don’t know how to fight, their foreclosure.
“The judges will accept, as they do in every case, pleadings that are represented by counsel as legitimate,” said Haworth. “It’s the defendant’s case. … If they don’t want to hire an attorney, that’s their business.”
State regulators, who were given evidence that Stern-generated documents contained legal errors, dismissed them as isolated incidents, gave the notaries involved written reprimands and allowed all but one to continue processing documents.
http://www.heraldtribune.com/article/20101128/ARTICLE/11281042/2055/NEWS?Title=Shortcuts-on-the-foreclosure-paper-trail
I don’t know how Florida law works, but I know that in many states, a judge may intervene sua sponte in a court proceeding against a defendant who does not know his rights.
Actually, ASF’s Deutsch filed testimony for the Judiciary Committee hearing on December 2, 2010 and was scheduled to speak in Panel II, but time ran out.
There is another hearing for Wednesday Dec. 8th at which the second panel will be heard:
http://judiciary.house.gov/hearings/hear_101208.html
This should be interesting since Professor Peterson, James Kowalski, Thomas Cox, and Vanessa Fluker are on the panel with Deutsch.
http://judiciary.house.gov/hearings/hear_101202.html.
Dr. Frank,
My mortgage (not in arrears) was securitized improperly (no assignments). Wells Fargo, my lender, was PAID back for the note when it was securitized (improperly).
Nobody holds a legal interest in my note. That’s not my problem. That’s Wells problem. There’s no fixing this either.
It baffles me when people are ok with TRILLIONS in giveaways to banks, that don’t actually help the real economy, but balk when a family with young kids might get a windfall.
Banks fucked up. Sorry. After what MBS securitization and the derivatives Ponzi has done to effectively transfer middle class wealth to the top 1%, I’m going after them with both barrels.
Resolution of this matter involves jail and haircuts. Few voluntarily submit to that…
As you note, it’s pretty hard to prove that a note wasn’t previously sold to someone else–that requires affidavits from everyone upstream in the chain of title. Good luck if any of them are bankrupt or out of business.
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