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Did Federal Banking Regulators Inadvertently Expose Massive Mortgage Backed Securities Fraud as Part of Fraudclosure Investigation?
Federal Banking Regulators Expose Massive Mortgage Backed Securities Fraud as Part of Fraudclosure Investigation
From the InterAgency Report:
The Federal Reserve System, the Office of the Comptrollerof the Currency (OCC), the Federal DepositInsurance Corporation (FDIC), and the Office ofThrift Supervision (OTS), referred to as the agencies,conducted on-site reviews of foreclosure processingat 14 federally regulated mortgage servicers duringthe fourth quarter of 2010.1This report provides a summary of the review findings and an overview of the potential impacts associated with instances of foreclosure-processing weaknessesthat occurred industrywide.
Promissory Notes are "negotiable instruments" and have a face value similar to cash. The mortgage trusts all have clear criteria for the storage of the notes. All of the SEC filings I have read in regards to these trusts name a document custodian, usually the trustee. I have not yet seen even one trust prospectus or pooling and servicing agreement (PAS) where the servicer is named the document custodian. Here's an example, of a trust where Bank of America is the servicer, Wells Fargo is the Trustee of Banc of America Mortgage 2006-B Trust (prospectus here). Note that instead of BoA as servicer for this trust, Wells Fargo as trustee is tasked with document custodian duties!
In addition, the Mortgage Loan Purchase Agreement will provide the Depositor with remedies against the Sponsor for the failure by the Sponsor to deliver the Mortgage Loan documentation required to be delivered to the Trustee or a custodian under the Pooling Agreement.
Wells Fargo Bank, National Association (“Wells Fargo Bank”) will act as Trustee and custodian under the Pooling Agreement.
Wells Fargo Bank will also act as custodian of the Mortgage Files pursuant to the Pooling Agreement.
In that capacity, Wells Fargo Bank is responsible to hold and safeguard the Mortgage Notes and other contents of the Mortgage Files on behalf of the Certificateholders. Wells Fargo Bank maintains each Mortgage File in a separate file folder marked with a unique bar code to assure loan-level file integrity and to assist in inventory management. Files are segregated by transaction or investor. Wells Fargo Bank has been engaged in the mortgage document custody business for more than 25 years. Wells Fargo Bank maintains document custody facilities in its Minneapolis, Minnesota headquarters and in three regional offices located in Richfield, Minnesota, Irvine, California, and Salt Lake City, Utah. As of June 30, 2006, Wells Fargo Bank maintains mortgage custody vaults in each of those locations with an aggregate capacity of over eleven million files.
Last fall, we got hints of the expected-yet-still-shocking revelation via a Countrywide/BoA employee, Linda DeMartini (testimony here), exposed the securities fraud practices in a depo taken during a NJ bankruptcy case, Kemp v Countrywide.
A direct quotation from the judge's opinion in the bankruptcy case:
"She [DeMartini] testified further that it was customary for Countrywide to maintain possession of the original note and related loan documents."
That assertion certainly seems to suggest that the failure to transfer a promissory note from Countrywide Financial to the security trust in this case was not an isolated error—but a matter of policy at Countrywide Financial.
If mortgage-backed securities aren't in fact "mortgage-backed," investors who bought these securities from Countrywide could hold Bank of America accountable.
"If Countrywide's practice was to hold onto the note, then investors in this pool and others may question whether the security was constructed properly and legally and may be able to require Bank of America to buy back their securities"
Gretchen Morgenson of the New York Times explained.
FROM PAGE 3 OF THE INTERAGENCY REPORT:
The reviews also showed that servicers possessed original notes and mortgages.
(NOTE THAT THE SERVICERS, NOT THE TRUSTEES ARE IN POSSESSION OF THE ORIGINAL NOTES & MORTGAGES)
FROM PAGE 4 (oddly it appears third party vendors where tasked with negotiable instrument document custodian duties)
Third-party vendor management. Examiners generally found adequate evidence of physical control and possession of original notes and mortgages.
FROM PAGE 6
Furthermore, concerns about the prevalence of irregularities in the documentation of ownership may cause uncertainty for investors of securitized mortgages. Servicers and their affiliates also face significant reputational risk with their borrowers, with the court system, and with regulators.
FROM PAGE 7 (Keep in mind the financial sector's propensity to fabricate evidence. Note the slippery language "may not have been sufficient" & "generally was sufficient".)
..examiners noted instances where documentation in the foreclosure file alone may not have been sufficient to prove ownership of the note at the time the foreclosure action commenced without reference to additional information. When additional information was requested and provided to examiners, it generally was sufficient to determine ownership.
Can't wait to see the backpedaling on this one. If you remember the Kemp v Countrywide case, they scrambled to unwind the testimony of the employee that claimed the notes were at the servicer.
If it's true that the notes are held by the servicers and not the trusts, and we have no reason not to believe the fed's findings, things can get real ugly real fast for the banksters...
Oh, and one more thing, where ya at IRS? You are missing out on $TRILLIONS$ in lost taxes.
Can anyone spell REMIC RULES?
www.4closureFraud.org
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Thanks Michael!
Forgive me...it's Friday...and been one hell of a week.
I'm linking Baseball Bat Man again.
Watch it and have a good laugh. That's what I'm doing followed directly by a few icy cans of beer.
Yep, now shut up and divy out record bonuses.
Soon, you fucking bankers will rot in prison (if you are lucky and not burned alive with your families in your own homes/penthouses).
No sweat, just change the rules of the game, give some nice sounding name that is sure to appeal to the sheeple - problem solved.
Something like the "Sheeple's Property Rights Protection Act' - who could ever be against protectiong the sheeples property??
If you want to steal something, and don't want to have to kill or maim somebody, and maybe get yourself hurt in the process, the best way to proceed is to first fuck with the legal title. If nobody really knows who owns the item you covet, it is much easier to steal it.
Correct me if I am wrong (not that anybody around here needs encouragement to do so) but aren't most MBS produced by taking a pool of mortgages and then assigning a teenie-weenie fraction of each one as the collateral for each issued share certificate? A prudent buyer would have to run a title check on each and every mortgage in the pool to be sure they actually possessed 100% of the collateral protection touted by the seller. I doubt anybody ever did that.
It is a classic example of first destroying or obfuscating legal title before running off with the goods.
It is karma, indeed, that the banksters are having trouble establishing ownership of the underlying mortgage in order to foreclose on the homeowner when they finally decide to kick out the squatters who haven't sent in a payment for 537 days.
What are the chance, do you think, that photocopies or digital copies of the same mortgages and notes were sent in to collateralize many different MBS?
You can have no freedom and no free enterprise without property rights. If you can't tell who owns something, you don't have property rights.
ever hear about horrors stories about clouded title of property in third world? much property go unused, or just temporarily quatted on because 20 people have a claim to the property....other countries used to admire our rock solid clear title on property, now they trashed centuries of this benefit in 10 years.
When all is said and done, we will no doubt find out that they inflated MBS by doubling ( or more) same slices mortgages in multiple securities.
"Correct me if I am wrong (not that anybody around here needs encouragement to do so) but aren't most MBS produced by taking a pool of mortgages and then assigning a teenie-weenie fraction of each one as the collateral for each issued share certificate? A prudent buyer would have to run a title check on each and every mortgage in the pool to be sure they actually possessed 100% of the collateral protection touted by the seller."
Don't think so. Unless I truly misunderstand, the trust is supposed to own the pool of mortgages for the benefit of the investors. MBS are derivatives like royalty interests. If you own mineral rights on a piece of property, you can sell royalty interests (rights to a portion of the potential revenue stream from mineral extraction) without selling your mineral rights (your property). Along the same line, the MBS trusts (are supposed to) own the notes and the deeds of trust/mortgages. The investor buys a portion of the potential revenue stream. That is why it is so important for the trusts to hold the notes and mortgage instruments.
That is why it is so important for the trusts to hold the notes and mortgage instruments.
Hence the term "trust" is used to convey the meaning of the transaction.
The two items are seperate but both needed to prevent unauthorized / premature evacuation of the resident / purchaser / promise maker. With a deeded mineral right, terms may be written to allow royalties for specific time duration to encourage activity. With these instruments however, once the controllers of the free flow of frns slowly reduced the velocity from which the promise-maker could obtain the legal tender prescribed in the note for repayment, it was only a matter of time before the deed itself became the property of the trustee.
Sick bis joke. They end up with all the excess frns AND the deeds.
"What are the chance, do you think, that photocopies or digital copies of the same mortgages and notes were sent in to collateralize many different MBS?"
Exactly why MERS was set up. The shell game holds no note, the originals were often destroyed or "lost" and rarely in the hands of a trustee. Undoubtedly those same notes were copied and resold. There is so much more to all this, but I imagine the forensic work to find proof for putbacks is many times more difficult then that required for a single homeowner. (Thinking of the Ibanez case )
"What are the chance, do you think, that photocopies or digital copies of the same mortgages and notes were sent in to collateralize many different MBS?"
Chances are pretty high...
Multiple Pledged Notes | Freddie Mac / Bank of America / Taylor Bean Whitaker – IMPORTANT INFO & STATEMENT REGARDING ASSIGNMENTS… TRANSFERS… NOTE OWNERSHIP…
4F
same thing they did/do with derivatives, complicate it, muddy it, and then cheat
Property rights......ah the good old days when we had them........
My guess is that the folks at the IRS have long since been told in no uncertain terms to look the other way as to the question of the structural integrity of the REMICs and other trust instruments used in these securities. They're simply not going to even ask. Same with Department of Justice. It's not a crime or a problem if you don't see it. End of story.
well, DOJ may not purse as criminal, IRS may not pursue as criminal or civil, but we can pursue as civil matter
...Because they helped build Pandora's box and know what sh*t it holds. But being mired in sh*t is still going to happen, just not for those who made the problem!
It was not just Countrywide. It was all of the 'servicers' that held onto the notes.
As I have recounted in other posts, I had a lengthy conversation with the now deposed head of Wells Fargo structured finance, the man who invented WF MBS business. He told me that WF simply kept the original notes in a warehouse in SLC, and never did the securitization assignments for ANY of the notes. And WF is best of breed! Imagine WaMu, Golden West, etc.
Everyone who is underwater on their mortgage should litigate first with quiet title, then by attacking the note itself.
Weenus, I am extremely interested in your proposed strategy... I am currently exploring my options for quiet title (current on my mortgage, but rightly pissed at all of this nonsense and ready to fight). Would you be willing to answer a few questions by email? If so, please drop me a quick note: crobin AT flextonerecordings.com
why did they not do it? did it save costs? did it obscure things? and why did they think they could get away with it? did they think there wouldn't be that many foreclosures?
If everyone underwater stop paying and starting litigating like jail-house lawyers, we could do what Congress refused to do, let the banks fail.
gosh darnit you banks... hell why you allways got to pull a fast one on us here US citizens you rascals, go back home to your kingdoms now
Q: How many ways and how many times can you sell and/or collateralize something that you never deliver?
A: MERS. Over 9,000.
Anyone at the Department of Justice ? Anyone? Hello.
This massive fraud will be rewarded as are all others.
Essentially none of the notes made it into the trusts within the required 6 months. 85% of all loans in the US are uncollateralized in reality....they are personal notes at best. The IRS will do nothing about it...since the guy in charge of them is a crook and tax cheat himself.
Bingo, and who the hell would enforce the law, Holder? Bagman since at least the 90s.
MERS worked...why not take the next step and simply hold onto the notes? Nothing to see here...move along...move along!
Wow.
In the meantime, the Government now admitting that they have given 1/2 billion in tax credit money to homebuyers that did not qualify. The shit never ends. http://thecivillibertarian.blogspot.com/2011/04/frankenstein-government-...
"may not have been sufficient" & "generally was sufficient"
Sounds like irs instructions regarding who may, must and/or is required to file self incriminating forms.
Fortunately only voluntary compliance with these directives occurs because if they were signed under duress they would not be allowed as evidence in a court proceeding. (Not like the 5th amendment means anything to anybody anymore anyway.)
4closure fraud is like opium addiction : sweet smell of the spider's den; hallucinated, impotent victims...
You go girl. You're my hero.
Question--Does anyone know the status of the bondholder action?