You Know You Are Going To Lose When …

You Know You Are Going To Lose When …

By Daniel Edstrom
DTC Systems, Inc.

Posted by Neil F. Garfield on livinglies.wordpress.com on 3/31/2012 (http://livinglies.wordpress.com/2012/03/31/you-know-you-are-losing-when/).  Study this until you have it committed items 1 through 10 to memory.

Taking a line from Jeff Foxworthy, I have compiled the following guidelines of how to know when you are going to lose against the thieving bank seeking to steal your property. You might call it, “You know your screwed when…”

Note: The premise of this article is taken from various points made on this blog and others. The main point is that the obligation to repay the loan arose when the money transaction took place. When money exchanged hands it is presumed that the expectation was that it would be repaid. So the only defenses that exist and the only two defenses that will get the judge’s attention are PAYMENT and WAIVER. Failing to address these issues head on right at the beginning of the first pleading and the first hearing, will most likely lead to failure in the case. Read the appellate decisions that are in favor of the banks and servicers; they all start with a recitation of “facts” that are not true but which nonetheless are taken as true because the borrower failed to put them in issue as contested facts.

Start with the origination documents. If you don’t know whether they have merely reproduced the note and mortgage, then deny it and make them prove it. They could be fabricated from whole cloth. Continue reading “You Know You Are Going To Lose When …”

L. Randall Wray does it again – Requiem For MERS

L. Randall Wray does it again – Requiem For MERS

By Daniel Edstrom
DTC Systems, Inc.

L. Randall Wray, Professor of Economics and Research Director for the Center for Full Employment and Price Stability, University of Missouri-Kansas City posted an article on the Huffington Post (http://www.huffingtonpost.com) that I somehow missed.  The MERS design was woven in fraud.  Professor Wray points out the two main issues with MERS.  The first is that most foreclosures are illegal because those doing the foreclosing do not have legal standing.  Second the practices that create the foreclosure problems also mean that the mortgage backed securities are actually unsecured debt.  Professor Wray says that this means the banks must take them back, so they are toast.  He also states that it all comes back to MERS business model: it destroyed the chain of title.

Continue reading “L. Randall Wray does it again – Requiem For MERS”

Oregon Does it to MERS Again

Oregon Does it to MERS Again

By Daniel Edstrom
DTC Systems, Inc.

Once again MERS is hammered, this time in Federal District Court by the Honorable Owen M. Panner.  This judge understands clearly what is going on and has some serious questions.  Read this case to understand securitization and foreclosures.  Here are some highlights (there are many others):

Should the beneficiary choose to initiate non-judicial foreclosure proceedings, the Act’s recording requirements mandate the recording of any assignments of the beneficial interest in the trust deed.

Nobody held a gun to the head of the servicers and required them to use non-judicial foreclosure.  They have the right to choose which action they wish to use – non-judicial or judicial.  The problem in this case (and almost all other cases), is that the servicers are making the wrong choices.  Why?  Money, what else?.  It is not their concern that they don’t qualify to use non-judicial foreclosures.  It is not their concern that they have to strictly comply with statutes.  In 90% or more of all cases the homeowners are walking away so nobody will know anyway right?  Oops, now the titles have to be cleaned up because of the mess left behind by the servicers, which have all but destroyed the title records for foreclosed properties.  This means that in the future, somebody else will have to file a judicial lawsuit to clean up the title for a property because the servicer made the wrong choice and failed to strictly comply with non-judicial statutes.  By the way this problem is understated and far worse than anyone actually imagines or understands at this point.

Continue reading “Oregon Does it to MERS Again”

Securitization Workshop for Attorneys March 19th 2011 in San Francisco

Securitization Workshop for Attorneys March 19th 2011 in San Francisco

By Daniel Edstrom

Join us for our 3rd Securitization Workshop for Attorneys being held in San Francisco on March 19th, 2011.  Visit the event website for more information: http://securedocumentresearch.eventbrite.com

This workshop has been approved for Minimum Continuing Legal Education (MCLE) by the State Bar of California.  Total credit hours approved are 6.75 hours.

Description of event:

SECURITIZATION WORKSHOP FOR ATTORNEYS
March 19th, 2011 – in San Francisco, CALIFORNIA

Continue reading “Securitization Workshop for Attorneys March 19th 2011 in San Francisco”

Securitization Workshop for Attorneys January 29th 2011 in Los Angeles

Securitization Workshop for Attorneys January 29th 2011 in Los Angeles

By Daniel Edstrom

Join us for our 2nd Securitization Workshop for Attorneys being held in Los Angeles on January 29th, 2011.  Visit the event webiste for more information: http://securedocumentresearch.eventbrite.com and visit our product page for a super early registration price if you sign up by December 31, 2010: http://dtc-systems.net/products/securitization-workshop-attorneys-los-angeles-ca-january-29th-2011/

Description of event:

SECURITIZATION WORKSHOP FOR ATTORNEYS
 January 29th, 2010 – in Los Angeles, CALIFORNIA

 [Location will be determined soon]

SECURE DOCUMENT RESEARCH

Auburn, CA 95603; ph: 530.888.9600

DTC Systems, Inc.

[email protected]://www.dtc-systems.net

 Presented by:

Secure Document Research and DTC Systems, Inc.in Association with the Garfield Continuum and Neil F. Garfield, Esq.
http://livinglies.wordpress.com
REGISTER EARLY, LIMITED SEATING IS AVAILABLE

Continue reading “Securitization Workshop for Attorneys January 29th 2011 in Los Angeles”

Understanding the Governing Documents 1

Understanding the Governing Documents 1

by Daniel Edstrom

Wall Street financial engineering is a thing to behold.  Of course most of it is in complex legal terms difficult to comprehend.  Let’s take a look at a few definitions in a Prospectus Supplement and break them down.  This is from the RASC Series 2005-EMX4 Trust put out by GMAC.

Subordination. So long as the Class M Certificates remain outstanding, losses on the mortgage loans which are not covered by amounts payable under excess cash flow or overcollateralization will be allocated to the Class M Certificates that remain outstanding with the lowest payment priority, and the other classes of certificates will not bear any portion of such losses. If none of the Class M Certificates are outstanding, all such losses will be allocated to the Class A Certificates as described in this prospectus supplement.

What this means: Numerous classes of certificates are issued.  In this trust the Class A certificates are paid in priority first while any losses first come out of the Class M certificates.  Once the Class A certificates principal is paid in full, the principal is applied to the Class M certificates.  Once the Class M certificates absorb all losses and the principal is reduced to zero, the Class A certificates will suffer losses.  The diagram to the left shows what this looks like.  Is there a loss?  Only if the loss is not covered by “amounts payable under excess cash flow” or “overcollateralization.”

DEBT SERVICE REDUCTION–Modifications of the terms of a mortgage loan resulting from a bankruptcy proceeding, including a reduction in the amount of the monthly payment on the related mortgage loan, but not any permanent forgiveness of principal.

What this means: A reduction in the monthly payment based on a bankruptcy ruling but not including any permanent principal forgiveness.  This doesn’t mean much at the moment but we will revisit this shortly.

Realized Loss–As to any defaulted mortgage loan that is finally liquidated the portion of the Stated Principal Balance plus accrued and unpaid interest remaining after application of all amounts recovered, net of amounts reimbursable to the master servicer for related Advances, Servicing Advances and other expenses, towards interest and principal owing on the mortgage loan. For a mortgage loan the principal balance of which has been reduced in connection with bankruptcy proceedings, the amount of the reduction. As to any mortgage loan that has been the subject of a Debt Service Reduction, the amount of the reduction. For a mortgage loan that has been modified, following a default or if a default was reasonably foreseeable, the amount of principal that has been forgiven, the amount by which a monthly payment has been reduced due to a reduction of the interest rate, and any Servicing Advances that are forgiven and reimbursable to the master servicer or servicer. To the extent the master servicer receives Subsequent Recoveries with respect to any mortgage loan, the amount of the Realized Loss with respect to that mortgage loan will be reduced to the extent such recoveries are received.

What this means: This is part of the Wall Street engineering genius that is difficult to understand.  Basically what it is saying is that despite what you might believe,  despite what a judge rules in bankruptcy, and despite the fact that a loan modification has been applied to a loan, the investors receive the original payment of principal and interest.  Even after a ruling by a standing bankruptcy judge the investors receive the original principal and interest based upon the original note (or at least the copy of the note allegedly pooled into the trust).  One can only imagine the book-keeping nightmares that servicers face keeping multiple sets of books and trying to keep them all straight.  This is my best guess as to why the servicers have such a hard time keeping the accounting straight for those in bankruptcy.  Just ask O. Max Gardner III how often the servicers mess up bankruptcy rulings.

Read all of the above again.  Even if the principal and interest payment are reduced in bankruptcy, the servicer is required to advance the principal and interest of the original mortgage loan as amortized.  Once the loan is liquidated (paid off), the principal loss is calculated at that time and advances which have not been paid by other forms of credit enhancements are paid back to the advancing party.   THE INVESTORS GET THEIR MONEY during the course of the loan (whether or not paid by the homeowners), then it gets ripped out of their hands all at once when the loss is calculated.  But you never know for sure whether the investors will actually suffer a loss or if the credit enhancements will pay for it.  This is one of many reasons why the homeowner is entitled to a full accounting.

Bankruptcy judges be warned: Wall Street takes your rulings with a grain of salt and applies them in their own fashion.  This can only stem from multiple sets of books that are concealed, misrepresented and not disclosed to the courts.

Disclaimer Reminder:  This is a blog for educational and informational use only and does not constitute legal advice.  Take no action without first consulting an attorney in your jurisdiction.