Category: Securitization

Financial Control Fraud

Financial Control Fraud

By Jim Macklin
Secure Document Research

When a person or persons who own or oversee the operations of a seemingly legitimate business or Governmental Agency uses that business or agency as a “weapon”, it is known as a control fraud. The term was coined by UMKC Professor William Black (The Best Way To Rob A Bank Is To Own One, Black, 2005). The “weapon of choice” in a financial control fraud is accounting. More losses occur in financial control frauds than any other form of property crimes …combined!

In the early stages of our most recent financial crisis, the FBI had correctly identified the presence of the type of fraud, yet, the Bush administration failed to effect any real consequences, and so the fraud was swept under the rugs of the administrations’ offices. De-regulation and the advent of hyper-bonuses helped to encourage the practices of the ratings agencies, hedge fund managers, and CEO’s of the Wall Street elite, while the AAA rated “junk bonds” went out for sale with a frenzied push for more paper. Never before, in the history of Wall Street, had a AAA rated bond gone into a default. Remember, these ratings agencies hadn’t even bothered to sample the veracity or viability of the loan files upon which these ratings were issued. This is a control fraud in its’ simplest and purest form, with all of the key players indemnified against losses through trust agreements. This is the smoking gun.

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A Shot at the Title

The Title Companies are scrambling right now to try to verify the ability to have issued title insurance. After all, they sent the Notes and Deeds (allegedly) to the “lender” with a stamp of approval and clear title…right?

A Shot at the Title

By James Macklin
Secure Document Research

The Title Companies are scrambling right now to try to verify the ability to have issued title insurance.  After all, they sent the Notes and Deeds (allegedly) to the “lender” with a stamp of approval and clear title…right?

Along with the original mortgage loan file, these critical documents may evidence the beginning of the lack of disclosure that occurred in most of the loans written between 1999 and 2009.

Borrowers may want to contact the original title Company that handled their transaction and request a copy of the wire transfer of funds as received by the Title Company. Continue reading “A Shot at the Title”

Split: The Note and the Deed of Trust (Redux)

The Note and Mortgage are split in judicial states the same as the Note and Deed of Trust in non-judicial states.

Split: The Note and the Deed of Trust (Redux)

by Daniel Edstrom

The Note and Mortgage are split in judicial states the same as the Note and Deed of Trust in non-judicial states.

The first issue is that the note was sold in 2005 but the Deed of Trust appears to have been left behind.  For the uninitiated, if the Note and Deed of Trust are split, this causes a nullity.  A nullity means the security interest is lost and the debt becomes unsecured.  In securitization this is standard operating procedure and is one of the issues that we are left to face.  Upwards of 60,000,000 homes may be unencumbered leaving those who own the notes on these houses with no power of sale.  And more considering MERS wasn’t the only party involved in splitting the note from the security instrument.

Who owns these loans if they are unsecured?  That was the whole purpose of creating the securitization diagram in the first place.

The result?  More questions, few answers. Continue reading “Split: The Note and the Deed of Trust (Redux)”

CNBC Mortgage Meltdown

Homeowner Dan Edstrom spent one year trying to find out who owned his mortgage. He describes his quest to CNBC’s Michelle Caruso-Cabrera.

Homeowner Dan Edstrom spent one year trying to find out who owned his mortgage. He describes his quest to CNBC’s Michelle Caruso-Cabrera.

source http://classic.cnbc.com/id/15840232?video=1653356156&play=1

Obligations and Defaults

We now jump ahead in the story and skip all the details of securitization including when, if and how your loan was allegedly transferred into the mortgage loan pool (the securitization trust).

If you haven’t heard of John Courson,

I want to change that.

John is the President and CEO of the Mortgage Bankers Association.

by Daniel Edstrom

Mr. Courson believes that it is a moral imperative to keep your financial obligations.  If you haven’t seen the video here http://www.thedailyshow.com/, you should.

Now let’s look at the alleged obligations and who is actually obligated.  This will lead us down the road to defaults and who is actually in default.  If you have a mortgage, you by default are the obligor because you are the one with the “obligation” to repay.  The note you signed is not the obligation but is evidence of the obligation.  The obligation arose when money was advanced by a “creditor” and you accepted the money.  So even if the note doesn’t exist there is still an obligation.  A default occurs when you fail to meet the terms of your obligation.  In days gone by this would be the end of the story, but thanks to Wall Street financial engineering we haven’t even reached the beginning yet.

We now jump ahead in the story and skip all the details of securitization including when, if and how your loan was allegedly transferred into the mortgage loan pool (the securitization trust).  We will just assume for the sake of argument that your loan is in the pool and that everything is A-OK, which is what the big banks with the robo-signing blues are saying anyway.  The SEC Filings are the governing documents and because they are typically a thousand pages of legal gibberish, you have to understand what words mean, such as “obligation” and “default”.  Let’s start with default.  Here is what US Bank, N.A., which acts as Trustee on thousands of securitized trusts says a default is (from http://www.usbank.com/cgi_w/cfm/commercial_business/products_and_services/corp_trust/terms_ps.cfm#d): Continue reading “Obligations and Defaults”

Securitization: What is it?

The idea behind securitization is that a lender can make a loan and immediately sell the loan so that their capital is not tied up for 30 years. In reality it doesn’t quite work this way.

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The idea behind securitization is that a lender can make a loan and immediately sell the loan so that their capital is not tied up for 30 years.  In reality it doesn’t quite work this way.

In the classic securitization example, a company that originates loans sets up an agreement with a warehouse lender (GMAC, Morgan Stanley, Bank of America, Wells Fargo, etc).  The agreement typically provides that the warehouse lender will provide the capital for the loan to the originator and the originator will provide the loan to the warehouse lender for securitization.

Continue reading “Securitization: What is it?”

Yesteryear

It used to be that when a homeowner took out a mortgage, the bank held the paper.

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It used to be that when a homeowner took out a mortgage, the bank held the paper.

If you had questions or needed help you simply contacted the bank.

The bank held the note and mortgage on-site and could produce this paper if they needed to payoff, foreclose or sell the loan.

When the loan was sold the note was endorsed and the mortgage assigned.

The new owner of the loan actually took possession of the note, mortgage and the assignment.

The assignment was property recorded in the county and the appropriate taxes and fees were paid for the transfer.

No other party was present and the homeowner was not confused as to who owned the loan.

Those were much simpler times.