U.S. Bank Nat’l Ass’n v. Ibanez 458 Mass. 637 (2011) – The High Cost of Litigation

U.S. Bank Nat’l Ass’n v. Ibanez 458 Mass. 637 (2011) – The High Cost of Litigation

By Daniel Edstrom
DTC Systems, Inc.

This case is a fiasco beyond imagination.  This boarded up house was the subject of the Massachusetts Supreme Judicial Court decision where US Bank as Trustee of a securitized trust lost in an attempt to obtain a judicial declaration of clear title.  The investors now have an accounting that they can review.  The losses keep coming month after month and may not be finalized for many more years.  Here is what is being reported to the investors and ratings agencies as of February 2012:

Current Amt: $0.00

Paidoff: 9/2008

Last Report Date: 2/2012

Liquidation: $102,077

Curr Loss (as of 2/2012): $29,832.56

Cumulative loss: $274,340.89

Loss Severity (%): 268.76%

Original Amount: $103,500

The cumulative loss and loss severity are extremely high.  This is not a record high for the amount or the loss severity percentage.  But for a boarded up house that is probably not worth $100,000.00 it sure is quite a hit.   Good thing there are still 440 or so loans in this trust with a current balance of over $88 million.  That makes this small amount easy to swallow.  In reality the loss amount is very low because the loan amount is low.  Another loan in this same pool had a cumulative loss of $770,630.99 and a loss severity of 86.41%.  The loan amount was $900,000.

Now for the real question.  How does a loan for $103,500 actually cost the investors a loss of $274,340.89?  Where does the “exta” amount come from to pay for the loss of this property?


The OCC Misses the Point on Toxic Waste

The OCC Misses the Point on Toxic Waste

By Daniel Edstrom
DTC Systems, Inc.

We all see what we want to see.  But when others control the conversation, it is easy to miss the point.  As a regulator the Office of the Comptroller of the Currency should be taking the lead and controlling the conversation, but in reality, they have been bridled and are being led around by the nose.  Conspiciously absent are numerous issues they as a regulator have the responsibility of dealing with.  This article is timely in response to an article by Neil F. Garfield (http://livinglies.wordpress.com/2011/12/27/the-big-lie-banks-did-nothing-illegal/), which is a response to Yves Smith of Naked Capitalism article (http://www.nakedcapitalism.com/2011/12/more-msm-criticism-of-obama-nothing-illegal-here-move-along-stance-on-foreclosure-fraud.html), which is a response to a Reuters article (http://www.reuters.com/article/2011/12/22/us-foreclosures-idUSTRE7BL0MC20111222).  But I found none of these articles until I was finished writing this post.  Take the following random and critical issues:

  • Are the loans in the pool?  Were the loans ever in the pool?  Does the pool exist?  Did the pool perfect interest in any of the loans?  This issue is very political and the OCC in our opinion will never address this issue or look into this.
  • What loans are in default?  Can a loan be in default?  What comes first, the default or the loss?
  • Are there any compliance issues?

Continue reading “The OCC Misses the Point on Toxic Waste”

How to Get a Full Accounting in California

Edstrom_MortgageSecuritization_POSTER_17_x_22_v4_1How to Get a Full Accounting in California

By Daniel Edstrom
DTC Systems, Inc.

Here is an appeals court case showing how to plead a cause of action for an accounting.  In the securitization of residential loans, this issue is frequently discussed, but I have never seen it brought in a lawsuit.  This appeals court case is certified for publication and was filed on April 22, 2009.


A cause of action for an accounting requires a showing that a relationship exists between the plaintiff and defendant that requires an accounting, and that some balance is due the plaintiff that can only be ascertained by an accounting.  (Brea v. McGlashan (1934) 3 Cal.App.2d 454, 460, 39 P.2d 877;  5 Witkin, Cal. Procedure (5th ed. 2008) Pleading, § 819, p. 236.)

An action for accounting is not available where the plaintiff alleges the right to recover a sum certain or a sum that can be made certain by calculation.  (St. James Church of Christ Holiness v. Superior Court (1955) 135 Cal.App.2d 352, 359, 287 P.2d 387.)   A plaintiff need not state facts that are peculiarly within the knowledge of the opposing party.  (Brea v. McGlashan, supra, 3 Cal.App.2d at p. 460, 39 P.2d 877.)

Full Ruling: http://dtc-systems.net/wp-content/uploads/2011/12/Teselle-vs-McLoughlin-C054919-CERTIFIED-FOR-PUBLICATION.pdf