Wednesday, September 7, 2011




Fannie-Freddie’s Hypocritical Suit Against Banks Making Loans that GSEs Helped Create

Fannie-Freddie’s Hypocritical Suit Against Banks Making Loans that GSEs Helped Create
EDITOR’S NOTE:  Practically everything that the government is doing with respect to the economy and the housing market in particular is hypocritical. If we look to the result to determine the intent of the government you can see why nothing is being done to improve DOMESTIC market conditions. By removing the American consumer from the marketplace (through elimination of available funds in equity, savings or credit) the economic prospects for virtually every marketplace in the world is correspondingly diminished. The downward pressure on economic performance worldwide creates a panic regarding debt and currency. By default (and partially because of the military strength of the United States) people are ironically finding the dollar to be the safest haven during a bad storm.
 The result is that the federal government is able to borrow funds at interest rates that are so low that the investor is guaranteed to lose money after adjusting for inflation. The climate that has been created is one in which investors are far more concerned with preservation of capital than return on capital. In a nutshell, this is why the credit markets are virtually frozen with respect to the average potential consumer, the average small business owner, and the average entrepreneur or innovator who would otherwise start a new business and fuel rising employment.
 While it is true that the lawsuits by Fannie and Freddie are appropriate regardless of their past hypocritical behavior, they are really only rearranging the deck chairs on the Titanic. Ultimately there must be a resolution to our current economic problems that is based in reality rather than the power to manipulate events. The scenario we all seek  would cleanup the rising title crisis, end the foreclosure crisis, and restore a true marketplace in the purchase and sale of real estate. We have all known for decades that the housing market drives the economy.
 There is obviously very little confidence that the government and market makers in the United States are going to seek any resolution based in reality. Therefore while investors are parking their money in dollars they are also driving up the price of gold and finding other innovative ways to preserve their wealth. As these innovations evolve it is almost certain that an alternative to the United States dollar will emerge. The driving force behind this innovation is the stagnation of the credit markets and the world marketplace. My opinion is that the United States is pursuing a policy that virtually guarantees the creation of a new world reserve currency.
 The creation of MERS was a private attempt to substitute private business plans for public laws. It didn’t work. The lawsuits by the government-sponsored entities together with lawsuits from investors who were duped into being lenders and homeowners who were duped into being borrowers in a rigged market are only going to result in money judgments and money settlements. With a nominal value of credit derivatives at over $600 trillion and the actual money supply at under $50 trillion there is literally not enough money in the world to fix this problem. The problem can only be fixed by recognizing and applying existing law to existing transactions.
 This means that MERS, already discredited, must be treated as a nonexistent entity in the world of real estate transactions. Nobody wants to do that because the failure to disclose an actual creditor on the face of a purported lean or encumbrance on land is a fatal defect in perfecting the lien. This is true throughout the country and it is obvious to anyone who has studied real property transactions and mortgages. If you don’t have the name and address of the creditor from whom you can obtain a satisfaction of mortgage, then you don’t have a mortgage that attaches to the land as a lien. It is this realization that is forming a number of lawsuits from the investors who advanced money for mortgage bonds. Those advances were the funds that were used to finance pornographic Wall Street profits with the balance used to fund absurd mortgage products.
 This is basic property law and public policy. There can be no confidence or consistency in the marketplace without a buyer or a lender knowing that they can rely upon the information contained in a government title Registry at the county recording office. Any other method requires them to take the word of someone without the authority of the government. This is a fact and it is the law. But the banks are successfully using politics to sidestep the basic essential elements of law. Under their theory the fact that the mortgage lien was never perfected would be ignored so that bank and non-bank institutions could become the largest landholders in the country without ever having spent a dime on loaning any money or purchasing the receivables. Politics is trumping law.
 The narrative and the debate are being absolutely controlled by Wall Street interests. We say we don’t like what the banks did and many say they don’t like banks at all. But it is also true that the same people who say they don’t like banks are willing to let the banks keep their windfall and make even more money at the expense of the taxpayer, the consumer and the homeowner. There are trillions of dollars available for investment in business expansion, government projects, and good old American innovation to drive a healthy economy. It won’t happen until we begin to drive the debate ourselves and force government and banking to conform to rules and laws that have been in existence for centuries.
Lets NOT forget both Fannie and Freddie, like most of the named banks they are suing, each are shareholders of MERS.
Again, who gave the green light to eliminate the need for assignments and to realize the greatest savings, lenders should close loans using standard security instruments containing “MOM” language back in April 26, 1999?
This was approved by Fannie Mae and Freddie Mac which named MERS as Original Mortgagee (MOM)!
Open Market-
“U.S. is set to sue dozen big banks over mortgages,” reads the front-page headline in today’s New York Times. The “deck” below the headline explains that that the Federal Housing Finance Agency, which oversees the government-sponsored enterprises Fannie Mae and Freddie Mac, is “seen as arguing that lenders lacked due diligence” in the loans they made.
A more apt description would probably be that Fannie and Freddie are suing the banks for selling them the very loans the GSEs helped designed and that government mandates encourage — and are still encouraging them to make. These conflicted actions are just one more of the government’s contributions to the uncertainty that is helping to keep unemployment at 9 percent.
Strangely the author of the Times piece, Nelson Schwartz, ignores the findings of a recent blockbuster

24 Responses

  1. Carie,
    Where do you come up with these ideas? I will say that the attorneys I work with love to read your arguments. They find the arguments very amusing……………
  2. Heavy…
    But, this is the truth:
    Subprime “refinances” — were fabricated defaults in order for banks to get the “loan” out of the GSE hands. Thus, the “refinance” was only a modification of already default debt — and, therefore, only collection rights — that were procured by fraud under the false guise of a “mortgage.”
  3. No Carie, I will not accept false default. Nor will I accept that a refinance is simply a modification of the original loan. Nor will I accept that all loans were unlawful.
    BTW, for those interested in MERS, the 9th Circuit just came out with their ruling in the case of Cervantes v Countrywide, from Arizona.
    You will find that the 9th found in favor of MERS.
  4. AND MORE:
    …the GSEs could not just sell the Note- on performing loans — this would be securities fraud to the GSE security investors. The Note (and it’s receivable stream) had to be falsely placed in default and charged-off in order to sell the “Note” — but, when this happens the Note no longer exists — thus, all that is sold is collection rights to a once existing note.
    Security investors fund the BANK — not the borrowers — there is no direct relationship between security investors and borrowers. If banks are able to sell their income stream, that is an accounting transaction — it is not a “loan” to borrowers. This is why security investors are NEVER the creditor.
    Collection rights transfers are not funded by borrower transactions (ie fabricated refinance). Collection rights are transferred by assignment — not NOTES (which is why NOTES are fake). When some people here talk about Non-Deposit “trust” non-members — they are referring to derivative transactions — that “SWAP” out collection rights — although the credit enhancers pay cash for collection rights — they use insurance for the purchase of the rights. This is why the subprime was so profitable — the bank debt buyers put up no cash for transaction — but, were then able to profit by the “sale” of the receivable pass-throughs to security investors.. .
  5. re-posting ANONYMOUS:
    …parties here working for the crooks…some here trying to make a business on fraud against homeowners. It simply is not acceptable.
    Second, once all proprietary “records” are finally divulged, subprime refinancing fraud is exposed — game over for those who are still trying to making a buck on the fraud.
    Third, the securitization of fraudulent “collection rights” — was a scam from the onset — never MBS — get your heads out of MBS — these “refinances” (not actually refinances) — were “loans” REJECTED from traditional MBS — credit enhancement was created from layers of mezzanine tranches for credit default swaps — (purchase of collection rights) — and were NEVER secured mortgages. This is what caused the financial crisis FALL. Understand that subprime securization was manufactured securitization fraud.
    Fourth — the direction in courts — has been fraud upon the court — over and over — and, this is finally surfacing. There was no “funding” — PERIOD. —- All that existed was a purchase of collection rights from GSEs — by which “purchase” was covered by insurance for fabricated default and rejects.
    Fifth — if you want to say that any borrower is responsible for any non-”funded” loan — that fabricated “funded” loan is unsecured — because there was NO VALID MORTGAGE.
    Sixth — There is NO lender. NO LENDER. NO FUNDING — NO MORTGAGE — Just your good “ole” debt buyer shyster — for unsecured fraudulent collection rights.
    If anyone hear chooses to think otherwise — you are — and have been — barking up the WRONG tree — and not battling the battle that needs to be fought. You are, instead, feeding the “investors” to falsified collection rights — and giving credibility to a loan that is not a loan — and not a mortgage. You are feeding the homeowners to “wolf” debt buyer “investors” — as they prefer to be called.
    Proof?? in the mortgage data base proprietary files.
    usedkarguy — BELIEVE IT. Wild ride?? Only starting. Magic carpet is not with debt buyer “friends” —–
  6. @carie – of course the loan was funded. just because it was funded using money from another source doesn’t make it not “funded”. It seems like you’ve blended the other lender idea in with the subprime refi idea somehow.
    and I know this is just going to get marilyn all wound up about lending credit and the constitution again….
  7. Pat—guess you still won’t accept “false default” issues…
  8. come on, tn—there’s no “security interest”…because there was no loan “funded”…no real creditor…accept it and move on…
  9. Carie,
    Subprime mortgages were not all refinances. They were also purchase money loans. Just because Roubini says that it is true doesn’t mean it is true.
  10. Thank you ND. My mortgage loan servicing was recently transferred from CITI to Carrington. Everything I get from them has a mini miranda. I’m in Oklahoma and have been told that the Attorney foreclosure mills here are successful because of the “Power of Sale” on the mortgage. My loan was delinquent and we were right in the middle of a loan mod with Citi when I got a letter saying my Servicing was transferred! Now I’m getting requests for information from Carrington for a loan mod. What’s my next step? Should I just dispute? Original Note 10-2005 has CIT Group/Consumer Lending, Inc as Lender and mortgage has MERS as Mortgagee. Carrington is saying my Creditor is Wells Fargo NA as Trustee for Stanwich Mortgage Loan Trust Series 2022-2 Asset Backed Pass-through Certificates. I did find out that the guy who owns Carrington is involved(owns) with the Stanwich Trust.
  11. and including the “mini-miranda” warning re: debt collector on correspondence does not automatically make one a debt collector. in fact, the bulk of foreclosure don’t even fall within the FDCPA because many courts have found that enforcing a security interest is not debt collection under the Act.
  12. @carie – for the sake of this I’ll agree with you about the subprime refi issue. my point was that subprime refis were a small sliver of the overall mortgages at issue. none of that applies to a purchase money mortgage, nor does it apply to all of the non-subprimes
  13. tn—I am speaking to anyone who has a monthly “mortgage”/servicer statement that says: “Attempting to collect a debt”, etc.
  14. from ANONYMOUS:
    These subprime “refinances” were formerly GSE loans — to get them out of the GSEs — servicers fabricated default — purchased the loan — – and then “refinance” the collection rights. GSEs were precluded from purchasing any subprime “origination” — thus, “Wall Street” market share of “loans” surpassed GSE ownership. Because many of these loans were already (falsely) in default — when Wall Street acquires — only collection rights survive. Thus, subprime “refinances” were nothing more that modification of GSE “rejects.”
    New purchases were not a part of subprime refinance — borrowers still had to qualify for new purchases — and could NOT have a subprime FICO credit score. Subprime was later extended to ALT-A — with FICO score not quite as bad as subprime — but, still could not qualify for GSE purchase — and could not qualify for “new purchase.”
    In a nutshell, Subprime refers to “below par” FICO scores. And, all were “refinances” — or so they liked to call them. .
  15. tn—NOT “small sliver”.
    100% of subprime loans were refinances. Dr. Nouriel Roubini —well know economist at NYU put out this stat quite some time ago. The Center for Responsible Lending — put out the same stat.
  16. @carie – you’ve stated that theory as applying specifically to subprime refinance situations. why then do you post it as a response to every question in the comments? it may apply to a small sliver of the mortgage loan “pie” but not at all to the larger remainder.
    I am not an attorney, but believe these rules DO apply…
    and they did it to themselves…
  18. Can you please summize this for us. Are you saying we should DV the Attorney foreclosure mills or my latest Mortgage Loan Servicer? Thank you.
  19. By the way; Quiet title is probably the only solution to solve the mystery. If someone answers your suit after publication, you will have more to go on. If they do not,
  20. @bytheway – why would you question the validity of the satisfaction of mortgage? use it against anyone down the road if it becomes necessary, but it doesn’t sound like you have a problem, do you?
    so many of the posters here seem to be looking for problems that aren’t there. if you paid off your mortgage, you’re not in foreclosure, and no one’s trying to collect from you, then be happy with the satisfaction/release. just because it came from LPS doesn’t nullify it.
  21. i’m not seeing how the title ties in with the substance of the posting at all
  22. MERS- if MERS signed the satisfaction of mortgage as Nominee for Suntrust and the doc was prepared by by LPS does that mean the Staisfaction of Mortgage is not vaild and still exists or should we sue them?
  23. 82% of American people believe Congress should be replaced by completely new reps and senators. Let’s choose people who went through losing a job, a house and health insurance. People aware that their own kids are inheriting a disaster and whose education level is not going to allow them compete against the rest of the world. Only then will the issues be addressed. People who finally realize that the most important asset in any country is… ITS PEOPLE!!!
    The damage can still be undone. For how long?
    As amended by Pub. L. 109-351, §§ 801-02, 120 Stat. 1966 (2006)
    Victim or Victor?
    A very smart man in Texas collects evidence for consumer’s. Certified evidence acceptable to a court is each consumer’s most powerful premptive strike with the least collateral damage. Both fair to debtor and consumer.
    After I spoke to Steve Stricland in Texas yesterday, I smacked myself in the head wishing I had a ‘V-8′ instead of a foreclosure disptuing through the Court in a long lengthy procedure and waste of the valuable courts time over whether the Plaintiff has ‘Standing’. The fact of the matter when contesting the allegations invoke consumer protection rights:
    § 805. Communication in connection with debt collection
    (a) COMMUNICATION WITH THE CONSUMER GENERALLY. Without the prior consent of the consumer given directly to the debt collector or the express permission of a court of competent jurisdiction, a debt collector may not communicate with a consumer in connection with the collection of any debt—
    UNDER FDCPA, a consumer may disput the debt and secure affidavit from debtor they are with personal knowledge of the debt and must disclose the lawful assignment. The consumer may seek with certified evidence a meeting with the judge ex parte before or during the filing of the complaint a ruling whether the lawsuit is valid!
    With all the excellent facts that the notice of default local counsel has been notified to process the notice of default, so don’t wait and wish you too could of had a V-8. The ‘Servicer’ c/o Subservicers has contracted with local debt collectors processing of the default.
    If I only knew what I know now, then, I may not be in foreclosure court paying a lot more money to in effect do the same dispute that the lawsuit is not valid – the debtor does not have Standing.
    As amended by Pub. L. 109-351, §§ 801-02, 120 Stat. 1966 (2006)
    15 USC 1601 note
    § 801. Short Title
    This title may be cited as the “Fair Debt Collection Practices Act.”
    (a) There is abundant evidence of the use of abusive, deceptive, and unfair debt collection practices by many debt collectors. Abusive debt collection practices contribute to the number of personal bankruptcies, to marital instability, to the loss of jobs, and to invasions of individual privacy.
    (b) Existing laws and procedures for redressing these injuries are inadequate to protect consumers.
    (c) Means other than misrepresentation or other abusive debt collection practices are available for the effective collection of debts.
    (d) Abusive debt collection practices are carried on to a substantial extent in interstate commerce and through means and instrumentalities of such commerce. Even where abusive debt collection practices are purely intrastate in character, they nevertheless directly affect interstate commerce.
    (e) It is the purpose of this title to eliminate abusive debt collection practices by debt collectors, to insure that those debt collectors who refrain from using abusive debt collection practices are not competitively disadvantaged, and to promote consistent State action to protect consumers against debt collection abuses.
    § 803. Definitions
    As used in this title—
    (1) The term “Commission” means the Federal Trade Commission.
    (2) The term “communication” means the conveying of information regarding a debt directly or indirectly to any person through any medium.
    (3) The term “consumer” means any natural person obligated or allegedly obligated to pay any debt.
    15 USC 1601 note
    (4) The term “creditor” means any person who offers or extends credit creating a debt or to whom a debt is owed, but such term does not include any person to the extent that he receives an assignment or transfer of a debt in default solely for the purpose of facilitating collection of such debt for another.
    (5) The term “debt” means any obligation or alleged obligation of a consumer to pay money arising out of a transaction in which the money, property, insurance or services which are the subject of the transaction are primarily for personal, family, or household purposes, whether or not such obligation has been reduced to judgment.
    (6) The term “debt collector” means any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another. Notwithstanding the exclusion provided by clause (F) of the last sentence of this paragraph, the term includes any creditor who, in the process of collecting his own debts, uses any name other than his own which would indicate that a third person is collecting or attempting to collect such debts. For the purpose of section 808(6), such term also includes any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the enforcement of security interests. The term does not include—
    (A) any officer or employee of a creditor while, in the name of the creditor, collecting debts for such creditor;
    (B) any person while acting as a debt collector for another person, both of whom are related by common ownership or affiliated by corporate control, if the person acting as a debt collector does so only
    for persons to whom it is so related or affiliated and if the principal business of such person is not the collection of debts;
    (C) any officer or employee of the United States or any State to the extent that collecting or attempting to collect any debt is in the performance of his official duties;
    (D) any person while serving or attempting to serve legal process on any other person in connection with the judicial enforcement of any debt;
    (E) any nonprofit organization which, at the request of consumers, performs bona fide consumer credit counseling and assists consumers in the liquidation of their debts by receiving payments from such consumers and distributing such amounts to creditors; and
    (F) any person collecting or attempting to collect any debt owed or due or asserted to be owed or due another to the extent such activity
    (i) is incidental to a bona fide fiduciary obligation or a bona fide escrow arrangement;
    (ii) concerns a debt which was originated by such person;
    (iii) concerns a debt which was not in default at the time it was obtained by such person; or
    (iv) concerns a debt obtained by such person as a secured party in a commercial credit transaction involving the creditor.
    (7) The term “location information” means a consumer’s place of abode and his telephone number at such place, or his place of employment.
    (8) The term “State” means any State, territory, or possession of the United States, the District of Columbia, the Commonwealth of Puerto Rico, or any political subdivision of any of the foregoing.

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