And Now, For The Real Sh$% Show… Life Insurance Companies v Countrywide, Mozilo, Bank of America, et al

The Market Ticker | And Now, For The Real Sh$% Show…

Oh my, what do we have here?

Life Insurance Companies v Country Wide, Mozillo, Bank of America, et al

That would be a nasty little lawsuit (well, maybe not so little) against Countrywide (and its successor, Bank of America) in which it is alleged that Countrywide sold a lot of bogus paper to pretty much every large insurance company in the world.

In point, here’s the salient section:

1. This action concerns a massive fraud perpetrated by Defendant Countrywide Financial and certain of its officers and affiliates against the Plaintiffs, which are investors in mortgage-backed securities (“MBS”) issued by Countrywide’s subsidiaries. The Plaintiffs are institutional investors that wanted conservative, low-risk investments and thus bought Countrywide MBS (the “Certificates”) that were represented to be backed by mortgages issued pursuant to specific underwriting guidelines and rated investment-grade (primarily AAA). In purchasing the Certificates, the Plaintiffs and their investment managers relied on term sheets, prospectuses and other materials prepared by and provided to them by the Defendants, which made representations about the Countrywide Defendants’ purportedly conservative mortgage underwriting standards, the appraisals of the mortgaged properties, the mortgages’ loan-to-value (“LTV”) ratios, and other facts that were material to Plaintiffs’ investment decisions. Plaintiffs and their investment managers also relied on Defendants’ public statements concerning the Countrywide Defendants’ adherence to prudent underwriting guidelines and careful credit analysis. These representations by Defendants were recklessly or knowingly false when made. In reality, Countrywide was an enterprise driven by only one purpose – to originate and securitize as many mortgage loans as possible into MBS to generate profits for the Countrywide Defendants, without regard to the investors that relied on the critical, false information provided to them with respect to the related Certificates.

If you want it distilled down into one sentence, it’s this: You told us you were selling us good paper, and in fact you were knowingly selling us a box of dogcrap.

We’ve seen a couple of these before.  But this one adds a new twist, and leads me to run up the


sign again….

Read starting at page 62.  Oh I’ll do it for you…

H. Countrywide Failed To Ensure That Title To The Underlying Loans Was Effectively Transferred

147. The rules for these transfers are governed by the law of the state where the property is located, by the terms of the pooling and servicing agreement (“PSA”) for each securitization, and by the law governing the issuing trust (with respect to matters of trust law). Generally, state laws and the PSAs require the promissory note and security instrument to be transferred by indorsement, in the same way that a check can be transferred by indorsement, or by sale. In addition, state laws generally require that the trustee have physical possession of the original, manually signed note in order for the loan to be enforceable by the trustee against the borrower in case of default.


148. In order to preserve the bankruptcy-remote status of the issuing trusts in RMBS transactions, the notes and security instruments are generally not transferred directly from the mortgage loan originator to the trust. Rather, the notes and security instruments are generally initially transferred from the originator (e.g., Countrywide Home) to the depositor (e.g., CWALT), either directly or via one or more special-purpose entities established by Countrywide Financial. After this initial transfer to the depositor, the depositor transfers the notes and security interests to the issuing trust for the particular securitization. Each of these transfers must be valid under applicable state law in order for the trust to have good title to the mortgage loans.


149. In addition, the PSA generally requires the transfers of the mortgage loans to the trust to be completed within a strict time limit after formation of the trust in order to ensure that the trust qualifies as a tax-free real estate mortgage investment conduit (“REMIC”).

150. The applicable state trust law generally requires strict compliance with the trust documents, including the PSA, so that failure to comply strictly with the timeliness, indorsement, physical delivery, and other requirements of the PSA with respect to the transfers of the notes and security instruments means that the transfers would be void and the trust would not havegood title to the mortgage loans.


151. The Offering Documents for each offering of the Certificates represented in substance that the issuing trust for that offering had obtained good title to the mortgage loans comprising the pool for the offering. In reality, however, Countrywide routinely failed to comply with the requirements of applicable state laws and the PSAs for valid transfers of the notes and security instruments to the issuing trusts. In Kemp .v. Countrywide Home Loans, Inc., Bkrtcy. No. 08-18700 (D.N.J.), Countrywide sought to prove that the Bank of New York, as trustee for an RMBS issuing trust that purportedly held Mr. Kemp’s mortgage, was entitled to enforce the mortgage. Countrywide presented testimony by Linda DeMartini, who had been employed by Countrywide Servicing for almost ten years as of August 2009 and was then a supervisor and operational team leader for the Litigation Management Department of Countrywide Servicing. Ms. DeMartini testified that, in her extensive career in the mortgage loan servicing business of Countrywide, “I had to know about everything . . . .” She testified that Countrywide Home originated Kemp’s loan in 2006 and transferred it to the Bank of New York as trustee for the issuing trust, but that Countrywide Servicing retained the original note in its own possession and never delivered it to the Bank of New York because Countrywide Servicing was the servicer for the loan.

What have I been prattling on for over a year about?  This exact point.

How many people have said this didn’t matter and wouldn’t be a problem?  Remember all the apologists for the banksters that said this wouldn’t lead to liability, it didn’t represent a void transfer, and that all this would be swept under the rug and be ok?

Care to rethink that position…. just a wee bit?

Looks to me like as the Statute of Limitations approaches and the firms in question that have gotten screwed have faced the choice of “shut up or sue” they’ve decided that the correct response is “Ok, I’ll sue.”

I doubt they’ll be interested in settling for a tiny amount of money either, given the default and economic harm numbers put forward in the complaint.

Nor do I think this will be a singular complaint – drop in your name and play “template” with this one folks.


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14 Responses to “And Now, For The Real Sh$% Show… Life Insurance Companies v Countrywide, Mozilo, Bank of America, et al”
  1. Felita says:

    We definitely have to support the House Bill coming out of the State of Virginia to which Dena Roudybush has done a fantastic job fighting the big banks and mortgage services to which she used to work for. Now Miss Roudybush, a practicing Attorney in State of Virginia and Maryland is now fighting for the citizens. Check out the site at:

    Virginia House Bill HB1506

  2. pelucheven says:

    The amazing thing is that our regulators are morally corrupt that they rather settle with these criminals than to stop the madness all together.

    I am so disapointed

  3. ThommyMiller says:

    Note that when the banksters transfer a mortgage into a trust and securitize it, it’s called an MBS. But they’re not transferring the mortgage properly, and the investors are finding out there really isn’t a mortgage attached. So an MBS without the M is… BS!! (pun intended) hat tip to Yves Smith or M Andelman – don’t remember who posted it…

  4. lucinda says:

    on our mortgage assgnment we have select portfolio servicing aka fairbanks capital aka equi credit as servicer and bank of new york as trsstee,but on 2 of our assgnments they name one as bank of new york as assignor and equi credit as assignor on another mortgage assgnment,whats up with that?

  5. Millie says:

    Hello “Founders”, Subscribers and Readers of this wonderful site:

    I am going to tell you all a story that eerily parallels what the author of this article speaks of:

    If you want a prime example of how the issues mentioned in this very article are played out on the stage of our courts (at least here in CA), a good look at my case will show you just how this has been and is BEING done (its not over yet):

    Our Original Lender, “Quality Home Loans” filed Chapter 11 BK a mere 11 days after our “table-funded” loan closed in 2007, and in the BK “work-out” ordered by the BK judge, Countrywide was ordered by the judge to “pool” all the remaining loans from QHL into a Trust…but somehow, my loan was not listed as one of them. I have Bloomberg screenshots of this supposed “Private Trust”, where it is listed that the “assets cannot be traded in the US”! (I wonder why that could be?).

    Just after QHL’s BK in 2007, Countrywide was bought out by B of A in 2008, but somehow, neither Countrywide, the BK court orders, nor B of A has record of my loan # and nor does the “supposed” Trust (Terwin Mortgage Trust) of which U.S. Bank National Association is the Indenture Trustee! Gee…did my loan fall off that “table” from which it was funded last minute before QHL went BK and fall into a “black abyss” to where no one knows what happened to it? And if so, how can Terwin Mortgage Trust, of which US Bank is the Trustee of most of their Trusts claim an interest in a loan they don’t even know where it is, or did someone say Twilight Zone? (Rod Serling, where are you? If anyone can enter that Zone and find our loans, you’d be the one!) Or did it split off into 2 directions and go both ways? I’d like the Banks, the Trustee, and the Trust as well as MERS to figure that one out and tell their rendition of what occurred, so that I can figure out just who has it (since they are playing ‘hide the ball”, or better yet, “What happened to the ball?”) and how US Bank, a “Fictitious Plaintiff” (see Black’s Law Dictionary), is bringing a lawsuit against us of which US Bank’s VP sent me a letter stating they have no knowledge of the suit, nor did they commence the action against us…but guess who did??? You got it…our Loan Servicer, SLS (Specialized Loan Servicing LLC)! The court told us that SLS hired the law firm to file the suit naming US Bank NA as the Plaintiff on behalf of the Trust, who doesn’t have any idea if our loan was pooled into it or not! They say all this is perfectly legal! What planet are they from, anyhow? They say that the loan servicer is representing the Trust’s interest (isn’t that the Trustee’s job?), even though our loan didn’t make it into that trust!

    We are just as bewildered as anyone reading this as to how all this nonsense can be justified…and then held up in court! By the way, did anyone catch the Bloomberg article last week in which U.S. Bank closed a deal with B of A to buy out their entire “Pooling and Securitizing buisness”? How convenient!

    Here in CA in our case, we just LOST our Unlawful Detainer (eviction) suit against US Bank NA (on the similar grounds as the MA Ibanez’ case WON, only our case was wrought with much more blatant fraud, Federal question, etc.) We were accused of arguing Quiet Title in our Final Ruling, but we never even mentioned it…the opposition, US Bank did!! We were denied a Motion to Reconsider the Final Judgment, and and Ex Parte Motion to Stay Judgment Pending Outcome of Appeal as well! Why, you may ask? The only thing we can figure is that we are “Pro Se”. We even have another suit that we filed that is pending in State Court with issues of wrongful foreclosure, breach of contract, breach of fiduciary duty, and much more…but the courts don’t care about the other suit, yet the Rules of Court says it DOES matter.

    We have Appealed within 1 week of the Final Ruling. While the Record from the UD (eviction) court is preparing the file for the Appellate Division, we have moved on around them and filed a perfectly legal and acceptable “Emergency Stay”. U.S. Bank has been “served” all these docs I have mentioned here, so its nothing new to them. We just hope we will be heard somewhere along the line! Don’t any courts follow Black Letter law any longer? Doesn’t Due Process of Law mean anything to them? Doesn’t the Obligation of Contracts mean a thing?

    Wow! How do they do it? Without the help of the courts, the Banks would not be able to get away with all this nonsense! The “Fit has begun to hit the Shan” and it is a mess no one wants to touch! Although it is good to see all this come out into the open…no one said it would be a pretty sight! We may have to wade through much muck and mire to get to the bottom of this sewage (or is is “sue-age”).

    Us Homeowners who were originally duped or “wrongfully-induced” into thinking the banks knew and followed the law, but when we found out they didn’t, we ran to the courts, which we thought would surely see the injustice…but now we are all waking up to the fact that neither is true. Oh yes, there are a few good judges who see through the muck and mire and are following the law, but there are still no apparent “honest criminal bankers” we have seen yet. Sure, some could sprout a conscience, much like the Grinch with his pea-sized heart… but all these crooks making out with over-sized bank accounts and wallets bursting at the seams, who needs a heart? While we decide where we will pitch our tent to live in after we are evicted from our homes, all the criminals are doing is deciding which vacation to go on next or which 2nd or 3rd home to buy, or how many yachts or cars they need. Sickening!

    We homeowners are much more intelligent than the banks must think, and we do see through all the smoke and mirrors and sleight of hand tricks they’re using, and we see what these “court jesters” are doing to distract from the “real” truth! We’ve seen behind the “curtain” in the land of OZ to see just who is controlling things. We see it, but unless and until the courts start following the law…they way they have sworn to do, we are going to have to keep our boots, goggles and snorkels on to breathe through all this sewage since it is getting so deep!

    “…and that’s all I have to say about that.” – Forrest Gump

    • Hell NO - No More Bailouts says:

      I’m also in CA. What is working BETTER in CA is usage of the Bankruptcy courts. You file the BK and also an adversarial filing.

      The other thing you REALLY need is to have an attorney instead of doing it pro se. The courts are REALLY biased here.

      I don’t know what part of CA you are in but see if you can contact Paul or Gary at Global Capital Law. They are located in Huntington Beach but do have ways of handling cases from other parts of the state and the DO know what they are DOING.

      My own case has a NUMBER of issues, some stemming from problems in the original documents, some from all the goofs since then. Paul and Gary were well prepared before seeing my own documents.

    • ThommyMiller says:

      The Ibanaz case made it through the first court and then the MA supreme land court with careful arguments and one critical thing that we will all need to be successful in these cases (I’m in Central CA): an amicus brief crafted by a certified mortgage fraud examiner! Marie McDonnell did an OUTSTANDING job putting together the arguments and researching the fraud. She spent almost a hundred hours of research to chase down all the issues she presented to the court in that brief – I don’t think there are any attorneys who would put that much effort into a case – it’s too expensive for the plaintiff. But without that research, you will not be able to convince a judge – the learning curve is too steep for the judge to get his/her mind around the issues: MERS, chain of title, securities fraud, robo stuff, fraudulent notarizations, etc etc. Every single one of the frauds has to be researched with facts and backed up with court cases.

      I would like to look at what you presented and why they dumped on you, Millie – and I’d suggest you get yourself a really good fraud examiner for the next round!

    • Heidi S. says:

      I live in California too. File bankruptcy today! That will stop the eviction. Maybe permanently. I don’t know your exact situation. It stopped mine. I was dealing with the same wacky state court system.
      All the best,

  6. mike maunu says:

    The IRS will never go after the REMIC’S! Why?

    The IRS is a quasi-governmental agency who’s job is working for the FED, a private international banking cartel. They are to collect the tax revenue to pay back the FED. In the old days tax revenue was collected and deposited into the US Treasury. Not any more. They wont go against the FED member banks!

    As to the assignments into closed REMIC trusts against IRS statutes and NY state law, where did they acknowledge accepting the assignment? All you have is a doc signed by some banker claiming they were paid something. Of course, we know the banks don’t lie!

    You must challenge and demand proof the trustee for the REMIC accepted it and see some accounting that shows consideration.

    In our case chase assigned the note/dot to the REMIC the day after the REMIC bought it at the FC sale as the alleged grantee/beneficiary using a credit bid. (California) this is easier to prove than Ibanez. They are getting more sloppy!

  7. l vent says:

    Don’t look now America but the BANKSTERS ARE SUING THEMSELVES. What a steaming pile of B.S. They keep serving up more and more distractions in order to PRETEND that they were not ALL IN ON THE GIGANTIC PONZI SCHEME. They just keep on passing the hot potato around and assuming new identities but we all know the truth about the Banksters/Servicers, Fannie/Freddie, Wall Street and the top echelons within our own Government. They are all one BIG CRIMINAL ENTERPRISE. There is really no differntiating the facts, they were ALL IN on the Ponzi Scheme to create wealth for themselves by stealing from the people of this Country. This very cabal devised a very DIABOLICAL PLAN to SET US ALL UP TO FAIL and then INTENIONALLY COLLAPSED THE ECONOMY to ROB THE PEOPLE OF THEIR WEALTH. When the RIGGED MARKETS COLLAPASED and our economy went into the crapper then it was time to STEAL ALL OF OUR ASSETTS, VIA MILLIONS OF FRAUDULENT FORECLOSURES. Once we were all FORCED TO FAIL they knew we would not be able to afford to fight because they sent all of OUR DESCENT PAYING JOBS overseas. Our Government is a giant bunch of KLEPTOMANIACS who HAVE STOLEN and continue to STEAL from their OWN PEOPLE. A GIANT GOVERNMENT KLEPTOCRACY. A Government who can ILLEGALLY STEAL WEALTH and PROPERTY RIGHTS or IMPOSE and FORCE FALSE DEBT upon it’s own people is not a DEMOCRACY it is an OLIGARCHY, KLEPTOCRACY FASCIST COMMUNIST DICTATORSHIP. They are destroying America before our very eyes.

  8. This is why homeowners should counter-record documents after defective NODs and similar bogus recordings by the banksters:

  9. Hell NO - No More Bailouts says:

    I have a CWABS 2005 vingate trust involved in my own tangle. They are trying to skate through the BK filing a Proof of Claim that has a copy of the copy of the UN-ENDORSED note that was retrieved from the TITLE company.

    They did not even file the assignment of the DOT until after they started the FC action. Okay, by the time they DID file it, dated in 2010, they were filing it while a BK stay existed.

    NOW WHAT trustee for BONY should be WANTING to accept SUCH a mortgage into the trust SO belatedly?

    And of COURSE it has the non-compliant assignment going DIRECTLY from AWL to BoNY-Mellon as Trustee for CWABS 2005-10. Oh, yeah, that is SOO compliant.

    Also, I’m such a nit-picker, I noticed that the PERSON who did the signature on that assignment is an employee of Litton. “So what?” you say? Well, Litton became the servicer in 2009. Who would Litton supposedly be ‘working’ for when they started the paperwork in 2009 to foreclose? It was SUPPOSEDLY already that BoNY Trustee for the CWABS certificate-holders. THAT makes the assignment by Litton’s Debra Lyman in 2010 SELF-SERVING. Also, how was Litton properly placed in charge of the FC action back in 2009 if the mortgage had not even been properly transferred prior to that? Yes, they were using MERS, but basically this was one of the EXACT points made in one of the major recent cases back east. You just should not be assigning the crappy piece of paper in favor of your ‘boss’.

    Debra Lyman should KNOW better, if it is actually her signature. She is supposedly an ATTORNEY on the Litton staff!

    I did not as yet dig into this filing to see if they also attacked any of the mortgages for the basic FLAWS in all of the “America’s Wholesale Lender” loans that CountryWide generated but did not have their own name ANYWHERE to identify a proper LENDER.

    If you go searching for ‘PAGANO’ on the web, you will see that CountryWide issued these mortgages in the name of a TRADE NAME that is NOT even a D/B/A. Arnold or Hultman with MERS admitted that CountryWide used it’s membership in MERS to enter these loans. They thought it was a D/B/A of CountryWide. They thunk WRONG. A few D/B/As were filed in New York state. But strangely, that was the state that AWL had supposedly been INCORPORATED in. CW never incorporated the name.

    Other sites have also cited another issue with these sloppy mortgages that are in the name of ‘AWL’: The MERS crap about what the LENDER is empowering MERS to do for it as it’s nominee is NOT present. Judges have already ruled that the role of ‘NOMINEE’ is too VAGUE. It does NOT empower MERS with the capability to foreclose OR to assign the mortgage. DUH. The specific ways in which MERS is empowered to act for AWL is not defined.

    If it is no ‘big deal’ that the membership did not match the named lender, then tell it to the Judges who will not allow AWL to foreclose in it’s name per the PAGANO ruling.

  10. John R. says:

    This is just a general question thrown out here for ya’all.

    So in foreclosure, plaintiff Big Bank produces an assignment transferring from whomever into the trust. Now I know, in my own case that this transfer is 2 years or more past the shut off date of the deposits to the trust.

    When a judge, anywhere, allows this to happen, uncontested or not, and, in effect, memorializies the transfer to the trust PAST the date that loans are allowed by those pesky REMIC, IRS rule thingys… doesn’t that end up voiding the REMIC status. And I do mean voiding it entirely! From the date it started!

    I mean they’re not following the rules, isn’t their consequences?

    And if it does blow the REMIC’s favorable tax status of the Trust… won’t the Nation’s judge’s be pissed when they find out the retirement account they thought they had that was invested in MBS’s owes….. a lot! to the IRS.

    Just a thought.

    • Hell NO - No More Bailouts says:

      John, the IRS SHOULD be pressing for penalties on this income but they are not even pursuing it that I have heard.

      I is really frustrating when you see people with a FC or short-sale being hit for taxes on the amount the servicer companies report on the 1099s.

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