Did Federal Banking Regulators Inadvertently Expose Massive Mortgage Backed Securities Fraud as Part of Fraudclosure Investigation?

Federal Banking Regulators Expose Massive Mortgage Backed Securities Fraud as Part of Fraudclosure Investigation

From the InterAgency Report:

The Federal Reserve System, the Office of the Comptrollerof the Currency (OCC), the Federal DepositInsurance Corporation (FDIC), and the Office ofThrift Supervision (OTS), referred to as the agencies,conducted on-site reviews of foreclosure processingat 14 federally regulated mortgage servicers duringthe fourth quarter of 2010.1This report provides a summary of the review findings and an overview of the potential impacts associated with instances of foreclosure-processing weaknessesthat occurred industrywide.

Promissory Notes are “negotiable instruments” and have a face value similar to cash.  The mortgage trusts all have clear criteria for the storage of the notes.  All of the SEC filings I have read in regards to these trusts name a document custodian, usually the trustee.  I have not yet seen even one trust prospectus or pooling and servicing agreement (PAS) where the servicer is named the document custodian.  Here’s an example, of a trust where Bank of America is the servicer, Wells Fargo is the Trustee of Banc of America Mortgage 2006-B Trust (prospectus here).  Note that instead of BoA as servicer for this trust, Wells Fargo as trustee is tasked with document custodian duties!

In addition, the Mortgage Loan Purchase Agreement will provide the Depositor with remedies against the Sponsor for the failure by the Sponsor to deliver the Mortgage Loan documentation required to be delivered to the Trustee or a custodian under the Pooling Agreement.

Wells Fargo Bank, National Association (“Wells Fargo Bank”) will act as Trustee and custodian under the Pooling Agreement.

Wells Fargo Bank will also act as custodian of the Mortgage Files pursuant to the Pooling Agreement.
In that capacity, Wells Fargo Bank is responsible to hold and safeguard the Mortgage Notes and other contents of the Mortgage Files on behalf of the Certificateholders. Wells Fargo Bank maintains each Mortgage File in a separate file folder marked with a unique bar code to assure loan-level file integrity and to assist in inventory management. Files are segregated by transaction or investor. Wells Fargo Bank has been engaged in the mortgage document custody business for more than 25 years. Wells Fargo Bank maintains document custody facilities in its Minneapolis, Minnesota headquarters and in three regional offices located in Richfield, Minnesota, Irvine, California, and Salt Lake City, Utah. As of June 30, 2006, Wells Fargo Bank maintains mortgage custody vaults in each of those locations with an aggregate capacity of over eleven million files.

Last fall, we got hints of the expected-yet-still-shocking revelation via a Countrywide/BoA employee, Linda DeMartini (testimony here), exposed the securities fraud practices in a depo taken during a NJ bankruptcy case, Kemp v Countrywide.

A direct quotation from the judge’s opinion in the bankruptcy case:

“She [DeMartini] testified further that it was customary for Countrywide to maintain possession of the original note and related loan documents.”

That assertion certainly seems to suggest that the failure to transfer a promissory note from Countrywide Financial to the security trust in this case was not an isolated error—but a matter of policy at Countrywide Financial.

If mortgage-backed securities aren’t in fact “mortgage-backed,” investors who bought these securities from Countrywide could hold Bank of America accountable.

“If Countrywide’s practice was to hold onto the note, then investors in this pool and others may question whether the security was constructed properly and legally and may be able to require Bank of America to buy back their securities”

Gretchen Morgenson of the New York Times explained.


The reviews also showed that servicers possessed original notes and mortgages. 


FROM PAGE 4 (oddly it appears third party vendors where tasked with negotiable instrument document custodian duties) 

Third-party vendor management. Examiners generally found adequate evidence of physical control and possession of original notes and mortgages.


Furthermore, concerns about the prevalence of irregularities in the documentation of ownership may cause uncertainty for investors of securitized mortgages. Servicers and their affiliates also face significant reputational risk with their borrowers, with the court system, and with regulators.

FROM PAGE 7 (Keep in mind the financial sector’s propensity to fabricate evidence.  Note the slippery language “may not have been sufficient” & “generally was sufficient”.)

..examiners noted instances where documentation in the foreclosure file alone may not have been sufficient to prove ownership of the note at the time the foreclosure action commenced without reference to additional information. When additional information was requested and provided to examiners, it generally was sufficient to determine ownership. 


Can’t wait to see the backpedaling on this one. If you remember the Kemp v Countrywide case, they scrambled to unwind the testimony of the employee that claimed the notes were at the servicer.

If it’s true that the notes are held by the servicers and not the trusts, and we have no reason not to believe the fed’s findings, things can get real ugly real fast for the banksters…

Oh, and one more thing, where ya at IRS? You are missing out on $TRILLIONS$ in lost taxes.

Can anyone say REMIC RULES?



29 Responses to “Did Federal Banking Regulators Inadvertently Expose Massive Mortgage Backed Securities Fraud as Part of Fraudclosure Investigation?”
  1. New stuff: Linda Green courtroom audio, lawyer alleges to have original wet ink note but the Assignment is bogus….



    Wells Fargo is on the hot seat, claims to have wet ink note but will not answer questions of verified chain of custody of note and mortgage. Come to find out that the taint of multiple bank president and MERS executive Linda Green — of 60 Minutes fame… err… infamy is all over this case with a bogus assignment.

    Dear Attorney Masterson: Show us the original wet ink note that you represented you are in possession of during the courtroom audio and I will get off your back, apologize publicly and buy you a $150 bottle of Veuve your choice of vintage. Bottoms up!

  2. Right on the money you are, so to speak. Meanwhile…..

    Top O’ the Morning, Folks!!!


    SUNDAY, APRIL 17, 2011

    KingCast/Mortgage Movies reminder to Attorneys Wahlquist, Kacavas and Delaney: You owe me some responses.

    Eternal vigilance is the Price of Liberty…..

  3. Viking says:

    It was not just Countrywide. It was all of the ‘servicers’ that held onto the notes.

    As I have recounted in other posts, I had a lengthy conversation with the now deposed head of Wells Fargo structured finance, the man who invented WF MBS business. He told me that WF simply kept the original notes in a warehouse in SLC, and never did the securitization assignments for ANY of the notes. And WF is best of breed! Imagine WaMu, Golden West, etc.

    Everyone who is underwater on their mortgage should litigate first with quiet title, then by attacking the note itself.

  4. Mary says:

    Well, yes they did. They put it in writing for everyone to see.

  5. l vent says:

    I have an Allonge to a note in my fraudclosure filing which reads,, Without Recourse, Pay to the order of: The mortgage servicer. No date, the allonge was ever recorded anywhere. According to the title the loan is in MERS but MERS says the loan has been inactive since 2007. The refi was done in 2007 and that bank is now a failed bank. The servicer is now trying to fraudclose in the name of MERS and an assignment was never made to the servicer. Should an allonge to a note be paid to a servicer who was never recorded as such either publicly or on title? The Allonge is signed by the V.P. of the failed bank. It appears this servicer is posing as the “failed bank”. That can’t be legal. Exhibit A, the copy of the mortgage and Exhibit B, the copy of the note have mine and my husband’s forged signature’s on them. There are forgeries, not so much as a copy of the actual deed have they have posession of, so called scrivenors errors on the Doc#’s of the legal description of the property, no mortgage assignments in 20 years, and typos all over the entire copy of the mortgage and note which does not even include the title, the title really looks faulty, there is no origination on title, just a $30,000 unnassigned lien from the builder and does not even say what the lien is for. Why would they even trying to fraudclose with this garbage? This is all completely insane.

    • Dig this:

      Here come the ethics complaints on a bogus Linda Green DOCX case:


      Ms. Ingress writes: Look for DOCX from Alpharetta, GA at the top of the page. Then scroll down and see the other players: Merrimack Mortgage, American Home Mortgage Servicing, Inc., Wells Fargo Bank, N.A., Trustee… Scroll down some more & note where it says “ASSIGNMENT EFFECTIVE DATE: 4/28/2009”. Then see that it was “executed on 10/16/2009”.

      Now go back to the top right corner of the page and see note that it was recorded at the Registry on 10/27/2009.

      This means that nothing in the assignment would have been legal until it was recorded on 10/27/2009. However, the recorded assignment is back-dated by 6 months which makes it appear to be effective as of 4/28/2009 so they could start to foreclose on 5/1/2009.

      It now appears they had no assignment or standing to do so. And they still don’t because now it turns out the whole assignment is a fake. Thanks to everyone who has been working on figuring this whole mess out!!!

  6. pparke500 says:

    Check out the master trust agreements used by Fannie Mae and Freddie Mac and then look at the servicing guidelines posted on the respective websites. There is no evidence there that the notes were ever in the possession of the government. In fact, Freddie Mac’s guidelines instruct the servicer to endorse the note in blank and to NOT file an assignment if it is ‘kept in the MERS’ and to NEVER foreclose in Freddie Mac’s name but to make sure the deed after foreclosure is made out to Freddie Mac. DO servicing guidelines outweigh trust law? We’ll see.

    • getgood says:

      Any updates on this specific question directed at the GSE’s? specifically Freddie Mac, in regards to the servicing guidelines outweighing trust law? I am getting close to finding my loan in a Freddie Mac trust. I have the CUSIP #. So what are the Freddie master trust agreements saying in regards to the handling of the note?

    • lvent says:

      ppark500: MERS stated on their website when I checked it out last year that Fannie Mae is an investor…NOT AN OWNER OF MY LOAN….The media leaked it out that Fannie invested in loans for 2-3 cents on the dollar and Fannie got rich paying themselves on returns on equity…There is alot about the GSE’s scandal in Josh Rosner and Gretchen Morgensen’s book :”Reckless Endangerment”….they said there is a HUGE ACCOUNTING SCANDAL at FANNIE MAE..The GSE’s were a private company and a Government sponsored enterprise? Talk about an illegal and unconstitutional conflict of interest…!! The dirty bastards have been in receivership and they are still getting taxpayer bailouts and handouts and bonuses?….The people of this country should have been marching on Washington D.C. along time ago and demanding all of the politicians step down…they should all be in prison by now…..The politiicians and the CEO’s of the GSE’s and the Wall Street firms…past and present. The attorneys for the servicers are Fannie Mae’s attorney network and they make no secret about that…Fisher and Shapiro, the attorneys repping the servicer, PHH mortgage in my fraudclosure state it on their website…They are all crooks…stealing homes they do not own, they never lent us any money and more than one attorney has stated that fact…The U.S. GOVERNMENT ARE THE REAL TRAITORS HERE…The illegal and unconstitutional fraudclosures must stop!!! The GSE’s cant file an assignment at this late date because that is fraud…….many states want affidavits and we all know, the GSE’s…and the servicers can’t provide those…There is no legal fix for what they did not do….by not filing the proper legal assignment therefore creating a legally enforceable lien…. This is just balls out theft of the homes of the people by the IMF….WHO IS THE NEW WORLD ORDER AND ARE ALSO THE BIGGEST INVESTOR/BONDHOLDER IN FANNIE MAE….THIS IS HIGH TREASON…BY THE U.S. GOVERNMENT…ALLOWING THE GSE’s to STEAL OUR HOMES UNDER THE GUISE OF TOO MUCH DEBT…WHICH IS WALL STREETS/THE BANKS AND THE GSE’S DEBT, NOT OURS….THESE GSE’s AND BANKS WENT MAD WITH AN UNLIMITED U.S. TAXPAYERS CREDIT CARD….$600 TRILLION IN MORTGAGE DERIVATIVES FRAUD..WITH NO COLLATERAL BACKING THAT UP……..THE U.S. GOVERNMENT IS ALLOWING THE FEDERAL GOVT. TO STEAL OUR HOMES NOT EVEN FOR THE CRIMES OF THEIR PERPS. BUT JUST TO STEAL EVERYTHING FROM THE AMERICAN PEOPLE THAT THEY HAVE NO LEGAL RIGHT TO TAKE….THIS IS FASCISM LEADING TO TOTAL COMMUNISM….THE PEOPLE MUST MAKE A STAND…WE THE PEOPLE HAVE TO THROW THE TRAITORS OUT…!!! WHERE IS THE OUTRAGE? I AM APPALLED!

    • lvent says:

      They cashed those notes when they sold the loans onto Wall Street…and Wall Street converted that note into a stock..The MBA already admitted all of the notes were destroyed….the notes weren’t endorsed because they could not multiple pledge the notes if they were endorsed…an endorsed note would have meant the check was cashed and they could not sell it then….and multiple pledge it..Fannie Mae already admitted to multiple pledging the notes…massive collateral mortgage fraud occurred because they and Wall Street oversold interests into those loans …exponentionally….

  7. tony says:

    What they found was a copy of a note, a copy of a mortgage without an assignment in recordable form and maybe an allonge or two without dates or signatures and NOT attached to the note as to become a permament part of. Guess what , there was no NOTE, NO Mortgage and No assignemnt of the Mortgage in recordable form ,how do some of us know there was no assignment of mortgage because years and years later when foreclosure begins it magically appears assigned from the originator ( where in many cases is DEAD) direct to the trustee or successor trust dated that it was just assigned! Then the alonge (“S) are NO GOOD as the copy is just that a copy it is not the NOTE!!! THe original NOTE … THAT”S called FRAUD….

  8. indio007 says:

    “Examiners generally found adequate evidence of physical control and possession of original notes and mortgages.”

    Weasel words alert! WTF is adequate evidence of possession? It doesn’t say they inspected the note itself. The banks probably let them view some other fabricated record.

  9. david black says:

    hi all
    funny how wells fargo is suing emc chase for NOT having the blue ink promissory notes and deeds of trust signed by homeowners at closing . WF is suing them in federal court for NOT having the paper.

    the law requires the trustee to have the blue ink docs in their vault at all times. but they being EMC chase in texas doesn’t have the original paperwork nor as I have alleged many times does any of the big guys.

    these agreements signed this weeek in OLympia wash and by the feds in washington are just a ruse.

    the bigger the lie the more likely it is to be believed

    come july 1st every bank in the country will be using NET PRESENT VALUE to determine the viability of any homeowner’s mortgage. if the homeowner asks for help and flunnks this mysterious test which as been ordered by the FEDERAL RESERVE. then guess what. dual tracking while they tell yo u are being considered for amod and then foreclosure.

    it is ths ame bullshit with a different wrapping on it. before anyone signes anything or apply they should request in my opinion a full set of truth in lending documents and all the paramters and information about the NET PRESENT VALUE TEST. google it and then put NPV banking software for mortgage analysis and yo uwill get some of the vendors names. JULY 1st is the deadline for every bank lender mortgage servicer etc etc in the courntry and NO ONE IS TELLING the AMERICN PUBLIC in the media about this little ruse.

    nor is their any mandated disclosure. in effect with the NPV any modification in today’s mortgage market is NEW LOAN WITHE NO DISCLOSURE as required by federal law before you apply or sign anything.

    qualify and then disclose to the homeowner the facts. tha is the law and the current situation shows that this is NOT what is happening nor will it happen until we all demand it by getting educated about NPV which I have read the FEDERAL RESERVE regulations which can be googled as wel.

    best regards

    • l vent says:

      They can give loan mods with no disclosure? WOW. Thanks for the tip.WHAT A TRAP. No wonder the Il Supreme Ct. ruled the banks have to do a forced loan mediation with the homeowners.My attorney told me don’t even think about trying to get a loan mod, it is a trap, another set up to fail because there will be a balloon payment hidden in there that will eventually cause the homeowner to fail. They want us to re-establish a new debt so they can screw us and later fraudclose with ease. The attorney also told me the mortgage debt is unsustainable and to use the fraud in the whole of my loan against them. The loan mod fraud put me into default intentionally so that I could never cure that default. It is complete tyranny. I refuse to negotiate with the terrorists who set me up to fail and also used me in a PONZI SCHEME that benefitted only the criminals and defrauded not only me, but millions of others.

      • Antipodeus says:

        Thank you, ‘I vent’, for not shouting. Good luck to you against those BASTARDS(!).

      • l vent says:

        Hey antipoedus, Dont try and criticize my freedom of expression. We all should be shouting! I am doing what we are all supposed to be doing. I am shouting that I AM MAD AS HELL AND I AM NOT GOING TO TAKE IT ANYMORE! I am just doing it on the internet instead of out of my window. I wouldnt want my neighbors to call the cops, the bastards might taser me or something. I really live in way to quiet of a neighborhood.

      • I vent…I just saw this comment…and I had to laugh so hard….I actually feel stupid sitting here at 6:38AM by myself laughing so much….your reply to Antipodeus on April 16, 2011…..I am doing it on the internet instead of out my window…..HAHAHAHAHA……THE BASTARDS MAY TASER ME OR SOMETHING…..OMG….I really don’t think you or I are quality ones to protest…especially peaceful protests…maybe riots but not peaceful protests…..I have the mouth and good at using a crowbar….but I really don’t see anything in this whole crime scene to be peaceful about….I would have to wear a strait jacket to march and a muzzle to keep my mouth shut…..LOL.

  10. angry & NOT TAKING IT says:

    the irs when i cked was missing the entire yr 2008 filings.. they knew they were in on it!

  11. PJDJ01 says:

    Can’t wait for someone to depose the report analysts and writers. That would be nice to get into court records.

  12. Hell NO - No More Bailouts says:

    @ debi J,
    Which CW Trust are you looking into? I need any dirt on CWABS 2005-10. I know that one was listed in the Los Angels court case filed by the investors.

  13. Mad as Hell in Maryland! says:

    You said it! The ‘lenders’ are now presenting scanned and pasted documents in court. (Here in Maryland). If you are in the courtroom, and they present a ‘note’, with the claim that it is ‘the original’, DO NOT CONCEED IT! (If the allonge is not attached properly, and an original as well, then, its a FRAUD.) Challenge everything. Have document examined. Let them present it and try to enter it as an exhibit. When you catch them, AND YOU WILL, its all over!


  14. Bust them! says:


  15. debi J says:

    The fraud is so rampant it is appalling. I just found a CW trust that had massive FRAUD payments within the pool. This is so outrageous its almost comical. When is the comedy show gonna end. Are our regulators that lame or incapable to bring this to the light? Let me know if they need MORE evidence besides all the stolen homes. Debi

    • Bust them! says:


      • Bust them! says:


      • l vent says:

        The entire PONZI SCHEME HEIST was done electronically, in cyberspace. I read the CRIMINAL ENTERPRISE used some slick computer program called Ptech. That is how they fooled the masses. Algarhythms is a slick word for we are robbing you silly and this shit we are creating does not really exist, it is all pigs and crap, an illusion, a grand deception.. That is no doubt the main reason why our titles and public recordings do not reveal the actual names behind all of their bogus transactions and is also why there is ORIGINATION FRAUD and there is MERS and FORECLOSURE FRAUD. That is precisely how the CRIMINAL ENTERPRISE has been hiding who they are and therefore the true identities of this PONZI SCHEME ongoing criminal enterprise out there in cyberspace. Cyberspace is not even an actual place that you can put your finger on and touch. Just like our fake Mortgage loans and the entire MERS charade, The Ponzi Scheme Heist was indeed very insidious, pernicious, evil beyond comprehension and nothing more than a GRAND ILLUSION out there in cyberspace. .

  16. FedUp says:

    Yes, this is it!! Can you say: COUNTERFEIT SECURITIES FRAUD!!!? because it is what it is……..

  17. Beautiful! Please I think that WF uses their fronts US Bank and ASC to also act in behalf of WF. Looking at the foreclosures in todays paper, there must be 12 Wells Fargo listed as the plaintiff in foreclosures. I have asked the loan clopser who wired the money for the closing; provide me with a copy of the wire and it was WFHome Mortgage. Did the trust fron them the money to close the loan?

  18. Great work as always! Please keep it up… http://diligencegroupllc.net.



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