The Market Ticker – Foreclosuregate, Housing And Fraud


Foreclosuregate, Housing And Fraud

There has been much digital ink spilled on the Foreclosuregate (or if you prefer, Fraudclosuregate) story over the last couple of years, but one thing has been only touched upon lightly – if at all.

That is the underlying “low-level” fraud that is unspoken in many of these actions.

There’s a general principle under the law when one desires to bring a lawsuit – the principle of injury.  That is, you can’t sue me because you think I’m ugly.  You need to show actual economic damage in order to obtain the relief you seek.  There are many examples where civil courts have reached a conclusion that indeed the facts support the case but there’s been no showing of economic harm and thus the plaintiff gets awarded one penny.

There has been an astounding lack of credulity on this matter of economic injury in these foreclosure suits.  In fact, I’ve yet to see a foreclosure complaint that alleges actual economic injury.

Instead, they all allege it’s cousin, lack of payment.

But lack of payment isn’t necessarily economic injury.

Let’s say that you hit me in your car.  You have insurance and so do I.  My medical treatment costs $20,000, and you’re ruled entirely at fault in the collision.  We’ll assume for the moment I have no “pain and suffering” damages nor lost time at work and thus no lost income – that is, we have a neat and tidy case where the total economic harm is $20,000.  I cannot sue you unless my economic injuries are not paid for through some other means.

If your insurance company pays the medical bill, I no longer have economic harm, thus I cannot win anything in a lawsuit.  Likewise if my insurance company covers the bill (unless it jacks up my insurance rates or somehow otherwise damages me.)  Finally, you might just hand me $20,000, which moots my pending lawsuit immediately as once again, I have no economic harm.

When a mortgage loan is packaged into one of these “securities” and then all sorts of protection and credit enhancement are taken against it, it is no longer a simple matter of saying that because you didn’t pay, there are economic damages in the amount of your lack of payment.  In fact, there may be no economic damage sustained by the entity that is suing you at all!

Take the instance of a “credit default swap.”  Remember that a CDS is not an insurance contract.  That is, it typically will not contain things like a right of subrogation or set-aside (the ability to go after the cause(s) of the payment under the CDS contract or pursue other assets of the defaulter in court) but rather is a pure “payment for event” sort of agreement.  Well, if that CDS payment moots the economic damage, does the alleged foreclosing party still have standing to eject you from your house?

Let’s follow this through an MBS.  For simplicity sake we will assume it is comprised of 1,000 loans.  Let us further presume that 10% of those loans default.

Ok, can you foreclose on those homeowners?

Remember, to be able to sue for a remedy in civil court, you must show economic harm.  A breach without economic harm brings no right of recovery!  Being*****ed off is not economic harm, and neither is non-payment unless the party suing you, directly or through an agent, suffers a loss.

Well, in the base case you’d probably say “yes”.  But who can sue?  Normally the PSA delegates this authority to the servicer or their agent.  Again, however, the underlying facts to be pled in a lawsuit that permit recovery must demonstrate economic harm.

The key question: Were the certificate holders economically harmed when all of the payment flows are accurately accounted for?

Well, that does depend now, doesn’t it?  The super-senior holders might not be, because of their credit protection.  More-junior holders might be harmed, but then the question turns on an accounting – was there credit protection bundled with the tranche or did they purchase it individually?  Was their position actually damaged as a consequence of your non-payment?

Hmmmm…. looks like we need an accounting here of the trust and the actual economic harm, right?  This does not mean, by the way, that one must show any particular amount of harm, beyond the general threshold of “materiality”, to sustain a foreclosure.

But what if there is no harm at all because of these credit enhancements and swaps, and in fact foreclosure is actually a double-dip – that is, double recovery?

In that case all such foreclosures are fraudulent.  Not because of a lack of paperwork and not because someone “should” or “should not” get a free house – but simply because the entity bringing the suit not only didn’t suffer a loss, they stand to gain rather than recover a loss through doing so.

Can I ask why we don’t see both pleadings where a securitized loan defaults alleging actual economic harm and an accounting of how that’s arrived at, rather than its surrogate – the allegation that you didn’t pay?

View with responses


10 Responses to “The Market Ticker – Foreclosuregate, Housing And Fraud”
  1. lies is all they tell says:

    the banks hold their retirement pensions. if they legally do the right thing because all the mortgages are null and void they will not have a pension. so they think they are helping their own cause.

  2. Readdocs says:

    Find out what the statute of limitations are for your state, and then begin
    a goal of counter suing to get your home back. It will take a lot of patience
    and persistence. If your mortgage is serviced or “owned” by a too big to
    fail bank, chances are you’re looking at fraud.
    Go back through your origination documents you signed at closing and read
    every thing plus who printed the documents. There are several good web sites
    dedicated to research you can use to do some indepth search that will keep
    you off of radar. Don’t use any pertinent personal information that could lead
    to your true identity when communicating on a public forum.
    Go regularly (monthly) to the county court house and check the documents
    recorded on your home to see if anything changes, there’s lots of good info
    to had from that source. In some cases you can check online for many counties.

    I am not a lawyer, and this is not legal advice. My humble opinion only.

  3. pcampbell says:


    Previously with a near perfect credit and two businesses, our family was devasted economically and was never given an honest opportunity to even modify my mortgage after almost a year and 1/2 of useless games with Wells Fargo. Rather, we are being forced out through short sale in two weeks from our home now being sold for $150,000 under the loan balance… to a non-citizen.

    No wonder Wells Fargo could never come up with the holder of the bank note; because it’s impossible to have a clear “owner” of title/note when its one of 1000’s of shareholders of these Mortgage Back Securities. When the mortage went into defult the “insurance” should have been paid out and the loss was midigated. If anyone should have right to sue for forclosure it should be the insurance company that insured the MBS right? But then how to you untangle that one home among 1000’s in the MBS? Got me there!

    When we originally stood-off the foreclosure sale date early this year in Bankruptcy court we had a confusing series of conveluted parties at “arms length” from our mortgage transaction and had no idea who we were dealing with. Frankly, I don’t think the judge knew either. Was our paperwork robosigned? I have no-idea.

    What you said above is what I was saying to my attorney 6 months ago as we filed chapter 7; but he didn’t get the MBS ponzi scheme. Instead he wanted a $20,000 retainer to return to court after he already over-charged us an extra $500 on our chapter 7!

    With 2-weeks to the street we still haven’t secured a decent place to rent because there are so few available in community we live in. And guess what? Because so many are in the same boat we are that means that land lords can jack-up the prices to about where our mortgage used to be. Great deal!

    • lies is all they tell says:

      hi you not say what state but his has happened to me and my husband please contact me. i hope you plan on appealing??? i also went through the same thing with wells fargo in the end telling me a current home owner to stop paying my mortgage. i am interested to know if they told you the same thing to you. my lawyer also does not know alot about this ponzi scheme. i brought up promissary estopel. because by telling me to stop paying the mortgage null and voids the contract. its case law. so contact me. w eneed to start fighting back. wells fargo not fund these loans. check with your tilte company they are in on it. the real lender was not on our note and mortgage. also the securitization proccess we were not involved in that decision also illegal. this has to stop and we must fight back please contact me please!!!!!

  4. lvent says:

    I agree the proof we were set up to fail is in the Swaps insurance….They knew there were real risks involved with these mortgage investments and the borrower was immensely decieved about what they were doing with all of these loans…… It was a massive and pernicious set up to fail..The banks put the word Liar in the Liars loans as Professor Wm. Black discussed on the Keiser Report last week…The stock market crash was also intentional as CNBC already reported that INSIDER TRADING CRASHED THE MARKETS IN 08…. You tube search the video, CNBC Illuminati Crashes Stock Market…..Bottom line is there is 40 TRILLION IN COLLATERAL FRAUD and up to 10 MORTGAGES ON EACH PROPERTY and that is the PROOF that THIS ENTIRE FINANCIAL CRISIS IS A GIANT MANUFACTURED HOAX..UNSUSTAINABLE DEBT BACKED BY ZERO COLLATERALLLLL… and those REAL NUMBERS must get out to the masses…..Stealing everything from the people to cover for all of this FAKE MANUFACTURED DEBT CREATED VIA A MASSIVE MORTGAGE FRAUD PONZI SCHEME IS DESPICABLE and THE TRUTH THAT MUST GET OUT TO THE PUBLIC…….EXPONENTIAL FRAUD IS WHAT WE HAVE HERE….Bloomberg reporting that BOFA’s problems began when they BLINDLY AQUIRED COUNTRYWIDE…WHY HOW INCREDIBLY DECEPTIVE!!!!!….BOFA OWNS THIS MORTGAGE FRAUD MESS AND THEY WERE ALL DOING THE SAME FRAUD AS INSTRUCTED BY THEIR RULING ELITE OWNERS…….The truth is, this was a massive set up to fail for all of us and we were never meant to recover from it…..the ruling elite and their minions and cohorts RANG MAINSTREET UP WITH UNSUSTAINABLE DEBT AND PULLED THE RUG OUT FROM UNDER THE AMERICAN PEOPLE…….AND THE TRUTH ABOUT THE DOLLAR AMOUNT OF THE COLLATERAL FRAUD BECA– USE OF THE MULTIPLE PLEDGING OF NOTES MUST GET OUT TO ALL……IF THEY CONTINUE TO GET AWAY WITH COVERING UP THE TRUTH ABOUT THE MORTGAGE FRAUD PONZI SCHEME AND LEGALIZING FRAUD, WHAT WILL COME NEXT IS HELL ON EARTH…THE TRUTH MUST BE TOLD TO EVERY AMERICAN……..20 MILLION MORE FRAUDCLOSURES IS WHAT THEY ARE PLANNING……THEY ARE COMING FOR EVERYTHING WE HAVE…..NO ONE IS SAFE…..WAKE UP AMERICA!!!!!!!!!!!!!!!!!!!

  5. Constitutional ChrisYAHan says:

    The Inspirations to: Felony CRIMINALITY, evinced, by the apparent escalations; by Government and Law Officios, to engage in the MULTIFARIOUS Fraud and Racketeering ARTS, provided by: CONvienience via:” Government LICENSE to STEAL Private Property,” of AMERICAN NATIONALS, under the express: artifices, schemes, devices, and Instruments of Frauds, including the specifically CONtrived CONvienient PRETENSES of: “ANONYINMITY” afforded through: the COVER of pretenses; of dubiously posed: “National Security CONcerns,” seem to have been precisely: EMBOLDENED, through the LEAD, of the Pretend POTUS’ “Chicago MOB; Political TACTICS, “including: mere Thuggery and Robbery, by Un-Lawful SEIZURES of Money [Debt NOTES,] Land , Vehicles and Other Private Propertys By: Dept. Homeland Security [Storm Troopers/ S.A. / Brown Shirts,]with VEILED, NON-specific InDEFENSIBLE SECRET allegations, to the mere HYPERBOLY, CONtrived, Baseless assertions, to PREDICATE THEFTS!

  6. Mad as Hell in Maryland says:

    SUPERBLY SAID! Hit the nail on the head! (Out of the park, etc).

    Its time to start fighting back! Question everything. Do your best to obtain loan level accounting. Justice may actually be served.

    Good luck to all. Fight the good fight!

  7. housemanrob says:

    Wow, Now just get the courts and judges to see that point of view…..they do, but they are paid to rule for the banks!

Leave a Reply