Gee, who woulda thunk…
See, I Told You So (Deliberate Destruction Of Documents)
Yves over at Naked Capitalism has dug up confirmation of what I’ve been saying now for more than two years and have had on “background” and could not “out” the sources of – the practice of not complying with both MBS securitization offering circulars and black-letter state law was both pervasive and intentional.
One of my colleagues had a long conversation with the CEO of a major subprime lender that was later acquired by a larger bank that was a major residential mortgage player. This buddy went through his explanation of why he thought mortgage trusts were in trouble if more people wised up to how they had messed up with making sure they got the note. The former CEO was initially resistant, arguing that they had gotten opinions from top law firms. My contact was very familiar with those opinions, and told him how qualified they were, and did not cover the little problem of not complying with the terms of the pooling and servicing agreement. He also rebutted other objections of the CEO. They guy then laughed nervously and said, Well, if youre right, were fucked. We never transferred the paper. No one in the industry transferred the paper.
WE NEVER TRANSFERRED THE PAPER. NO ONE IN THE INDUSTRY TRANSFERRED THE PAPER.
Got it folks?
This was not an accident and the dog didn’t eat anyone’s homework.
THE MAJOR BANKS AND LENDERS ALL INTENTIONALLY FAILED TO COMPLY WITH BOTH THEIR OWN OFFERING DOCUMENTS AND BLACK-LETTER STATE LAW.
Even better – in 2009 The Florida Banker’s Association ADMITTED that they have been intentionally destroying the original “wet ink” signatures and documents:
The reason many firms file lost note counts as a standard alternative pleading in the complaint is because the physical document was deliberately eliminated to avoid confusion immediately upon its conversion to an electronic file. See State Street Bank and Trust Company v. Lord, 851 So. 2d 790 (Fla. 4th DCA 2003). Electronic storage is almost universally acknowledged as safer, more efficient and less expensive than maintaining the originals in hard copy, which bears the concomitant costs of physical indexing, archiving and maintaining security. It is a standard in the industry and becoming the benchmark of modern efficiency across the spectrum of commerceincluding the court system.
I don’t care what’s a “standard” if it does not comport with the law!
This is like saying that “dealing crack is a standard in the gang industry, therefore, we can sell it even though Federal Law says that we should go to prison for doing so.”
Incidentally, for those who will chime in that “electronic copies are just as good”, no they’re not. They’re not secured, they’re not cryptographically signed and verified by the originator, and they are trivially easy to tamper with.
I’d accept that an electronic copy is ok provided that the original is scanned, encoded, and digitally signed by the consumer at the point of origination, and that consumer then takes the original and a copy of the electronic document with him, with all of this being disclosed and approved by the consumer. If I PGP-sign a document or file it is extremely difficult to tamper with it in a way that cannot be detected. But without that sort of signature and encoding in the presence of the consumer, along with the consumer being the one that gets the paper copy, it is essentially impossible to prove that the document was not tampered with. “Wet signatures” and originals are required for exactly this reason – it makes tampering dangerous as it can usually be detected quite easily.
This is massive, pernicious and OUTRAGEOUS fraud folks.
It is fraud upon the county governments who were deprived of their recording and transfer fees (e.g. “doc stamps.”)
It is fraud upon all of the MBS buyers, who purchased these securities with a representation and warranty that these notes WERE transferred and properly endorsed.
And it is fraud upon the courts when the “lost note” affidavits are filed asserting that the documents were LOST, when in fact THEY WERE INTENTIONALLY DESTROYED.
If you hold private-label MBS wake the hell up and get your lawsuits going, because these big banks that put this stuff together will not survive this and the only way you get anything back is to be first in line.
Folks, this is not small potatoes or something we can overlook.
We are talking about intentional, pernicious, industry-wide fraud perpetrated upon the public, upon the government, upon homeowners and upon investors to the tune of trillions of dollars.
We MUST NOT tolerate this.
Each and every institution involved must be held to criminal account for their willful and intentional acts in this regard.
Bail these people out? Hell no. They deserve a speedy and public trial, to be immediately followed by the proper sanction imposed for intentional acts taken to destroy this nation and it’s financial stability. This is terrorism, exactly as Bin Laden intended (destruction of our economy) and should be met with an identical punishment.
SOURCE: The Market Ticker
E-notes don’t exist and are not legal. The only way they can be legal is if the issuer expressly consents the to electronic record.
From the electronic commerce act
15 USC CHAPTER 96 – ELECTRONIC SIGNATURES IN GLOBAL AND
Sec. 7003. Specific exceptions
(a) Excepted requirements
The provisions of section 7001 of this title shall not apply to a
contract or other record to the extent it is governed by –
(1) a statute, regulation, or other rule of law governing the
creation and execution of wills, codicils, or testamentary
(2) a State statute, regulation, or other rule of law governing
adoption, divorce, or other matters of family law; or
(3) the Uniform Commercial Code, as in effect in any State,
other than sections 1-107 and 1-206 and Articles 2 and 2A.
Sec. 7021. Transferable records
For purposes of this section:
(1) Transferable record
The term “transferable record” means an electronic record that –
(A) would be a note under Article 3 of the Uniform Commercial
Code if the electronic record were in writing;
(B) the issuer of the electronic record expressly has agreed
is a transferable record;
Mr. Kessler, there has been harm done. There are many people out there that were going about their business so to speak , making payments working hard… and boom, the TBTF bailout and double digit unemployment. All because their ABS, their home and payment stream was used to sweeten the pot of Toxic Loans. Know plenty of people that were/are out of work that drained savings, deterred college for their kid’s to keep a roof over the families head, most with manageable mortgage payments and significant equity in their homes. First they were hit in 2004-2008 with increased “assessments” due to the “bubble” and “false appraisal values” of properties sold… then they are hit by record unemployment, and their children and their children’s children will bare the burden of debt via the bailouts!
When do these Americans get a fair shake? In fact each and every homeowner should have the right to demand, without recourse, and receive full disclosure on how, when , and by whom their “asset” was used to perpetuate this fraud. As information provides, it is quite possible that the “pooled” mortgages of these people have been paided off 5X’s over. To that extent, then there should be a “free house”, and residual damages paid to people, many who have found themselves and their families devastated by no action of their own.
I do not agree with the conclusion. Digitization of documentation when it comes to the chain of mortgage title and the mechanics prescribed by state law for the transfer of holder status were flouted by the securitzation industry. This does not automatically work a fraud upon the borrower. It does create major legal problems. Part of the problem, as you correctly indicated, is that digitization was undertaken with neither the consent nor the knowledge of the borrower. I believe this is part of the major legal problem that consent of the borrower is required for securitization as well as digitization of the conveyance of mortgage title and was never obtained from the borrower.
It may well make the mortgage unenforceable. However, this will not stop a judge from declaring an equitable trust in favor of the creditor. Your analysis fails to address the question how was the borrower harmed. It is the harm that provides the predicate for a monetary counterclaim for damages to offset the equitable mortgage.
Yea….I’ve gotten three versions of my “original” and “certified true copies” of my Deed of Trust over the lasst three years from my lender……they have yet to come up with the “assignment” although the pool said they were to be recorded in the land records in 2006…….what did they have soooo many they just didn”t get arount to it til now…….4 years later???
How folks were harmed is yet to be determined. When a Mortgage is paid off per the note, will you then get the original sent to you makked Paid Iin Full?
That was always a time for a burning of the note party.
Now, because fo these false notes and lost notes, the fear is noone knows who actually holds the original note and who you are paying is in question.
The forced uncertainty, and no guaranty you are paying who you are supposed to be paying and will not have someone show up demanding payment with the original in their possession after you’ve in good faith paid all you were supposed to is the harm!