Now, this is how it’s done…
For those of you that do not know the term, “It’s On Like Donkey Kong” I provide the definition below…
“A phrase to denote that it’s time to throw down or compete at a high level; something is about to go down. The use of the comical video game character Donkey Kong provides comic relief but the phrase itself has greater or more significance than simply its on.”
For more on Michael Pines see here…
Personally sent to us from one of our fighters from the trenches…
MICHAEL T. PINES, an individual;
CITY OF CARLSBAD, PAUL
EDMONSON, CITY OF SIMI VALLEY,
CITY OF NEWPORT BEACH,
CALIFORNIA STATE BAR, COUNTY
OF SAN DIEGO
Now pay attention to the text from the complaint…
Read it, understand it, and share it with everyone…
This post is longer than the norm but for good reason…
We will start with the OVERVIEW…
The financial institutions and their co-conspirator loan servicers, real estate investors, real estate brokers, and attorneys (Collectively “Banks”) have turned law enforcement into criminals. Law enforcement knowingly engages in a common practice of violating the law. People are being wrongfully evicted from their homes in the millions. Instead or protecting citizens from this criminal conduct, law enforcement aids and abets it and even arrests the victims instead of the criminals.
Plaintiff is a public figure and reputed to be one of the original experts in foreclosure and related law and one of four attorneys that originated legal and public movements against the “Banks”.
He has been arrested on numerous occasions for perfectly legal activities and never prosecuted.
Plaintiff was also the subject of proceedings by the State Bar which is corrupt and conspired with the Banks.
Now let’s take a look at the FACTUAL ALLEGATIONS…
The core of this action arises out of the biggest criminal fraud in history – predatory lending, the unlawful securitization of real proerty loans, and criminal fraud in real estate loan servicing and collection.
It is of such common knowledge that the Court can take judicial notice of the fact that the entire nation was victimized by Pedatory Lending.
The specific facts are set forth in, “The Monster, How A Gang of Pedatory Lenders And Wall Street Bankers Fleeced America – And Spawned A Global Crisis, Michael W. Hudson, Times Books, Henry Holt and Co. LLC., 2010 (“Monster”).
Monster is complete with legal citations, annotations, and irrefutable legal proof.
Real property loans throughout the United States were securitized in the “RMBS” market (Residential Mortgage Backed Securites) and the “CMBS” market (Commercial Mortage Backed Securites),
As is typical when a loan is securitized, the funds Property Owners borrowed did not come from any source that Property Owners could readily identify. Instead, the money came from “Investors,” the identity of whom was concealed by those involved in originating the loan (“Originators”). Notably, Investors all over the world who actually loaned Property Owners money in the first place have filed countless of their own legal actions based at least in part on the very same allegations of predatory lending Property Owners were subjected to. Some examples are: New Orleans Employees’ Retirement System et al v. Federal Deposit Insurance Corporation, et al., United States District Court, Western District of Washington at Seattle, Case No: 2:09-cv-00134-MJPE. Even quasi-federal agencies that invested are filing actions. See, e.g., Federal Home Loan Bank of San Francisco v. Credit Suisse, CGC-10-497840 and Federal Home Loan Bank of San Francisco v Deutsche Bank, CGC-10-497839, San Francisco Superior Court (collectively all of the above investor actions are the “Investor Cases”). The Federal Home Loan Bank of New York, reputed to be the largest and most powerful banking institution in the world has publicly it’s intention to file similar suit against Bank of America. The U.S. Government has also filed suit.
Even before the loans were made, the “Securitizers” had planned and arranged to securitize the loans. In the course of securitizing the loans, Securitizers had a practice of taking more money from the Investors than was loaned to the Property Owners and the Investors. In addition, there were usually “credit enhancements” which could take several forms including such things as “excess spreads”, over collateralization, reserve accounts, surety bonds, wrapped securities, letters of credit, and cash collateral accounts. (See, http://en.wikipedia.org/wiki/Credit_enhancement for a more detailed description). The well-known problems with American International Group (AIG) relate to credit enhancements. Both the Property Owners and the Investors have claims to the credit enhancement funds as well as undisclosed fees taken by the Originators and Securitizers and possible credits and offsets for other items.
As to Property Owners, such funds should be credited against their loans. But it is even worse. For example, according to Property Owners’ records they overpaid at least tens of thousands of dollars were not actually owed. Property Owners allege that once a proper accounting is done and proper credits applied, it will be shown that Property Owners will owe nothing on their loans making the unlawful detainer action used to evict them simply a part of the ongoing fraud. The Defendants had actual knowledge of this, yet, Defendants decided to aid and abet in the fraud.
Securitization Of Mortgage Loans Including Property Owners
Securitization is intentionally complex and the details and even some of the mathematical calculations involved cannot be succinctly set forth in a complaint.
As set forth in the Investor Cases, the securities that the “Securitizers” (anyone involved in securitization) sold are so-called asset-backed securities, or “ABS,” created in a process known as securitization. More specifically, they involved a complex financial instrument product known generically in the securities industry as collateralized debt obligations (“CDOs”). “Synthetic” CDOs are even more complex instruments that are “derivatives” based only indirectly on the CDOs (i.e., Credit Default Swaps).
Securitization begins with the sale of bonds to Investors (usually they are sold “forward”) meaning they are sold to the investors before the Investors’ funds are given to mortgage borrowers such as the Property Owners. Only some of the funds were then used to fund loans such as Property Owners. Investors were led to believe all of their funds except for reasonable fees were forwarded, but this was false.
The entities involved in making the loans are known as the Originators. The process by which the Originators decide whether or not to make particular loans is known as the underwriting of loans. During the loan underwriting process, representations were made to the Investors that the originators would apply various criteria to try to ensure that the loan will be repaid. However, they did not do so and instead, the way the securitization scheme was structured, it was actually in the best interests of the “Securitizers” (including Originators) for the loans to fail. They were clearly not acting with the interests of Property Owners or the Investors in mind.
Until the loans are securitized, the borrowers on the loans sometimes make their loan payments to an Originator, but this may never occur or only be for a very short time. Collectively, the payments on the loans are known as the cash flow from the loans.
A large number of loans, often of a similar type, were supposed to be grouped into a collateral pool. The Originator of those loans claims it sells them (and, with them, the right to receive the cash flow) to a special purpose vehicle called a trust by the Securitizers. The trust is supposed to pay the Originator cash for the loans. As mentioned, the trust raises the cash to pay for the loans by selling bonds, in the form of certificates, to Investors. Each certificate purportedly entitles its holder to an agreed part of the cash flow from the loans in the collateral pool.
There are tranches of investment bonds sold. Typically, “Tranche A” is a veneer of conventional mortgages where the borrowers appear creditworthy. Other tranches had much less credit worthy borrowers. Using the creditworthy borrowers, the Securitizers obtained ratings on the bonds that were inaccurate at best. Securitizers conspired with the rating agencies to mislead investors. Thus, schematically, these are some of the steps in a securitization in no specific order:
a. Investments are created for Investors usually in the form of Bonds.
b. Credit Enhancements are obtained.
c. Rating agencies are provided misleading information and paid to rate the Bonds as “safe”.
d. Investors pay money to the trust.
e. The trust issues certificates to the Investors.
f. The trust pays money to the parties up the chain toward the borrower/property owner through the Originators.
g. Only part of the funds are used to fund mortgage loans such as the one made to Property Owners.
h. The rest of the money is kept by the Originators and Securitizers in the scheme. In other words, by way of example, the Investors might think they are funding a loan for $1 million, however, only $500,000 is actually loaned to borrowers such as the Property Owners, and the Securitizers keep the rest through a complex series of transactions.
i. The Originator and Securitizers plan in advance for the loans to default.
j. Loans made to persons like Property Owners are purportedly placed into one or more pools.
k. The Originator was supposed to assign to the trust the loans and in particular the promissory notes, which were to be placed into a collateral pool, including the right to receive the cash, but a proper assignment/transfer was never done.
l. The trust is supposed to collect cash flow from payments on the loans in the collateral pool; however it has no legal right to do so even under the lengthy, complex documents used in securitization.
m. When the mortgage loans go into default, the Securitizers demand that payment be made to the Investors by the “credit enhancements.”
n. In “Credit Default Swaps” the Securitizers also placed “bets” that the loans would not pay off (as was planned) in order to cover the difference between what was loaned to borrowers such as Plaintiff and what was funded by the Investors and make another hidden profit for the Securitizers. According to some published reports, these unregistered securities were frequently more than 30 times the principal on the mortgage loans (such as Property Owners’). Thus, if the borrowers such as Property Owners did not perform on the loans, the Securitizers would make more money than if they did.
o. After default, even though the mortgage loan is technically paid in full if a proper accounting were done, and legally the Securitizers have no right to collect, the Securitizers, usually through “servicers”, pretend the loan is still owed by the borrowers. They pretend and represent to persons such as Property Owners money is owed on the loans to the original named “beneficiary” on the deed of trust, and try to foreclose on the mortgage and steal the mortgaged real property from borrowers such as the Property Owners. The Mortgage Electronic Registration System (“MERS”) was often used as a part of the scheme named as the “nominal beneficiary” to pretend it had the right to transfer the mortgages and/or collect money from the borrowers such as Property Owners.
p. Securitizers hire law firms such as Defendants who know or should know collection of loans such as the Subject Loan is improper and routinely conceal information concerning such to the courts. (In Re Nosek)
q. The U.S. Supreme Court has found that these law firms are liable in class actions under the Fair Debt Collection Practices Act. (Jerman v. Carlisle, McNellie, Rini, Kramer & Ulrich LP, et al., 130 S. Ct. 1605; decided April 21, 2010). 27. At the risk of being redundant, but also more specific and adding that the taxpayers are paying for this, the order of things is usually as follows:
• The first transactions that occurred were the sale of securities to unsuspecting investors.
• The second transaction that occurred was that the investor money was put into an account at an investment banking firm.
• The third transaction was that the investment banker divided the money between fees for itself and then distributing the funds to aggregators or a Depository Institution.
• The fourth transaction was the closing with the borrower. The loan was funded with the money from the investor after deducting large undisclosed fees and also because of the disparity between the interest payable to the investor and the interest payable by the borrower, a yield spread was created, adding huge sums to what the investment banker took without disclosure to the investors or the borrowers.
• The fifth was the assignment and acceptance of the loan generally into between 1 and 3 asset pools, each bearing distinctive language describing the pool such that they appeared to be different assets than already presumed to exist in the first pool.
• The sixth was the receipt of insurance or counter-party payments on behalf of the pool pursuant to the documents creating the securitization structure.
• The seventh was the re-securitization of the pooled assets between one and three times.
• The eighth was the federal bailout payments and receipts allocable to the balances owed on the loans that were claimed to be part of the pool.
• The ninth are the foreclosures by parties who never provided any money which is often the original named beneficiary on the trust deed.
• In the alternative fraudulent and forged assignments were made, so it could be alleged the law firm defendants represent investors (“robo-signing”) occurred which is currently the subject of criminal investigations.
• Lastly, attorneys are hired to evict the Home owners such as Property Owners.
• After eviction, the house is sold to a new Home owner who is also defrauded since they are told none of this, and no one knows at this point where the proceeds from the sales go.
• It is unlikely it goes back to the government which has at least indirectly funded all this through “bail outs”.
I need to stop here…
If you are still with me on this one, you can check out the full complaint with the criminal loan collections and causes of action in the PDF file below…