Académique Documents
Professionnel Documents
Culture Documents
case, investors would have a claim for the rescission of the MBS, meaning that the securitization would be unwound, with investors receiving back their original payments at par (possibly with interest at the judgment rate). Rescission would mean that the securitization sponsor would have the notes and mortgages on its books, meaning that the losses on the loans would be the securitization sponsors, not the MBS investors, and that the securitization sponsor would have to have risk-weighted capital for the mortgages. If this problem exists on a wide-scale, there is not the capital in the financial system to pay for the rescission claims; the rescission claims would be in the trillions of dollars, making the major banking institutions in the United States would be insolvent. This is significant for two reasons: first, it points to pattern and practice, and not a mere isolated lapse. Second, Countrywide, the largest subprime originator, reported in SEC filings that it securitized 96% of the loans it originated. So this activity cannot be defended by arguing that Countrywide retained notes because it was not on-selling them; the overwhelming majority of its mortgage notes clearly were intended to go to RMBS trusts, but it appears industry participants came to see it as too much bother to adhere to the commitments in their contracts. From StopForeclosureFraud
EXPLOSIVE |CASE FILE New Jersey Admissions In Testimony NOTES NEVER SENT to Trusts KEMP v. Countrywide
The new allonge was signed by Sharon Mason, Vice President of Countrywide Home Loans, Inc., in the Bankruptcy Risk Litigation Management Department. Linda DeMartini, a supervisor and operational team leader for the Litigation Management Department for BAC Home Loans Servicing L.P. (BAC ServicingV testified that the new allonge was prepared in anticipation of this litigation, and that it was signed several weeks before the trial by Sharon Mason. As to the location of the note, Ms. DeMartini testified that to her knowledge, the original note never left the possession of Countrywide, and that the original note appears to have been transferred to Countrywides foreclosure unit, as evidenced by internal FedEx tracking numbers. She also confirmed that the new allonge had not been attached or otherwise affIXed to the note. She testified further that it was customary for Countrywide to maintain possession of the original note and related loan documents. From Firedoglake
Deposition: Countrywide Never Sent Mortgage Notes to Trust; MortgageBacked Securities in Question
If the notes never transferred to the trust, theres no way to retroactively do that now; the trusts are governed by very specific pooling at servicing agreements that for the most part give the trust 90 days to transfer all the required assets. You cannot transfer the loan after its slipped into default, 3 or 4 years after setting up the trust. It violates the laws and contracts under which the investors purchased the securities.
This is an enormous deal. If Countrywide never gave up possession of the note, then the trust has no standing to foreclose whatsoever. It also means that investors in the MBS dont actually have securities backed by mortgages. The allonge appears to be an effort to clear up this situation, and it was signed years after the fact, well past the deadline of the pooling and servicing agreement, and not even affixed to the note as required by law. This is a deposition from one supervisor, but it could mean that all mortgage pools that Countrywide sold are suspect. That would amount to perhaps hundreds of billions of dollars in MBS. And the law appears to be air-tight on this, and not governed by the Constitution but New York trust law and the specifics of the pooling and servicing agreement. Now, tell me again how the banks are planning to get out of this. From The Market Ticker
Most if not all of the MBS trusts are organized under NY Trust Law. NY Trust Law requires that delivery be made in as perfect a form as possible. Intentionally not delivering anything is so far removed from this requirement that it is a near-certainty that the Trusts are in fact legally void. IRS REMIC rules require that the trusts contain a static pool of loans, and that they all be in the trust as of the certification date. This is typically 90 days post-closing of the trust (the 90 days is to allow a few late deliveries.) If REMIC rules are not followed the entire trust loses its tax passthrough preference and back taxes are due on the operations of the trust back to the point of violation in this case, back to the
founding. The holders of the certificates could become held financially responsible for these taxes at the corporate rate. The Pooling and Servicing Agreements all contain certifications that the formalities of transfer were complied with, including all intervening assignments and delivery to the Trust. These are not certifications of something to be done prospectively,they are certifications of fact that have allegedly occurred. If in fact no transfers took place then the entire MBS chain is arguably void as there are no mortgages in the securities. This would constitute the largest fraud ever perpetrated upon investors in the history of the world. And now, to top it off, we have in formal testimony an admission by Bank of Americas litigation management department, that they have concealed this fact from the public markets. Where is the notification required of a material adverse event in the firms 8Ks, 10K or 10Qs on this matter? This sort of knowledge certainly has the potential to be material (in that the liability would exceed the Banks capitalization several times over) and yet we first learn of this in a conclusive fashion in a lawsuit?
Mr. President and Sheila Bair: TAKE THESE BANKS, PARTICULARLY BANK OF AMERICA, INTO RECEIVERSHIP NOW. This outcome cannot be avoided. We must do this in a form and fashion that is controlled, which means you must do it now, before the vultures get their teeth into these issues. There is no way to retroactively fix this were talking about trillions of dollars here, more than you can print and play with, and there are international concerns that own these MBS as well. The rule of law must be upheld. View this entry with comments Well, there you have it Just technical difficulties, right? See ya in the trenches Full complaint below