Gretchen Morgenson: Who Has Your Back? Hard to Tell

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Gretchen Morgenson: Who Has Your Back? Hard to Tell

Gretchen Morgenson: Who Has Your Back? Hard to Tell

NYT-

What is the duty of a trustee to protect investors?

The answer to that question is at stake in an $8.5 billion settlement that is awaiting approval by a justice in New York State Supreme Court. Early this week, the court will hear closing arguments in a case about the settlement struck by Bank of America and 22 mortgage securities investors two years ago. The settlement would resolve Bank of America’s legal liability for more than one million loans made by Countrywide Financial — now owned by Bank of America — during the mortgage mania. The court will decide whether the settlement is fair and reasonable and can go forward.

While this case may appear to be about Countrywide’s lending practices, what’s really on trial here is the role played in the settlement by Bank of New York Mellon, the trustee charged with protecting all investors in these securities. Trustees for asset-backed securities have a duty to ensure that the companies administering them, known as servicers, do right by the investors who own them.

[NEW YORK TIMES]

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4 Responses to “Gretchen Morgenson: Who Has Your Back? Hard to Tell”

  1. DolleyMadison says:

    Trustees have an obligation to make sure servicers do right by investors?? Servicers have been given carte blanche to the properties allegedly backing these MBS. They manufacture defaults and then show up with a credit bid leaving the investors and the homeowners empty handed. These “trustees” are paid for their name to lure in unsuspecting investors during the offering, then to make the judge think the (pre-schduled, always intended) foreclosure is legitimate. Form 15d (notice of suspension of duty to file reports) is always filed by these trustees within 2 years of the offering. The essesntially wash their hands of the MBS and are seldom, if ever even aware of the ievitables foreclosures. It os no coincidence that the PSAs all included a clause stipualting that the buyers of these MBS have NO RIGHTS TO THE UNDERLYING NOTES. These servicers have a license to steal and, SURPRISE are using it.

  2. It appears BOA does not own the loans at all!!!
    Ut Appa
    SUMMARY: Countrywide used the fictitious (DBA) name AWLI on mortgages and notes. Why? What are the legal implications? Are the mortgage and note void because AWLI did not exist, was not registered with DOL as a dba; was not registered with DFI as a mortgage lender?

    Why: $ and Fraud – See comments to http://www.fool.com/investing/general/2013/06/05/aig-slams-bank-of-america-at-settlement-hearing.aspx

    This was a fairly simple and straight forward process that allowed Countrywide to reap hundreds of millions of dollars in profits for loan and related fees by using tax payer money to originate loans that it could not otherwise make because it didn’t have sufficient resources.

    The plan started out in 2003 under Countrywide direction in anticipation of dominating the home mortgage industry. As every state has strict guidelines for mortgage lending, and requires state licencing, Countrywide sought to circumvent individual state licensing laws and corporation taxes by using a name and entity that would stay under the radar. This was one of the earliest frauds connected to this scheme and was devised to avoid taxes and licensing.

    The plan began to unfold when Countrywide Home Loans, Inc. began registering the trade name Americas Wholesale Lender with the Secretary of State in each state it sought to do business. Accordingly, each respective secretary of state would show “Countrywide Home Loans, Inc. dba Americas Wholesale Lender, under the foreign corporation registration section. [CW is a registered corporation in Washington but nothing on AWL]

    The plan quickly materialized because most, if not all states, were lax in their corporate law enforcement. The name slid under the radar just as expected. Countrywide began making thousands of loans in every state under the name of Americas Wholesale Lender and successfully avoided licencing requirements and paying taxes on profits that were actually realized by Countrywide.

    Countrywide encountered a major snag when observant county recorders in several states refused to record security documents (mortgages and trust deeds) that were held by a trade name or dba, ie: Americas Wholesale Lender. Trade names have no legal capacity, therefore they cannot own property, file lawsuits, or hold recorded security interests.

    For a full discussion see Pagano v. Americas Wholesale Lender, 87 Conn. App. 474.

    Countrywide quickly addressed the problem by committing yet another fraud, which listed the lender on their mortgages and deeds of trust as follows: “Lender is Americas Wholesale Lender, a Corporation organized and existing under the laws of New York”.

    After making this minor, albeit fraudulent and scandalous change in language, Countrywide resubmitted its mortgages to the previously unwilling county clerks who accepted them without reservation because the mortgage holder was now shown to be a corporation. No one noticed that no such corporation was in existence. But that was to come.

    Although Countrywide had dodged that bullet, the reality was that their fraud would be discovered at some point in the future, however they believed that the savings in corporation tax, licensing fees and recording fees would outweigh the future potential cost. They also believed that the courts would consider their fraud just a clerical error, which for many unfortunate borrowers, became true.
    ….
    It was during this time that the secret was discovered… there were 3.5 million loans made in the name of Americas Wholesale Lender, a New York Corporation, (still no such corporation was in existence) and such loans were funded with taxpayer money, they were never sold to securitized trusts as required by their pooling agreement, they were being controlled by Bank of America, Bank of America was collecting payments on those loans, and Bank of America was foreclosing on those loans despite the fact that BOA did not own or fund those loans.

    In an effort to stop Bank of America’s extensive fraud against innocent borrowers, concerned and responsible individuals formed the New York Corporation named America’s Wholesale Lender, Inc. a New York Corporation. (Hereafter AWLI)

    Once that was done, the matter was brought to the attention to the United States District Court that Bank of America was foreclosing on loans it didn’t own and loans that were made in the name of a corporation that BOA held no interest in. The U.S. District Court dismissed the matter as irrelevant and allowed BOA to continue with its fraud. This shocking revelation can be confirmed by review of the case that was filed against Bank of America. (Currently under seal)

    One immediate result of the newly formed Americas Wholesale Lender, Inc. a New York Corporation was that disgruntled borrowers now had a name, address and entity to file suit against. Based upon court records, it is estimated that over 500 suits were filed against AWLI in the first 6 months. At least another 500 suits were filed in the following 6 months. Additionally, Bankruptcy trustees were serving adversary proceedings on AWLI seeking to void mortgages held in the name of AWLI. In all, more than 2000 lawsuits were filed against AWLI related to the fraudulent loans originated by Countrywide.

    Because the individuals who incorporated AWLI were sensitive to the plight of the borrowers, and they were aware of the extensive frauds being committed by BOA, the officers and directors of AWLI decided to take a non-confrontational approach with borrowers who simply sought to cancel their loans made to AWLI. If those suits did not seek monetary damages against AWLI, and simply sought to cancel the mortgage and remove the lien from their property, then AWLI decided not respond to the lawsuit and allow a default judgment to be entered in the borrowers favor. Likewise, when an adversary proceeding was filed against AWLI in a Bankruptcy Court, and the relief sought was to cancel the mortgage, again AWLI simply failed to respond which allowed the Bankruptcy Court to enter a default judgment in favor of the debtor.

    Based upon court records in 22 states involving lawsuits against AWLI that went to default judgment, including bankruptcy cases, it appears that borrowers were able to cancel approximately 18.5 million dollars worth of the fraudulent loans created by Countrywide with taxpayers money. It is safe to say that Bank of America will never be able to defraud these borrowers again, nor will it be able to take their homes away.

    Currently, the more sophisticated foreclosure fraud designed by BOA which includes Bank of New York Mellon, Deutsche Bank, and U.S. Bank NT is in full operation. Despite a second offer made as late as May 2012 by AWLI corporate counsel to BOA counsel to purchase AWLI and stop the fraudulent foreclosures, BOA once again refused the offer in favor of continuing their enormous fraud. Here is how the fraud is being conducted by BOA on the 3.5 million loans that BOA did not pay a single dime for. Remember these loans were not funded by Countrywide or BOA.

    ….

    In the case of these 3.5 million loans, the lender stated on the mortgage or deed of trust is America’s Wholesale Lender, a New York Corporation. Because BOA is not affiliated with AWLI, and because AWLI has attempted to stop BOA from committing this fraud in its name, BOA devised a fraudulent scheme where it has MERS execute an assignment that appears to be on behalf of AWLI, which assigns the loan to either Bank of New York Mellon, Deutsche Bank, or U.S. Bank NT. Once that fraudulent assignment is recorded, that conspirator bank then attaches it to the foreclosure proceedings to defraud that court into believing it is the true owner of the loan. If a borrower is unable to afford an attorney to represent him in court, he loses his home.

    When diligent attorneys become aware of this fraud, they are usually required to hire a forensic mortgage examiner to expose the fraudulent assignment falsely made in the name of Americas Wholesale Lender, a New York Corporation to the conspirator bank. In every case where this fraud is exposed before the foreclosure is completed, the fraudulent assignment is declared void. In a landmark case decided in the Massachusetts Supreme Court, in re Eaton, is was stated that “Bank of America cannot foreclose without committing fraud” (see Amicus Brief of Marie McDonnell)

    In every case where this fraud was committed to complete a foreclosure, that foreclosure is subject to being voided through appropriate legal action. Even if a borrower has lost his home to foreclosure, has been removed from that home, and now resides somewhere else, if he can afford an attorney, that attorney can most likely expose the fraud, which would make the defrauding banks and MERS liable for severe damages, including treble damages for wrongful or fraudulent foreclosure.

    The Attorney General for the State of New York has recovered over 400M from Bank of America stemming from these fraudulent foreclosures. Likewise, he has whacked Bank of New York Mellon and Deutsche Bank for their involvement in this fraudulent scheme.

    Under the lending laws of most states, the 3.5 million loans made in the name of Americas Wholesale Lender, a New York corporation, between 2003 and 2007 are not enforceable. The reason behind that is that in each state, a home mortgage lender must have a license to make home loans. There was no license made in the name of Americas Wholesale Lender, Inc. Also, during this time, no such corporation was in existence, therefore no valid loan could be made in the name of a non-existent lender. In all states, if a corporation is not registered with that state, it has no legal capacity to conduct business. That law applies here. Another flaw was that the Mortgage or Deed of Trust named AWLI as the lender, but in some cases the Note named an entirely different party. In those cases, neither the Note or Mortgage was enforceable.

    NOTE: AWLI WAS NOT REGISTERED WITH DFI http://mortgage.nationwidelicensingsystem.org/slr/PublishedStateDocuments/WA-Consumer-Loan-Company-Description.pdf

    Additionally, neither BOA or Countrywide ever funded any of the 3.5 million loans made in the name of Americas Wholesale Lender, a New York Corporation. In every case, those loans have now been fully repaid by the TARP bailout and the various insurance companies who insured the securitized trusts where the loans were to have been pooled and transferred, but no transfer was ever made. In every case on these 3.5 million loans where an assignment of that loan was made to Bank of New York Mellon, Deutsche Bank, or U.S. Bank, NT, any such assignment, in addition to being fraudulent, and made without consideration, was made after the expiration date of the pooling agreement and was made strictly as a litigation tool to cause the appearance of a proper foreclosure. It should also be noted that any such assignment will show to be made immediately prior to foreclosure notices being sent to the borrower, but usually years after the expiration date of the pooling agreement. The enforcement and collection of these loans by BOA means they are being paid twice, and of course, at tax payer’s expense.

    See comments to http://www.fool.com/investing/general/2013/06/05/aig-slams-bank-of-america-at-settlement-hearing.aspx

    Note, CW registered the word mark “America’s Wholesale Lender” on 2/8/93. It was assigned to BOA on 11/8/08 (recorded on 1/13/09).

    Research: cannot sue under a word mark unless registered as a dba.

    AMERICA WHOLESALE LENDER v. SILBERSTEIN also found;
    “An assignee, however, may not commence an action solely in a trade name either, regardless of the entity to which the trade name applies, because a trade name is not an entity with the legal capacity to sue. Nor could Countrywide cure the jurisdictional defect by substituting a party with the legal capacity to sue on behalf of the trade name. The named plaintiff in the original complaint never existed. As a result, there was no legally recognized entity for which there could be a substitute.” [. . .]
    …and continues
    [. . .] Furthermore, because America’s had no standing to bring an action, no action in this case ever was commenced, as it was void ab initio. In the absence of standing on the part of the plaintiff, the court has no jurisdiction.

    Note, dba is a fictitious name but the trade name must be registered with State Department of Licensing. http://bls.dor.wa.gov/tradename.aspx

    RCW 19.80.010 Registration Requires:

    Each person or persons who carries on, conducts, or transacts business in this state under any trade name must register that trade name with the department as provided in this section. (4) Foreign or domestic corporation: The registration must set forth the corporate name as filed with the office of the secretary of state.

    ….

    RCW 19.80.040

    Failure to file.

    No person or persons carrying on, conducting, or transacting business under any trade name shall be entitled to maintain any suit in any of the courts of this state until such person or persons have properly completed the registration as provided for in RCW 19.80.010. Failure to complete this registration shall not impair the validity of any contract or act of such person or persons and shall not prevent such person or persons from defending any suit in any court of this state.

    SO, you don’t sue them. Wait till they sue you.

    I believe action should be considered to preserve breach of warranty claims under UCC 3-416 against BOA for mortgages/DOT and loans generated under the fictitious name America’s Wholesale Lender, Inc. “a New York Corporation.” I have to determine if the borrower has standing to assert a breach of warranty claim but assume they can as given they are part of the original deal (privity) or, at least, a third party beneficiary to any mortgage/DOT assignment and loan transfer.

    Add fraudulent transfers of loans that do not belong to Bank of America

    That action can be service of a summons and a complaint on AWLI seeking a declaratory judgment that it did not authorize endorsement and transfer of the note. That break the chain of transfer/assignment and eviscerate any claim by BOA.

    As noted in my prior emails, there was no such entity until 2008 and the one that was set up was set up by debtors to stand down on any litigation. See: http://www.fool.com/investing/general/2013/06/05/aig-slams-bank-of-america-at-settlement-hearing.aspx

    “In the case of these 3.5 million loans, the lender stated on the mortgage or deed of trust is America’s Wholesale Lender, a New York Corporation. Because BOA is not affiliated with AWLI, and because AWLI has attempted to stop BOA from committing this fraud in its name, BOA devised a fraudulent scheme where it has MERS execute an assignment that appears to be on behalf of AWLI, which assigns the loan to either Bank of New York Mellon, Deutsche Bank, or U.S. Bank NT. Once that fraudulent assignment is recorded, that conspirator bank then attaches it to the foreclosure proceedings to defraud that court into believing it is the true owner of the loan. If a borrower is unable to afford an attorney to represent him in court, he loses his home.

    In an effort to stop Bank of America’s extensive fraud against innocent borrowers, concerned and responsible individuals formed the New York Corporation named America’s Wholesale Lender, Inc. a New York Corporation. (Hereafter AWLI)

    Once that was done, the matter was brought to the attention to the United States District Court that Bank of America was foreclosing on loans it didn’t own and loans that were made in the name of a corporation that BOA held no interest in. The U.S. District Court dismissed the matter as irrelevant and allowed BOA to continue with its fraud. This shocking revelation can be confirmed by review of the case that was filed against Bank of America. (Currently under seal)

    One immediate result of the newly formed Americas Wholesale Lender, Inc. a New York Corporation was that disgruntled borrowers now had a name, address and entity to file suit against. Based upon court records, it is estimated that over 500 suits were filed against AWLI in the first 6 months. At least another 500 suits were filed in the following 6 months. Additionally, Bankruptcy trustees were serving adversary proceedings on AWLI seeking to void mortgages held in the name of AWLI. In all, more than 2000 lawsuits were filed against AWLI related to the fraudulent loans originated by Countrywide.

    Because the individuals who incorporated AWLI were sensitive to the plight of the borrowers, and they were aware of the extensive frauds being committed by BOA, the officers and directors of AWLI decided to take a non-confrontational approach with borrowers who simply sought to cancel their loans made to AWLI. If those suits did not seek monetary damages against AWLI, and simply sought to cancel the mortgage and remove the lien from their property, then AWLI decided not respond to the lawsuit and allow a default judgment to be entered in the borrowers favor. Likewise, when an adversary proceeding was filed against AWLI in a Bankruptcy Court, and the relief sought was to cancel the mortgage, again AWLI simply failed to respond which allowed the Bankruptcy Court to enter a default judgment in favor of the debtor.

    Based upon court records in 22 states involving lawsuits against AWLI that went to default judgment, including bankruptcy cases, it appears that borrowers were able to cancel approximately 18.5 million dollars worth of the fraudulent loans created by Countrywide with taxpayers money. It is safe to say that Bank of America will never be able to defraud these borrowers again, nor will it be able to take their homes away.

    Hence, consider whether or not a homeowner should seek a simple declaratory judgment naming AWLI for breach of transfer warranty. UCC 3-416(d). Specifically, that the endorser [e.g. David A. Spector, Managing Director for “Countrywide Home Loans, Inc., doing business under the fictitious business name of America’s Wholesale Lender, a New York Corporation”] was unauthorized by AWLI. Mr. Spector was not “a person entitled to enforce the instrument.” He was acting in bad faith. This could be relatively simple given what is reported above concerning AWLI. I assume AWLI would not contest that claim thereby eviscerating BOA’s claim.

    Although AWLI is a New York Corporation, it was doing business in Washington so a declaratory judgment action could be filed in state court per the long arm statute.

    NOTE THE SHORT STATUTE OF LIMITATIONS UNDER WASHINGTON’S UCC 3-416: http://apps.leg.wa.gov/rcw/default.aspx?cite=62A.3-416

    (c) The warranties stated in subsection (a) cannot be disclaimed with respect to checks. Unless notice of a claim for breach of warranty is given to the warrantor within 30 days after the claimant has reason to know of the breach and the identity of the warrantor, the liability of the warrantor under subsection (b) is discharged to the extent of any loss caused by the delay in giving notice of the claim.

    I am considering serving a simple declaratory judgment complaint naming AWLI and BOA. As you know, this technically begins a lawsuit (per the terms of the summons) and, from my experience, is akin to a test run with the opposition telling you what is incorrect. This is helpful for vetting the facts/law and redrafting an amended complaint which would be filed.

    FYI, AWLI’s registered agent is.

    DOS Process (Address to which DOS will mail process if accepted on behalf of the entity)
    NATIONAL REGISTERED AGENTS, INC.
    STE. 105
    875 AVENUE OF THE AMERICAS
    NEW YORK, NEW YORK, 10001

    Registered Agent
    NATIONAL REGISTERED AGENTS, INC.
    STE. 105
    875 AVENUE OF THE AMERICAS
    NEW YORK, NEW YORK, 10001

    What do you think? Perhaps this should be a class action for anyone who has a AWLI loan that is endorsed in blank and without recourse by David A. Spector, Managing Director for Countrywide Home Loans, Inc., doing business under the fictitious business name of America’s Wholesale Lender, a New York Corporation.
    AIG Slams Bank of America at Settlement Hearing
    http://www.fool.com
    AIG brings up some pertinent issues regarding a settlement that may not have been as voluntary as once thought. – Amanda Alix – Financials

  3. A debt is not owed twice when the PSA is paid in full by insurance! ahttp://stopforeclosurefraud.com/2013/09/09/the-embarrrassing-double-dipping-docket-bank-foreclosure-complaints-conceal-that-the-psa-trusts-pay-defaulted-mortgages/ payment – Legal Dictionary – The Free Dictionary
    legal-dictionary.thefreedictionary.com/payment?
    Good faith does not allow us to demand the payment of the same thing twice. … day, as an absolute payment, the principal would be discharged from the debt.

  4. Sarah says:

    What role do investors have in slamming 20 million people out of their houses? Answer: Plenty. (No, not those investors, but those investors.)
    Gretch can’t provide anymore than puffery in her NYT role. Any writer that dares to describe what is the greatest scam of them all, the so-called American Dream, is out of a job. Who has the back of the real victims? Oh, we’re not even going to mention them anymore.

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