Same Old Story: Paper Trail vs, Money Trail (Freddie Mac) Posted on May 15, 2018 by Neil Garfield

Same Old Story: Paper Trail vs, Money Trail (Freddie Mac)
Posted on May 15, 2018 by Neil Garfield
Payment by third parties may not reduce the debt but it does increase the number of obligees (creditors). Hence in every one of these foreclosures, except for a minuscule portion, indispensable parties were left out and third parties were in reality getting the proceeds of liquidation from foreclosure sales.
The explanations of securitization contained on the websites of the government Sponsored Entities (GSE’s) clearly demonstrate what I have been writing for 11 years and reveal a pattern of illusion and deception.

The most important thing about a financial transaction is the money. In every document filed in support of the illusion of securitization, it steadfastly holds firm to discussion of paper instruments and not a word about the actual location of the money or the actual identity of the obligee of that money debt.

Each explanation avoids the issue of where the money goes and how it was “processed” (i.e., stolen, according to me and hundreds of other scholars.)

It underscores the fact that the obligee (“debt owner” or “holder in due course” is never present in any legal proceeding or actual transaction or transfer of of the debt. This leaves us with only one conclusion. The debt never moved, which is to say that the obligee was always the same, albeit unaware of their status.

Knowing this will help you get traction in the courtroom but alleging it creates a burden of proof for you to prove something that you know is true but can only be confirmed with access to the books, records an accounts of the parties claiming such transactions ands transfers occurred.

GO TO LENDINGLIES to order forms and services. Our forensic report is called “TERA“— “Title and Encumbrance Report and Analysis.” I personally review each of them for edits and comments before they are released.
Let us help you plan your answers, affirmative defenses, discovery requests and defense narrative:
954-451-1230 or 202-838-6345. Ask for a Consult. You will make things a lot easier on us and yourself if you fill out the registration form. It’s free without any obligation. No advertisements, no restrictions.
Purchase audio seminar now — Neil Garfield’s Mastering Discovery and Evidence in Foreclosure Defense including 3.5 hours of lecture, questions and answers, plus course materials that include PowerPoint Presentations.


For one such example see Freddie Mac Securitization Explanation

And the following diagram:

Freddie Mac Diagram of Securitization

What you won’t find anywhere in any diagram supposedly depicting securitization:

Money going to an originator who then lends the money to the borrower.
Money going to a named REMIC “Trust” for the purpose of purchasing loans or anything else.
Money going to the alleged unnamed beneficiaries of a named REMIC “Trust.”
Money going to the alleged unnamed investors who allegedly purchased “certificates” allegedly issued by or on behalf of a named REMIC “Trust.”
Money going to the originator for sale of the debt, note and mortgage package.
Money going to originator for endorsement of note to alleged transferee.
Money going to originator for assignment of mortgage.
Money going to the named foreclosing party upon liquidation of foreclosed property.
Money going to the homeowner as royalty for use of his/her/their identity forming the basis of value in issuance of derivatives, hedge products and contract, insurance products and synthetic derivatives.
Money being credited to the obligee’s loan receivable account reducing the amount of indebtedness (yes, really). This is because the obligee has no idea where the money is coming from or why it is being paid. But one thing is sure — the obligee is receiving money in all circumstances.
Payment by third parties may not reduce the debt but it does increase the number of obligees (creditors). Hence in every one of these foreclosures, except for a minuscule portion, indispensable parties were left out and third parties were in reality getting the proceeds of liquidation from foreclosure sales.
Spread the word

Wells Fargo Agrees to pay $1.2 Billion (yes, with a B) to resolve claims by Justice Dept. & other federal agencies for the origination of “shoddy loans” insured by FHA

Compliance & Regulation
Why Wells Fargo Blinked in Its FHA Fight with the Government
Kate Berry
By Kate Berry
February 3, 2016

The long arm of the government is tough to elude, even if you are the nation’s largest home lender.

Wells Fargo stunned the mortgage industry Wednesday by tentatively agreeing to pay $1.2 billion to resolve civil claims by the Justice Department and other federal agencies that it originated shoddy loans insured by the Federal Housing Administration.

The proposed settlement could prove a bellwether for other banks that have outstanding investigations of FHA loans including PNC Financial Services Group, Regions Financial and BB&T.

Wells had been the lone big bank holdout willing to go to trial as a potential test of the government’s pursuit of banks for violations of the False Claims Act. That Civil War-era law allows the government to collect triple damages for fraud against the government. The law also has been a lightning rod for banks, causing some to pull out of FHA lending entirely.

Some observers said they were surprised at the size of the deal. Wells had put up a fight, claiming it has always been a prudent and responsible FHA lender. But some observers said the risk to its reputation and the cost of continuing the litigation was just too great.

“Nobody’s put [the government] to the test like Wells,” said Allen Jones, an independent mortgage consultant who managed Bank of America’s FHA business from 2005 to 2009. “They definitely made a run like no one else has. But there comes a point in time where you add it up and have to quantify the downside risk.”

The $1.8 trillion-asset bank reached an “agreement in principle” on Monday to resolve the FHA claims but could not provide any additional details until the deal is finalized, said Catherine Pulley, a Wells spokeswoman.

The agreement is forcing Wells to shave $134 million, or three cents a share, off its previously reported net income for 2015, the bank said in a Securities and Exchange Commission filing. Wells said its revised profit for 2015 is $22.9 billion, or $4.12 a share.

The San Francisco bank had to provide for an additional legal accrual because of the settlement, which increased its operating losses within noninterest expense by $200 million, the filing said.

The deal appears to provide Wells some future protections. It would resolve “other potential civil claims relating to the company’s FHA lending activities for other periods,” the filing said.

Prosecutors had alleged that Wells “engaged in a regular practice of reckless origination and underwriting of its retail FHA loans” from 2001 to 2010.

Theoretically lenders are required to indemnify FHA for loans that contain mistakes or are defective, essentially self-insuring the loan so taxpayers are not on the hook for potential losses. In this case, Wells not only failed to report material violations to the Department of Housing and Urban Development, but HUD also paid insurance claims on thousands of defaulted loans that it later found had significant violations, the lawsuit alleged.

Last year the government added a Wells executive in charge of quality control, Kurt Lofrano, as a defendant to the lawsuit, which was originally filed in 2012. Lofrano was responsible for reporting loans with material defects to HUD, which oversees the FHA.

Prosecutors were preparing to use Wells’ own internal quality control reports to prove that executives knew some loans were of poor quality but did nothing about it. Wells failed to report the errors or change its practices because of pressure to fund more loans, the government claimed.

Patricia McCoy, a professor at Boston College Law School who specializes in banking law, said that because details of the settlement have not yet been released, there is no way to gauge the severity of Wells’ lending errors.

“Part of the problem is, there is a continuum of different types of conduct that would have led to a False Claims Act claim, and depending on the lender it could have been really bad, or a mixture with innocuous errors that slipped through,” McCoy said. “We don’t know where Wells Fargo fell along that continuum. At worst, it was a mix, some bad and probably a lot of innocuous errors.”

A bigger problem, McCoy said, is that the Justice Department has used the False Claims Act and its potential for treble damages for each violation as a tool to get banks to settle FHA violations. That threat has caused many to flee the program, she said.

“It’s a very heavy sledgehammer, and that’s not a constructive approach because in the course of underwriting innocent mistakes can happen and often they can be cured or fixed,” she said. “If the FHA is saying as a condition of a lender doing FHA loans, they have to be 100% perfect or else they are automatically going to face this threat of treble damages — that’s not a viable lending program.”

The Bank With the Most Homes in the End Wins!!!!!

Housing Wire’s Lynn Effinger: The Same Culprits are Re-inflating the Housing Bubble

The same culprits are re-inflating the housing bubble

Here we go again…

October 26, 2015
Lest anyone mistakenly believe that I am a lone voice questioning why the ruling/governing class in America seem to have already forgotten what led to the financial and housing crisis that sparked this nation’s longest recession, Stephen Moore, the Distinguished Visiting Fellow, Project for Economic Growth at the Heritage Foundation, and former writer for the Wall Street Journal, penned a recent article for, titled, “Why is Washington re-inflating the financial bubble.”

And I quote, “Bubble, bubble, toil and trouble. That might well be the new theme for the U.S. economy. Washington – the White House, Congress, housing agencies, and the Fed – have learned nothing from the housing bubble of 2007-08.”

Moore adroitly explains (as I have many times on HousingWire), that although there is blame enough to spread across Wall Street, and to many involved in the mortgage and real estate industries, as well as to consumers themselves, the true enabler was our government.

Through easy money, housing policies that pushed people into low down payment loans that many could not or would not ever repay, and a tsunami of debt, the stage was set.

Evidence abounds that the bubble is now being re-inflated by these very same culprits:

  • Fannie Mae and Freddie Mac are once again offering 3% down payment loans, albeit with purported underwriting “safeguards.”
  • Janet Yellen has yet to pull the plug on zero-interest rate loans that have only benefitted Wall Street and their congressional “partners,” which means that interest rates will no doubt begin to rise in 2016.
  • Government debt has climbed from just under $10 trillion in 2008 to more than $18 trillion.
  • Federal Housing Administration loans have become the “new sub-prime” loans according to many high-profile members of our industry.
  • There remains significant concern that the recasting HELOC loans will drive delinquencies upward.

If those aren’t troubling signs enough, other reports, including one from RealtyTrac, recently indicated that bank repossessions have spiked 66% year-over-year in Q3 of this year.

This is the greatest annual rise ever recorded by RealtyTrac. The foreclosure sales and real estate analytics company stated that more than 123,000 single-family homes went back to the lenders in just three months.

While it is true that in states such as Florida, Massachusetts, New York and New Jersey, a virtual flood of deferred foreclosures from the previous housing crisis are finally cascading over legal and legislative dams in these judicial foreclosure states, other states, such as Nevada, are seeing dramatic increases in mortgage delinquencies.

And, a dramatic rise in foreclosure activity will impact values in certain markets. A very large percentage of the homes being foreclosed upon have deferred maintenance, which means they will be sold at discounted prices. The added inventory of homes will in itself drive down or slow rising home prices, but the discounted sales will have an even greater negative impact.

Additionally, in an article in HousingWire authored by Brena Swanson on Oct. 19, “MBA predicts mortgage lending will shrink next year,” there is both negative and positive news for those involved in real estate.

According to Swanson, the Mortgage Bankers Association said at a press conference at its annual meeting being held in San Diego that it expects a decrease in refinance mortgage originations. But, it is also predicting an increase in purchase mortgage originations.

Swanson reported that Michael Fratantoni, chief economist and senior vice president of research and industry technology with the MBA, attributed the predicted increase in purchase mortgage originations to a mixture of factors, including growing demand in households for owning a home rather than renting, and mortgage finance options.

To put an exclamation point on Moore’s observations, consider that Fannie Mae and Freddie Mac are much more bullish on loan originations for 2016. Why wouldn’t they be, since they are promoting 3% down payment loans? This will no doubt increase loan originations, but just as surely, it will increase delinquency risks.

As a result of all this, there is a looming downward spiral predicted here. That said, savvy real estate professionals, investors and potential home buyers recognize potential opportunity when they see it.

Lynn Effinger
Lynn Effinger is president of Effinger Consulting and senior vice president of Institutional Services at RIO Software Solutions, Inc. He is a veteran of more than three decades in the housing and mortgage servicing industries and is also the author of the inspiring memoir, “Believe to Achieve – The Power of Perseverance.”