Where is the Loan Receivable?

Invitation to Investors Who Bought Mortgage Bonds Thursday, October 18th, 2012 at 11:39 am Leave your comment INVESTORS READ CAREFULLY

IF YOU BOUGHT MORTGAGE BONDS DURING THE MELTDOWN

As for the Borrower, we have the obligation, then the note supposedly evidence of the obligation, and then the mortgage which pledges the home as collateral for faithful performance as per the terms of the note.

As for the investor/lenders we also have a mortgage bond, supposedly backed by loans, in which repayment terms are vastly different from the note signed by the borrower.

This problem could have been alleviated if the investment bankers had simply placed the name of the REMIC on the note and mortgage but they had other ideas about trading with and on claims of ownership of the note, hence MERS and other intermediaries were introduced so that ownership would be obscured, thus creating unenforceable notes and mortgages as several investor suits have stated.

In accounting terms if a bank or other entity or institution provides a loan to someone, it would adjust its books and records to reflect (a) a loan receivable and (b) a reserve for bad debt against that loan receivable. The loan receivable goes into assets, and the reserve for bad debt goes on the liability side of the balance sheet.

After 6 years of this craziness I have come to the opinion that it is virtually certain that no entity, person or institution EVER had a loan receivable on their books with respect to most loans (96%) that were all subjected to false claims of securitization and assignments. What does that mean for the loan?

Assuming that the failure of any institution to properly record the loan was intentional, which it was, it undermines any claim on the documents or instruments in the fake chain of securitization and assignments. The most I have ever seen is a category in the asset section of the balance sheet called

Held for sale which basically encompassed 96% on average of all loans on the books of originators, even if they were banks.

So what is the difference and how can this be used? What does it show? Is this something the Judge can understand? Yes, if you understand it and explain it correctly.

The borrower signed a note to which the lender was not a party. The lender accepted a bond to which the borrower was not a party. The note only suggests one obligor the borrower and provides for use of proceeds of payments on that note. The note only provides for one creditor the payee on the note payable to the party the borrower THOUGHT was the lender, but wasnt. The note and riders provide for the method and manner of repayment. The bond suggests multiple obligors and the record shows that the subservicer, master servicer, insurers, credit default swap counterparties, and diversion of payments from one tranche to another and one loan to another all cover the repayment of the interest and principal on the bond. The bond has a different interest rate than the note. The bond provides for cross collateralization and overcollateralization which is a fancy way of commingling multiple payments received from multiple parties and allocated them in a manner that appears to be exclusively determined by the Master Servicer. The bond provides for continued payment by the subservicer of the monthly payment whether or not the original borrower makes a payment. The note does not contain or even refer to t hose terms. In fact the note contradicts the bond in that the proceeds of payment made or allocated to the subject loan must be utilized in specific ways expressed in the note ways that are far different than the ways the money is to be used when it comes to paying some lenders and not others. The lender advances funds, part of which are used to fund the loan but the lenders interests are not protected by the closing documents that the borrower signs. The borrower signs the documents without receiving disclosure required by Federal and state laws as to the identity of the lender and terms of compensation, repayment etc. In short, the note doesnt match the bond. If the glove doesnt fit, you must acquit, like it or not.

Neither the note nor the bond match the common law obligation between the borrower and the lender(s). Thus three sets of repayment schedules are presented those in the note, those in the bond, and the common law demand repayment. If the note was payable to the lender, it could be secured by a mortgage. Since it was not made payable to the lender, the mortgage recorded is subject to cancellation of instrument. The bond is not secured obviously because the lender was not party to the documents signed by the borrower. The common law obligation appears to be the only valid obligation or debt that could be collected by providing the loan to borrower. The presumption would be that it is a demand loan but obviously unsecured by a mortgage signed by the borrower. Thus when all is said and done and reality is introduced to most of these foreclosures, judicial, nonjudicial or in bankruptcy courts or otherwise, you are left with an undocumented demand loan that is unsecured and which can be discharged in bankruptcy.

But most homeowners would be more than happy to negotiate in good faith just as the hundreds of thousands of p

-eople who applied for loan modifications believing the servicer was actually authorized when it wasnt.

If you sweep away all the debris, the investors/lenders are NOT at risk for being fraudulent lenders but are the victims of securities fraud. And the borrowers are victims of deceptive lending practices, fraud and a host of other causes of action against virtually everyone except the actual lender. All of this is true only if you accept the premises described above which I consider to be unavoidable.

Thus the obvious answer is for a clearinghouse arrangement to be established by which the borrowers could communicate with investor lenders, unless the investors simply want to stick with their claims against the investment bank for selling them trash described as bonds.

I submit that the borrowers would enter into a true, non-defective mortgage directly with the investors to mitigate the investors loss and that the amount borrowers are willing to offer as the loan balance exceeds the value of the property and far exceeds the value of the proceeds on foreclosure.

I offer the services of my various technology platforms to be the intermediary through which the investors claims are collated into distinct groups which may or may not match up with the REMICs that were described in the prospectus because those REMICs were never funded.

Having done that we can provide investors with proof of how their money was misused and at the same time mitigate their losses.

This platform would match borrowers to groups of investors who would set forth the guidelines for accepting modification, given the current market conditions and the fact that the obligation is not secured.

Several managed funds have expressed some interest in this idea. I need to hear from more of you. If any managed fund or other investor in mortgage bonds would like to discuss this further, please call our customer service number 520-405-1688 and you will either receive an immediate call back or a telephone appointment for a teleconference will be set up for you and/or your colleagues. We are looking for groups of fund managers because I dont want to have 300 conversations when I could have just 5-6.