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Are Countrywide mortgage-backed securities really mortgage-backed?
EDITOR’S NOTE: BOA IS IN SERIOUS TROUBLE. I PREDICT THE BANK WILL CRASH AND SOON. As this article points out, the mortgage backed securities are not backed by mortgages. The transfers were not made. Whether the loan originated with Quicken, Freedom, Aurora, BNC or anyone else, if it ended up with Countrywide the mortgage is not enforceable or even real. It is an unsecured debt subject to offset for liability for appraisal fraud, TILA violations, rescission remedies, fraud in the inducement etc. The only thing missing here is that it is not just a matter that the loans were never transferred by Countrywide, it is about the fact that Countrywide never owned them and therefore COULDN’T TRANSFER THE LOANS.
WHAT DOES THIS MEAN?
- It means that the the only party to name in the quiet title lawsuit is the mortgagee of record — the mortgage originator.
- It means that the mortgage originator either didn’t ever have the right to call itself a creditor or doesn’t have that right now.
- It means that the mortgage is void and should be removed from the title registry, which is what quiet title is all about.
- And it means that with neither BOA, nor Countrywide being the creditor, they have no right to enforce the debt without NAMING the creditor on whose behalf they are initiating collection. If they disclose that, then it will be obvious that the real creditor wants no part of the actions to collect dubious debts procured by predatory and fraudulent lending practices.
- It means that the real creditor does not want to try to collect from the homeowner.
- It means that homeowners who have been foreclosed should be able to get their homes back free and clear even if there was a transfer or sale to a third party.
- It means that that any foreclosure involving BOA or countrywide is probably subject to being dismissed with prejudice forever.
QUOTES:
If the President or Treasury actually wanted to fix the housing market, the ability to do so is lying in all those court records, which show the systematic failure of securitization and the massive exposure the banks hold as a result. This would really help the economy – foreclosure problems are seen to add 1.25 points to the unemployment rate, according to one survey. But instead, they’ve
allowed the banks to pick and choose at their discretion who gets a modification. They’ve allowed the banks to use HAMP as a predatory lending scheme, to squeeze a few extra payments out of borrowers they planned to evict anyway. They’ve even allowed banks to continue toscrew even their customers who they gave a modification.
Fortune has examined dozens of court records that corroborate the
employee’s testimony. And if Countrywide’s mortgage securitizations
systematically failed as it appears they did, Bank of America’s
potential liability dwarfs its shareholder equity, as the
Congressional Oversight Panel points out.
Field is referencing Countrywide v. Kemp, and the sworn testimony of
Linda DeMartini, a top official at BofA. She acknowledged on the
record in a deposition that Countrywide never conveyed the mortgages
to the trusts, and that Countrywide notes “weren’t endorsed except on
a case-by-case basis generally long after securitization ostensibly
occurred.” This would mean that the mortgage-backed securities
composed of Countrywide loans are, in fact, non-mortgage-backed
securities. And Field did the grunt work of looking at the court
records, which back up DeMartini’s claim. None of the 104 Countrywide
notes she looked at in two New York counties were endorsed originally.
Read the whole story, it’s a good one. [cont’d.]
Smoking Gun on BofA Securitization Fraud
Yesterday, June 03, 2011, 6:09:34 PM | David Dayen
(photo: woodleywonderworks)
HUD Secretary Shaun Donovan told the LA Times today that a settlement
between top banks and state and federal regulators on foreclosure
fraud would be inked in “a matter of weeks.” HUD has been pretty close
to the settlement talks, so I don’t totally doubt him, though I’m
wondering exactly how many Attorneys General they expect to sign on to
a deal, with Republican AGs distancing themselves and Democratic AGs
undertaking their own investigations. Interestingly, Tom Miller’s
chief spokesman contradicted Donovan quickly after the LAT published,
saying “While we certainly hope we can reach a settlement in a matter
of weeks, we don’t know how long it will take.”
Donovan said flatly that the banks’ offer of $5 billion in penalties
for robo-signing and other fraudulent practices was “unacceptable,”
but made no attempt to give a more acceptable figure (regulators
reportedly made a $25-$30 billion offer initially, and told banks last
week they would be on the hook for $17 billion in civil lawsuits if
they didn’t settle). And how could he offer a figure? There hasn’t
been enough investigation to determine the extent of the abuses. Heck,
Abigail Field did more investigation by herself into Bank of America’s
faulty mortgage docs than probably anyone in the foreclosure fraud
working group negotiating with the banks.
Are Countrywide mortgage-backed securities really mortgage-backed? Do
banks even have the legal right to foreclose on certain homes?
These are just a few of the questions raised since the foreclosure
crisis revealed shoddy mortgage servicing practices at many of the big
banks – practices that have led to countless investigations and
lawsuits. Court testimony by a former Countrywide employee added to
the intrigue last fall, because she confessed that many loans there
weren’t properly handled, bringing into doubt the validity of
Countrywide’s securitization process. Bank of America, which owns
Countrywide, quickly silenced the discussion with firm denials.
But Fortune has examined dozens of court records that corroborate the
employee’s testimony. And if Countrywide’s mortgage securitizations
systematically failed as it appears they did, Bank of America’s
potential liability dwarfs its shareholder equity, as the
Congressional Oversight Panel points out.
Field is referencing Countrywide v. Kemp, and the sworn testimony of
Linda DeMartini, a top official at BofA. She acknowledged on the
record in a deposition that Countrywide never conveyed the mortgages
to the trusts, and that Countrywide notes “weren’t endorsed except on
a case-by-case basis generally long after securitization ostensibly
occurred.” This would mean that the mortgage-backed securities
composed of Countrywide loans are, in fact, non-mortgage-backed
securities. And Field did the grunt work of looking at the court
records, which back up DeMartini’s claim. None of the 104 Countrywide
notes she looked at in two New York counties were endorsed originally.
Read the whole story, it’s a good one. [cont’d.]
This is a bombshell. If the regulators were in any way competent,
DeMartini’s testimony would have stopped them cold. They would have
engaged in the same analysis as Field, and presented to BofA the stark
truth that they have no ability to foreclose on Countrywide loans that
were securitized, which would lead to all kinds of charges from both
homeowners facing foreclosure, and from investors who were scammed
when they purchased the securities. They would have signaled to the
other banks, who did little different during the bubble, that they had
the goods on them as well. The underlying exposure is massive. That
would be the kind of ammunition needed to force compliance from BofA.
But none of this has been done.
The Obama Administration knows that housing is among the biggest, if
not the biggest, problems with the economy right now. The President
said it in a meeting with House Democrats yesterday. I liked this side
note: “The President said housing was the main thing dragging down the
economy, with Geithner nodding solemnly like they’d done everything
humanly possible for the last 27 months to fix the housing market.”
If the President or Treasury actually wanted to fix the housing
market, the ability to do so is lying in all those court records,
which show the systematic failure of securitization and the massive
exposure the banks hold as a result. This would really help the
economy – foreclosure problems are seen to add 1.25 points to the
unemployment rate, according to one survey. But instead, they’ve
allowed the banks to pick and choose at their discretion who gets a
modification. They’ve allowed the banks to use HAMP as a predatory
lending scheme, to squeeze a few extra payments out of borrowers they
planned to evict anyway. They’ve even allowed banks to continue to
screw even their customers who they gave a modification.
And this “settlement,” whatever it offers, won’t change that fact.
—
Jake Naumer
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