Courts and LAwyers Getting Sucked into Holder Arguments

Mar 1, 2013

The only problem I have with cases that find for either the borrower or the would-be forecloser is that they continue to put too much emphasis on “holder” and too little emphasis on “owner.” The banks continue to use worthless paper assigned in blank.

The paper was worthless because no financial transaction occurred. The paper talks about the transaction and raises certain presumptions. But the presumptions are rebutted when you are able to show or elicit an admission that the story on the note is untrue.

If you look at the UCC you will see that such transfers must be for value. If it were otherwise, then you could hoodwink anyone into signing a note, not give him a loan and go all the way through foreclosure simply because you were the holder. It’s common sense but it is NOT receiving the attention it needs because the Achilles heal in most transactions where an asset pool claims an interest in the note are NOT backed up by a payment of money for the loan.

What the investment bank did was sell mortgage backed bonds issued by the loan pool (trust) but never never used the money to fund the trust. The investment bank funded the loan from a giant slushfund of all money paid by all investors for all mortgage bonds issued by all asset pools. They did that to create the illusion of an ownership or insurable interest which is why the insurance was payable to the investment bank instead of the investors. Same for credit default swaps.