"DESTRUCTION OF THE NOTE"

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COMMENT FROM “BUYER”: I love this argument. But, could someone please point to the rule/law which states the note MUST be destroyed once it is securitized? There’s kind of a disconnect there. Seems destroying the note cuts off the funding mechanism for the Certificates, so isn’t making sense to me.

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ANSWER FROM EDITOR — BUYER: It is not that it must physically be destroyed.

The issue is whether the note actually describes the obligation. It doesn’t.

First the act of closing a loan wherein the lender is not revealed invalidates or destroys the note even though acceptance of the money creates an obligation. The question is to whom that obligation is owed.

Second by “securitizing the receivable according to terms far different than the note ever recited, the description contained in the note becomes increasingly remote from a proper description of the obligation, which keeps changing as the receivable, not the note, moves up the securitization chain. Thus the receivable — the actual obligation that the note purported to describe — keeps changing while the note remains the same and the original note never moves physically by delivery, transfer documents (endorsement, assignment etc.)

Thus the point is that the note is destroyed by operation of law. And the problem the pretender lenders have is that the note, even if it is transferred and delivered does not describe the receivable (payments from borrower, insurer, counterparties etc.).

ONE ON ONE WITH NEIL GARFIELD

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