Foreclosure Defense: Fed Bailout Discharges Mortgage Liability

They might have meant to do it and they might not have thought of it, but the effect of the funding created by The Federal Reserve that bailed out the investment banks so that the investment banks could bail out the investors in ABS certificates, is that the mortgages and notes are satisfied twice over and the borrowers have already paid through taxes and should not be made to pay twice by paying off a non-existent debt to a party that has been twice paid or more and has already signed off its rights to enforce the note or mortgage.

New Entry of Glossary

INVESTOR: SEE LENDER, REAL PARTY IN INTEREST, HOLDER IN DUE COURSE, SOURCE OF FUNDS see also cyruswellstexascase-excellent-verbiage-on-securitization-conspiracy-with-charts-and-causes-of-action

In the mortgage meltdown context the investor is the actual source of funding on all residential mortgages.  Investors include but are not limited to “qualified” investors possessing sufficient net worth under SEC rules, or the status of being a financial institution themselves, which includes pension funds, mutual funds, hedge funds, city operating funds, county operating funds, national operating funds from many countries, and corporate operating funds.

ABS certificates were sold as “cash equivalent” many of the investors being led to believe that they were weekly auction market interest rate securities that would not and could not vary in value — until one day in March, 2008, when Lehman Brothers sent out an innocuous memo to all investors in ABS certificates that the auction market had convened but that there were no buyers.Many thousands of “investors” most of whom representing tens of millions of individual people found out the certificates were essentially worthless. These worthless securities (having no value because of the reasons stated in this blog) are in the process of being publicly and privately re-purchased at face value, despite the fact that they have a negative fair market value. The purchasers are the investment banking firms that created and sold them in the first place. But the source of money is the Federal Reserve which in this “special circumstance” has opened its discount lending window to investment bank for the first time history. The FED is accepting the worthless ABS certificates or evidence of them at face nominal value and “lending” the investment bank the money using as collateral the worthless ABS certificates. Thus the FED, creates funds to soak up the losses across the board. The significance of all this is that the debt originated by the borrower has been paid multiple times and the right to foreclose the mortgage or enforce the note has been extinguished by alteration of terms and actual payment. In short, the Federal Reserve is becoming the real party in interest or the POSSIBLE real party in interest in virtually ALL loan transactions originated from 2001-2008, the holder in due course, and has no intention or desire to become involved in foreclosures. The parties who are “exercising their right” to enforce the note and mortgage do not have such a right because they are not who they say they are, because they have already been paid, and even the people who paid them have been paid. The terms of the secure transaction (mortgage) has been eviscerated and the note has been satisfied by the taxpayer bailout of the investment banking combines.

Tags: ABS certificates, bailout, fair market value, Federal reserve, foreclosure defense, foreclosure offense
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