Getting Lost in the Weeds: Following the Money Trail

Jul 19, 2012

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“What they did was take money from their left pocket and put it into their right pocket taking out $10 each time and putting that $10 into their back pocket. Then they reported that $10 to the SEC and the shareholders calling it trading profits or a fee. They’re calling this movement from left pocket to right pocket ‘expansion of the money supply’. And of course, if I start with $100 in my left pocket and take out $10 and don’t record it in the transfer then instead of the amount of money in my left pocket going down to $90 it remains at $100 and next time I move money from my left pocket to my right pocket if still don’t report the $10 I take out rather than going down to $80 the total in my left pocket still remains at $100” Neil F Garfield

“If you look back over the past 200 years at any of the bank failures the world has had, we always say, ‘We never believed they would do something like this!’ but they do and they do it for one simple answer, greed.” Neil F Garfield

Editor’s Comment:

Dear Reader,

I’ve called them pretender lenders because that’s what they are. The actual financial transaction did not take place the way you think it did. The documents would have us believe otherwise, but the money shows where the real deal was. I understand your concern but I am concerned that you might be missing the whole point and conveying incorrect information to others.

Your research is fabulous in following the relationships between the pretender lenders. Your research does not pretend to cover the entire transaction, just the documentation and the apparent relationships. All of that is invaluable.

The essential point that I am hoping you will consider is that the origination of the loan was a false origination. The note, the mortgage, the HUD statement and all documents after the loan received referred to a financial transaction that never occurred. They are void.

The financial transaction occurred with a different party under different terms than those expressed in the note and mortgage and disclosure docs given to the borrower at the time of closing. Your point of confusion is easy to understand since the banks have gone to great lengths, including fabricating, forging, and robosigning fraudulent documents each reciting facts relating to a financial transaction (where MONEY exchanges hands). “For value received” is a fraudulent statement. No payment was ever made and the closing instructions to the escrow agent came from a complete stranger to the transaction with instructions to refund any excess to that stranger. Without any language that would connect the stranger to the pretender lender at the origination of the loan. If there was an actual connection between the financial transaction which was undocumented and the documents that refer to a financial transaction that never happened both the paperwork and the wire instructions would each refer to the other and be disclosed to the borrower.

For example, on the wire instructions, if the funding of the loan was intended to fulfill the so called “commitment” of the loan originator posing as the lender and therefore as the payee on the note, then it is standard practice to include in the wire transfer the words “for benefit of ‘xyz’ company”. If the documents were meant to incorporate the financial transaction where money exchanged hands they would have referred to the parties who were the source of funds and the terms under which those funds were to be repaid as set forth in the prospectus and pooling and servicing agreement.

In neither the money chain (wire transfer instructions) nor the document chain (note, mortgage, HUD 1 settlement and disclosure documents) were any representations or disclosures made that even hinted at the presence or possibility of the other chain.

You might be tempted to presume that the wire transfer related to the borrower’s execution of loan documents in favor of the source of funding in the wire transfer. But taken on its face, no such connection is made nor was one intended. It was this split between the money trail and the document trail that enabled the banks to create a long term gap during which they could trade “ownership” of the loan before making any attempt to deliver the loan to the investors who had advanced the funds. By that time, the loan was in default and past the cutoff date. All of these trades were false trades based on false premises and the promise of false documents as we found out when one of the “trades” turned out to be foreclosure.

While the borrower believed that his “lender” was moving around from the originator to a servicer and then a new servicer and then a new trustee etc. the actual ownership of the obligation came from an undifferentiated commingled escrow account that was created in spite of provisions to the contrary in the prospectus and PSA delivered to the investor. Hence the banks were able to report that they had successfully obtained insurance and had further covered the investment with credit default swaps and other hedge products, but they failed to reveal that the beneficiaries of the payout were the banks themselves and not the investors. This is also what enabled the banks to claim losses from mortgage defaults requiring a bailout from the federal government even though the banks had neither funded nor purchased any mortgage.

In order to get away with this, the investment banks needed to have a provision inserted in all of the resale agreements in which the loan was sold multiple times, that upon payment of the insurance or credit default swap the payor waived their right to pursue the borrower on any of the loans (waiver of subrogation). Had that provision not been inserted, AIG, the federal government and counter parties in credit default swaps would have swarmed over the transactions and determined for themselves that the original note and mortgage were faked.

Regards,

Neil