PHANTOM ASSIGNMENT AT LOAN CLOSING

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IN law school we are always told to start at the beginning, although few practitioners actually do that ,since they THINK they know at a glance the nature of the transaction. Consider the usual “loan closing” where a securitization scheme is in operation. It is a “table-funded loan” which is a fancy way of saying that someone else actually loaned the money — some one other than the party named as payee on the note, or as lender or beneficiary on mortgage or deed of trust. A pattern of conduct in which table funded loans are the rule rather than the exception is evidence prima facie of a predatory loan. (REG Z). Why?

The reason is actually quite simple. If an undisclosed party is the actual party in the money trail, then the document trail is defective and does not comply with disclosure requirements under the deceptive lending laws at the federal and state level. The pretender lender at closing is masquerading as the party who did the underwriting on the loan, who was taking the risk of non-payment and who has the power of enforcement. But these assumptions are not true. And at the point where the pretender lenders come up with fabricated and forged assignments and affidavits they are misdirecting the attention of the court away from a simple fact.

In order for the pretender lender at the closing to have been party to a contract that is enforceable with the homeowner as borrower, the pretender lender needed some documentation that was recorded at closing showing its representative capacity for the real source of funds, i.e., the real lender. Thus the investor-lender would be required to execute an assignment of the legal and equitable rights under the loan transaction to the pretender lender. That assignment does not exist, which is the fatal incurable defect in nearly 80 million transactions in which a securitized loan was involved.

The banks want the Courts to accept their word for it — that the assignment should be presumed. Some have advanced the argument that there is an equitable assignment, which the courts have universally struck down as being contrary to the need for certainty in the marketplace and contrary to all law and precedent. Thus the closing of the loan DOCUMENTS conflicts with the closing of the actual MONEY TRANSACTION. The absence of the phantom assignment between the investor and the pretender lender is not overcome by reference to the PSA whose terms clearly show the requirements and timing of assignments, as well as the requirements for underwriting and compliance with existing law.

THEREFORE NEITHER THE NOTE NOR THE MORTGAGE OR DEED OF TRUST ARE VALID ENFORCEABLE DOCUMENTS BECAUSE THEY (A) DO NOT REFLECT THE ACTUAL MONEY TRANSACTION AND (B) THEY DO NOT PROVIDE A NEXUS BETWEEN THE CASH LENDER AND THE PARTY IN WHOSE FAVOR THE DOCUMENTATION WAS EXECUTED BY THE HOMEOWNER.

Tags: assignment, borrower, disclosure, foreclosure, foreclosure defense, foreclosure offense, Lender Liability, Loan Closing, Mortgage, note, rescission, securitization, TILA audit, trustee
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