Principal Reduction is Both Fair and the Only Practical Solution

From “Anonymous” in Response to Post about PAID IN FULL

Editor’s Note. I might have misstated the case when I said that investment banks are buying up the lower tranches. It’s not them. It is the people in the investment banks because they have another gambit to run on this. Anonymous, I would appreciate it if you would inquire and confirm, corroborate or rebut this statement.

The rest of your points are of course pearls. AND the specifics you offer make it increasingly clear that a principal reduction at the borrower’s end is only a reflection of the reality of the reduction on the creditor’s end — whether through payment, credit enhancement or waiver of rights that are questionable but nonetheless part of the deal.

One – in response to — “investment banks that are buying up the toxic waste tranches, ” —–investment banks are not buying up toxic tranches -they are consolidating these tranches onto their balance sheets -and writing them off the former receivable pass-through.

Two – we do not know what AIG (or other insurers) were entitled to once they honored the swap protection contract (they actually did not honor – the US Government did) – this information is not available. AIG could be entitled to whole loan collection rights. But, AIG “Obligations” are now owned by the US Government – who, by the way, is the party rejecting loan modifications – despite their law to promote them.

Three – paying an obligation for another party does not release action against the borrower. The debt remains. However, the real party must follow the law. The real party remain undisclosed. The real creditor must be divulged. And, any failure to disclose the real and current creditor deprives the borrower of the right to a modification negotiation with the actual creditor. We all know, by know, servicers are not the creditor.

Four- Use the paid “tranches” as evidence that the structure of the REMIC – as once originated (by cut-off date – ha ha) – is gone. Mezzanine tranche holders are only paid – if there is anything left after the A tranches holders are paid. And, this is ONLY for current pass-through. If the A tranches have been paid – in full- by swaps -there is nothing left to be paid to any M tranche holders. The “waterfall” structure is gone – thus, so is the pass-through REMIC that once organized the structured tranches.

Five – Balance sheet accounting is critical – who is accounting for the right to collect the loan? That is the fundamental question.

Six – As to “holder” of the note – there have been good challenges to the negotiability of the note posted here (see Collete McDonald). and post re- Professor at Pepperdine.

If you try to challenge strictly on fact that someone else “paid” the loan amount for you – you will not win. This has already been tested in debt collection. It will not work. But, this is greater than “debt” collection – as the current creditor is supposing to be negotiating with you according to Congressional law. You need to know your creditor – until you find that out – the foreclosure is a farce and and a fraud – upon you – and upon the court.

Finally, as Neil has stated many times, trying to get a complete discharge or “free home” will not work. Thus, trying to say the DEBT does not exist – will not hold. Only way you can possibly go this route is to claim that the account does not belong to you. And, that could be a focus – when a loan number has been changed (need less to say – your new loan number is not in the PSA “attached” “Mortgage Schedule.”

And, as PJ has also said – principal reduction is the key. There needs to be principal reduction with a fair interest rate.

Judges will not like hearing that the debt has been paid – and, therefore, you owe nothing. Need to shatter their “trustee” bogus Trust structure – and demand to know the current creditor. And, pursue counter-claims for a fraudulent foreclosure and fraud upon the court.

TO quote trespass unwanted,
I know nothing, and if I think I know something I know nothing. I don’t give legal advice because I don’t know legal things.

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