Fannie Mae Admits Mortgage Transfers Without recording — Sees Substantial Liability

Hat tip: Bill Paatalo

Everyone in law enforcement knows that if you  can get suspect to say something he thinks will help him, you have the beginning of a confession or at least an admission against interest. That is why criminal defense lawyers tell their clients to shut up and stay shut up.

Here is Fannie Mae in all of its glory disclosing a high risk element if proposed regulations go into effect requiring the recording of mortgage transfers in land registers and disclosure of the transactions. And it is potentially throwing MERS under the bus.

Spoiler alert: Those laws already exist. And violating them clouds title and hides taxable income and profits from transactions that are reported for purposes of foreclosure but never reported to the IRS because the transactions never occurred.

What Wall Street is doing is clever and they might get away with it. By convincing lawmakers and regulators that such disclosures and recording are unnecessary expenses for a “beleaguered giant” Fannie is leading the way to the holy grail of finance: transfers and transactions based upon or indexed to mortgage loans without any oversight. More importantly it is attempting to institutionalize the practice of violating existing laws requiring the recording of any transfer of a mortgage and the disclosure to the borrower.

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THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
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see https://www.housingwire.com/articles/half-fannie-mae-mortgages-registered-mers-name

So over half of all mortgage loans claimed to be “owned” by Fannie either in its own portfolio or as Master trustee of a private label REMIC trust are registered with MERS. And Fannie admits that virtually all of those loans have been transferred multiple times but disclosed and recorded much less than the number of transfers. Hmmm.

That is why fabricated, forged, backdated and robosigned documents became so ubiquitous. Lots of paper transfers of the loan took place without anyone buying the debt. And we all know that a transfer of the mortgage without the debt is no transfer at all. So you might think “No harm no foul,” right?

Right except for the fact that the last party on that paper train is the party who brings the foreclosure action and who (a) has not purchased the debt for value and (b) is relying upon unrecorded transfer documents pursuant to transactions (“for value received”) that never occurred.

So they make up documents as if the transactions actually occurred but they never actually say that there was a transaction because that would be lying to the court.

By creating facially valid (i.e. conforming in form to statutory requirements) documents, they rely on the presumption that everything stated in the facially valid document is true. Why would someone record an assignment of mortgage if there was no transaction? The answer is simple: for foreclosure purposes only.

The Fannie disclosure is an exercise in misdirection. It wants people to think about the revenue to be gained and the price to be paid for recording those transfers so they won’t think about whether any of those transfers were real.

If people started asking that question then they might start finding out that the party named as the claimant in foreclosure actions is just a sham conduit not for the owner of the debt but rather for an investment bank seeking more revenue. And that too is a violation of law. Conduits can’t foreclose in any jurisdiction. Only the owner of the debt can foreclose and then only if the claimed owner has paid value for it.

You cannot foreclose just because you want income. You can only foreclose on a debt that is owed to you because you paid value for it. This isn’t capitalism. It’s theft.

Practice hint: What is the name of the trust? Is that a REMIC trust? A REMIC trust is a conduit. For what is the trust acting as conduit?

And for those who might forget

REMIC = Real Estate Mortgage Investment Conduit

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