Mounting Evidence on Phantom "Trusts"

First they started with servicers bringing foreclosures, and that didn’t work. Then they tried MERS to bring foreclosures, and that didn’t work. Then they tried backdated, fabricated and forged documents from non-existent originators with signatures from phantom people as “limited signing officer” or “assistant vice president” and that is going down the drain. Now they are bringing foreclosures in the name of “Trustees” and the cracks in that strategy are already appearing.

What they were doing was buying time. The ‘Trustee” in fact had virtually no powers on paper and certainly no power in practice. The “Trust” was an entity “to be formed by the Master Servicer” and never was. And now the reality is the investors have been written off, with the Master Servicer buying the pool, and engaged in repackaging loans that are already dead or dying, selling an entirely new securitization package to anew group of investors with a similar structure as the old one but with new investors, underwriting, etc.

The investment bank, through the Master Servicer declares that the value of the “pool” has gone down. They don’t actually know or care whether or how much the value of the pool has gone down or up, they just declare it because they can according to the securitization documents. That triggers the Master Servicer to put a value on the pool and buy it at that value or even lower if the pool is seen as a declining asset.

Keep in mind that the pool is a process rather than a single thing or event. Loans are being taken out and new ones are put in. Assignments during litigation are direct violations of the pooling and servicing agreements that prohibit acceptance of the assignment of a non-performing loan after the cutoff date which is usually years before the litigation. So in truth nobody really knows what really made it into the pool or if there really was a pool by any name, whether any particular loan is STILL in the pool.

So the Master Servicer buys the pool and the investors settle for pennies on the dollar. Then the write-down of the pool on the mere declaration of the investment bank or its agents or affiliates, triggers claims for losses backed up by insurance, credit enhancements, credit default swaps, guarantees etc. Since there are no investors left in the pool by virtue of the Master Servicer’s purchase, the proceeds of the third party payments go to the party that owns the policy or contract, to wit: the investment bank, Master Servicer or other affiliate, which in turn takes part of the money as profit and sends the rest to London or Luxembourg.

Under this scenario, the investors who were the lenders in the borrower’s loan are no longer in the picture and arguably have no right or claim to third party payments. Since they were the creditor, the allocation of third party payments to the obligation from the borrowers never occurs. Hence while the loan is paid off sometimes multiple times, neither the borrower nor the investor get to see a penny of it.

To make matters worse, the “Trustee” is now bringing foreclosure actions on behalf of dormant or dissolved pools that never existed as actual legal trusts, and which have been dissolved anyway. So they get the money from the yield spread premium where they took the investor money and only invested part of it in mortgages. They get the money from third party payments. And now they are going after the houses.

Somehow all this is being allowed because under some philosophical theory it is more equitable for these intermediaries who never invested a penny in any loan deal to make a profit than to let the borrower keep a house of dubious value. The borrower who was cheated by the false appraisals just like the like the investors were cheated by the false appraisals of the securities they bought, now is sitting with a defective loan, a devalued house, and a life in shambles. How is that a good thing?

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