The main obstacle to homeowner success in the courtroom is the asymmetry of information causing the homeowner to believe that they were part of a loan transaction instead of merely being compensated for a concealed business plan that was completely reliant on the homeowner’s unknowing cooperation. The homeowner did not receive this information for two reasons. First, no reasonable person would accept the deal without significant compensation. Second, no reasonable person would accept the deal at all.
Just to add some clarity and simplicity — none of the paper issued and sold by Wall Street brokerage firms was backed by anything. It is erroneous to assume that any sale of any asset occurred. Securities were sold but none of them represented any ownership, right, title, or interest in any asset.
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Accordingly, it is equally wrong to assume that any investor acquired any right, title, or interest to any scheduled payment from homeowners. They did not. The problem is that most people start with the erroneous assumption that something was securitized. All of the certificates, hedge contracts, derivatives, and insurance products were bets based upon discretionary data coming from the insured — the brokerage firm.
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This became crystal clear when TARP came into existence. First, it was to bail out mortgage losses from homeowner defaults, then it was to bail out losses from owning the certificates that were supposedly backed by loans, then it was simply used to corporate welfare — resulting in the creation of Maiden Lane entities to launder the title creating the illusion of a legal creditor owning a loan account receivable. “workouts” and “modifications” are
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Wall Street’s attempt to have the homeowner agree later to what the securities brokerage firm (aka investment bank) intended when the loan was first originated or acquired. Such agreements substitute a new party as the stated or named creditor. It requires acknowledgment that this new party (usually a “servicer’ who performs no servicing, thanks to SaaS), will be treated as though an obligation payable by the homeowner exists on its ledgers. And it presumes that payment of value for the underlying obligation was made by this new entity. None of this is true.
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PRACTICE NOTE: The reason why any homeowner can win a foreclosure is that none of the parties in the foreclosure team or the securitization team have ever paid for the underlying obligation in exchange for a conveyance of ownership of the debt, note, or mortgage. This produces a failure of condition precedent for enforcement and collection. See Article 9 §203 UCC. This is not “proven” by the homeowner. It is revealed through negative inference against the foreclosure mill team. That inference arises when they fail to produce and even assert that they have made such payment.
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The main obstacle to homeowner success in the courtroom is the asymmetry of information causing the homeowner to believe that they were part of a loan transaction instead of merely being compensated for a concealed business plan that was completely reliant on the homeowner’s unknowing cooperation. The homeowner did not receive this information for two reasons. First, no reasonable person would accept the deal without significant compensation. Second, no reasonable person would accept the deal at all.
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Neil F Garfield, MBA, JD, 73, is a Florida licensed trial and appellate attorney since 1977. He has received multiple academic and achievement awards in business and law. He is a former investment banker, securities broker, securities analyst, and financial analyst.
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