You Got the Money, Right? So why are you telling me it wasn't a loan?

what did the homeowner get in exchange for executing the note and mortgage? 

The answer is not a loan because there was no loan at the conclusion of the transaction cycle. The answer must be that either the homeowner was investing in the securities scheme or was not getting anything for the note and mortgage. 

For many lawyers and judges, especially in bankruptcy court that is the only relevant question. After that everything else is obvious. But truth be told, they’re only asking that question because they have already decided everything including the “fact” that you received the money. But just because everyone is asking the same question doesn’t mean that they are asking the right question. In law, as it is practiced in a courtroom the right question presupposes nothing.

The right question is what is the contract? To answer that in the context of transactions with homeowners by securitization players you need to back up to the start. In order to decide the existence and terms of the contract, you must first determine contractual intent. And the fact that one side means or intends something does not mean the other side has agreed or has the same intent.

Who were the parties transacting business with the homeowners and what was their intent? The answer is that there is a long line of players ending usually in a thinly capitalized virtual nonentity or actual nonentity acting as the originator of the transaction.

The facts show that at the end of the transaction cycle,

• there is no lender,

• there are no investors who own partial shares of any obligation due from any homeowner,

• there is no loan account receivable,

• there is no reserve accounting for default,

• there are no entries on any accounting ledger that reduce or increase the loan account receivable owned by anyone who paid value for the underlying alleged obligation (debt)

• nor anyone who can trace their authority back to an owner of such an account receivable on the accounting ledger of a company keeping their records in accordance with Generally Accepted Accounting Principles.

• Hence there was no profit in the receipt of interest payments reflected on those books of account. 

Where is the loan? The facts show that payment to or on half of the homeowner was therefore something other than a loan.

[PRACTICE HINT: ALL OF THE ABOVE CAN BE ESTABLISHED WITH CERTAINTY OR BY NEGATIVE INFERENCE WHEN THE OPPOSITION REFUSES TO RESPOND TO PROPER AND TIMELY FILED DISCOVERY DEMANDS IN COURT]

So if the securitization parties were not in the deal to make money from receiving interest on the payment to the homeowner, why did they give the homeowner any money at all?

The facts show that without sales of securities to investors there would have been no transactions with homeowners. Wall Street investment banks are not in the business of lending. They’re in the business of making money through the creation, issuance, sale, and trading of securities. Hold up on that assumption! I know you are thinking that the securities were shares of loans. All evidence in thousands of cases shows that not to be true; even more telling is that no lawyer from any foreclosure mill has ever alleged, asserted or argued that to be the case.

And the same facts show that the implied trust that is designated in attempts to enforce the promise made to pay back the money received by the homeowner has absolutely no interest, rights obligations or duties with respect to any payment made by a homeowner or any proceeds of a “successful” forced sale of the property.

The same facts show that but for the homeowners there would have been no sales of securities. Without those two elements securitization could not occur.

And the facts show that the only parties who maintained and expanded their financial health in the Great Recession 2008-2009 were those same investment banks. While commercial activity declined, reported revenues and profits went up for the Wall Street investment banks.

So the real question is what were the Wall Street banks paying for? Since they’re unable to show the purchase of a loan, debt, note or mortgage on their books or reported to regulators, what were they buying?

They were buying cooperation from homeowners. And homeowners gave that cooperation and that is fine. That is a valid and legal business deal. Wall Street pays the homeowner and the homeowner delivers cooperation. But that is not the end of it, because homeowners knew nothing about it. And the reason they knew nothing about it, is that they were never told — despite stringent laws and regulations requiring explicit disclosure in good faith. And the reason why nobody has been prosecuted for lending violations is that there was no loan.

Investment banks needed to get a promise to repay the money paid for cooperation. In order to do that they needed to withhold and conceal key attributes of the transaction and to lie about what was happening. So they dressed up the cooperation payment as a loan. And because a loan was what the homeowner wanted and expected, the investment banks made sure that the homeowner signed documents that were evidence of a loan transaction —even though on their own books no such transaction took place. The advance to homeowners was a cost of doing business.

Homeowners, without a single clue that they were paid money for their cooperation and with no knowledge of the lack of lending intent by any of the “originators” or their affiliates and co-venturers, started making scheduled payments without any knowledge that their money was not going to pay anyone who was reducing their debt by the amount of their payment.

So if you back it up to the point of origin where the investment banks created an infrastructure to sell a securities scheme disguised as partial ownership of loan receivable accounts, the real question becomes “You got their cooperation, didn’t you? So why should you get the money back?”

So you are left with the inescapable fact that the homeowner issued a note and then a mortgage to secure payments as promised on the face of the note. And that is the question — what did the homeowner get in exchange for executing the note and mortgage? 

The answer is not a loan because there was no loan at the conclusion of the transaction cycle. The answer must be then that either the homeowner was investing in the securities scheme or was not getting anything for the note and mortgage. 

The only way that could not be true is if there was admissible evidence showing the accounting ledger of some company or entity showing the existence of entries on that ledger arising from the payment of value in exchange for ownership of the debt, note and mortgage claimed to have been legally created. That is the only thing that would reveal that the loan relationship between a borrower and a lender actually existed at least at the time of foreclosure.

As we have seen in thousands of cases no such evidence is ever preferred or presented. 

Using ordinary tools of construction of language and legal precedent it is more likely that the homeowner either received something for the issuance of the note and mortgage than that no consideration was present. By process of elimination we can only arrive at one conclusion, taking the entirety of the transaction into consideration as it occurred in the real world: the homeowner, without knowledge or consent, became an investor into the securities scheme.

That leaves only one remaining question: Was the payment that the homeowner received enough? Since it was never subject to knowledge, consent or bargaining, that is up to a court to decide.

• If it wasn’t enough then it is the securitization players that owe the homeowner money, not the current paradigm.
• If it was too much then maybe some portion of the amount set forth on the note remains as a liability.
• And if it was just right, then there would be no reason to have executed the note and mortgage at all.
• Lastly, if nobody asks the court to decide the note becomes an unliquidated amount upon which no judgment can be entered.

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• But challenging the “servicers” and other claimants before they seek enforcement can delay action by them for as much as 12 years or more.
• Yes you DO need a lawyer.
• If you wish to retain me as a legal consultant please write to me at neilfgarfield@hotmail.com.

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