Countrywide Admits to Not Conveying Notes to Mortgage Securitization Trusts article by naked capitalism November 21, 2010 WDG

Comment: Being able to present the note when it was supposed to be in a trust, implicates fraud by the attorneys and the servicer.
Testimony in a New Jersey bankruptcy court case provides proof of the scenario weve depicted on this blog since September, namely, that subprime originators, starting sometime in the 2004-2005 timeframe, if not earlier, stopped conveying note (the borrower IOU) to mortgage securitization trust as stipulated in the pooling and servicing agreement. Professor Adam Levitin in his testimony before the House Financial Services Committee last week described what the implications would be: If mortgages were not properly transferred in the securitization process, then mortgage-backed securities would in fact not be backed by any mortgages whatsoever. The chain of title concerns stem from transactions that make assumptions about the resolution of unsettled law. If those legal issues are resolved differently, then there would be a failure of the transfer of mortgages into securitization trusts, which would cloud title to nearly every property in the United States and would create contract rescission/putback liabilities in the trillions of dollars, greatly exceeding the capital of the USs major financial institutions. WDG Comment: This is why the first JPMorgan attorney at my first hearing before Markell stated that if he ruled against them, it would bring down the banking industry. (Statement witnessed by you and I, but stricken from the official court transcript) Recently, arguments have been raised in foreclosure litigation about whether the notes and mortgages were in fact properly transferred to the securitization trusts. This is a critical issue because the trust has standing to foreclose if, and only if it is the mortgagee. If the notes and mortgages were not transferred to the trust, then the trust lacks standing to foreclose If the notes and mortgages were not properly transferred to the trusts, then the mortgage-backed securities that the investors purchased were in fact nonmortgage-backed securities. In such a case, investors would have a claim for the rescission of the MBS, meaning that the securitization would be unwound, with investors receiving back their original payments at par (possibly with interest at the judgment rate). Rescission would mean that the securitization sponsor would have the notes and mortgages on its books, meaning that the losses on the loans would be the securitization sponsors, not the MBS investors, and that the securitization sponsor would have to have risk-weighted capital for the mortgages.

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WDG COMMENT: The sponsor was the straw man entity that never assigned transfer to the depositor, AND, there is no recorded transfer to the sponsor, as well!!! This means if the note had been sold to attain money to actually fund the loan at that time with money other than credit out of thin air, AND which no proof has yet been made to show that legal consideration was ever made for the note agreement in the first place, then they have more problems then trying to steal my houses for their investment of no money paid for the loans or the originator never loaned any money from their assets. If this problem exists on a wide-scale, there is not the capital in the financial system to pay for the rescission claims; the rescission claims would be in the trillions of dollars, making the major banking institutions in the United States would be insolvent. As we indicated back in September, it appeared that Countrywide, and likely many other subprime originators quit conveying the notes to the securitization trusts sometime in the 2004-2005 time frame. (Exactly at the time of loan originations) Yet bizarrely, they did not change the pooling and servicing agreements to reflect what appears to be a change in industry practice. Our evidence of this change was strictly anecdotal; this bankruptcy court filing, posted at StopForeclosureFraud provides the first bit of concrete proof. The key section: As to the location of the note, Ms. DeMartini (B of A) testified that to her knowledge, the original note never left the possession of Countrywide, and that the original note appears to have been transferred to Countrywides foreclosure unit, as evidenced by internal FedEx tracking numbers. WDG Comment: This is why Countrywide AND JPMorgan must provide the proof of how they attained the notes and deeds of trust that were presented at my deposition. They must PROVE they legally attained those borrowed notes from the trusts custodians in order to present them at that deposition, otherwise it proves the notes not only were not assigned by recording, proven by lack of recording which had to be prior to the closing date of the trust, but, as well, never were physically delivered as required by the trusts pooling and servicing agreements. (Do the attorneys representing the banks really want to have to show both no deliveries of the notes physically to the trusts custodians AS WELL AS no assignments made?) It should be obvious to the judge, but pointed out by you, of course, that by lack of this proof of where and how they attained the notes and deeds of trusts that their authenticity should be questioned, and if not, then securities fraud had been committed because the notes were never in the trusts that stock was sold based upon the notes and deeds of trust, as well as acting to deceive the court in their capacities in making flawed evidence and misrepresentations for their right to have attained those notes and deeds of trust. Again, the defendants are representing the servicers, not the mortgagee, the beneficiaries, (I believe). I see Bank of NY Mellon and Wells Fargo et al on documents related to the foreclosure actions against me.

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WDG Comment: (showing the note AND having proof that it was securitized proves the fraud in that the note should be in the possession of the trust, not an attorney representing the servicer, or posiblly and unassigned new beneficiary, or new unassigned trustee ) Big can of worms for them! She, Ms. DeMartini (B of A), also confirmed that the new allonge had not been attached or otherwise affixed to the note. She testified further that it was customary for Countrywide to maintain possession of the original note and related loan documents. This is significant for two reasons: first, it points to pattern and practice, and not a mere isolated lapse. Second, Countrywide, the largest subprime originator, reported in SEC filings that it securitized 96% of the loans it originated. (Uh oh for them) So this activity cannot be defended by arguing that Countrywide retained notes because it was not intending on selling them; the overwhelming majority of its mortgage notes clearly were intended to go to RMBS trusts, but it appears industry participants came to see it as too much bother to adhere to the commitments in their contracts. (or to law!!!) As one hedge fund investor noted, Whenever weve gotten into situations on the short side, no matter how bad we think it is, it always proven to be worse. The mortgage securitization mess looks to be adhering to this script.

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