mortgage fraud- ag v2

8/6/2019 Mortgage Fraud- AG v2

http://slidepdf.com/reader/full/mortgage-fraud-ag-v2 1/21

“The moment the idea is submitted into society that property is not as

sacred as the laws of God, and that there is not a force of law and public

justice to protect it, anarchy and tyranny commence. Property must besecured or liberty cannot exist.”

• John Adams



Bad Public Policy, Bad Actors The 1992 Community Reinvestment Act (CRA) required banks to make bad loans to unsuitable

homebuyers in the guise of social justice. This contravened long-established and well-justified lending and underwriting practices

The CRA created cover for shoddy and predatory lending practices

Banks turned to Mortgage Backed Securitization to get the toxic loans off their balance sheets

MBS is a well established capital markets instrument, well underway in the 1980s.

MBS/ABS debt can be very creditworthy if the underlying loans are properly underwritten, because only a small

percentage of individual loans will default

The Fed’s artificially low rates from the 1990s fed the housing bubble, because money became too cheapand it was easy to pile on leverage

The bubble, and ability to manufacture AAA-rated MBS and Sub Prime MBS created a never-endingdemand for mortgage ‘product’ to feed the machine

The MBS tool became the end goal; everyone was in on the deal:Mortgage originators aggressively pushing product out the door by giving mortgages to unsuitable borrowers who

never should have been homeowners in the first place;

Banks funding the originators through warehouse ‘financing’

Banks packaging and selling the subprime loans to MBS trusts through third party sponsors;

Rating agencies blessing the packages with strong ratings;

Bond insurers picking up premiums for insuring tranches;

Homeowners who saw their investment rise with the asset bubble;

Home flippers who used the cheap mortgages as credit cards.



But the Worst Was Yet to Come .After 2006, suspicion arose in the capital markets that subprime mortgages, and even supposedlyprime mortgages were even worse than they should be.

• ‘Liar’ and ‘No-doc’ loans were an open cultural admission that something was amiss.

• Fly-by-night mortgage origination shops, many of which have disappeared.

• Over-inflated appraisals and home valuations.

But, at least the underlying loans were secured by a mortgage on property.

• Weren’t they?

On top of the collapsed housing market and economy, it now appears that the chain of property

ownership was broken in the course of MBS creation.

• In contravention of centuries of property rights, the deed of trust was separated from the note; the DoT was not

regularly passed on from the originator through the sponsor to the MBS trust.

• This means that neither borrowers nor MBS investors have the protection of clear title

State courts are beginning to wake up the contravention of property law and are refusing to allowforeclosures based on suspicious or incomplete documentation.

• The January 7 decision by the Supreme Judicial Court of Massachusetts to void home seizures by US Bancorp and WellsFargo is a fire bell in the night.



Patterns of Behavior

Federal bank regulators are scrutinizing more than 150 lawsuits :

50 home loan-related lawsuits directed at lenders and mortgage companies

Five biggest servicers -- Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and Ally Financial -- currently face up to $30billion in penalties from state attorneys general and federal agencies for wrongful foreclosures and other mortgage-relatedmisdeeds.

67 pending class-action suits in more than 20 states that challenge foreclosures based on so-called "robo-signing"

57 additional suits in 25 states over alleged improprieties resulting from loan modifications in the Obama administration'ssignature foreclosure-prevention initiative, known as HAMP, and 24 lawsuits over non-HAMP modifications

Investors in mortgage securities have filed 21 suits that allege misconduct and seek to force banks to buy back the loans at facevalue, an outcome that could cost banks hundreds of bill ions of dollars.

The FDIC is also tracking separate suits launched by state attorneys general in Ohio, Nevada and Arizona against Ally and Bank of

America.

FDIC Director of Depositor and Consumer Protection Mark Pearce's prepared remarks for a Congressional Hearing, July 7, 2011



The Mortgage ElectronicRegistration System (MERS)• Separated the Note from the

Deed• Clouding Title on 60M Homes• 5-7M illegal foreclosures• Affects most home-owners• Eventually Title Companies will

refuse to write policies onhomes that have/hadsecuritized mortgages

• Home value will plummet• Cash only purchase• Almost impossible to restore

title

MERS Ate Your Mortgage



MERS:Energizer Bunny for Mortgage Fraud

MBS subprime flourished whenMERS went online

Massive fraud would have beenimpossible without it

Business model violates settledproperty law

It is nothing more than a giantelectronic excel spread sheet

• Never a lender• No employees

• No power to assign mortgages

Nearly 80 million mortgages weresecuritized from 1997 to today



Fraud? Or a Really Bad Business Decision?

U.S. Bankruptcy Judge Robert E. Grossman

“By MERS account, it took no part in the assignment of the Note in this case, but

merely provided a database which allowed its members to electronically self-report transfers of the Note,” wrote Judge Grossman. “[T]here is nothing in the

record to prove that the Note in this case was transferred according to the processdescribed above other than MERS’s representation that its computer database

reflects that the Note was transferred to U.S. Bank.”

“The Court recognizes that an adverse ruling regarding MERS’s authority to assign mortgages or

act on behalf of its member/lenders could have a significant impact on MERS and upon thelenders which do business with MERS throughout the United States. However, the Court mustresolve the instant matter by applying the laws as they exist today. It is up to the legislative

branch, if it chooses, to amend the current statutes to confer upon MERS the requisite authorityto assign mortgages under its current business practices. MERS and its partners made thedecision to create and operate under a business model that was designed in large part to avoidthe requirements of the traditional mortgage recording process. This Court does not accept the

argument that because MERS may be involved with 50% of all residential mortgages in thecountry, that is reason enough for this Court to turn a blind eye to the fact that this process

does not comply with the law.”



MERS: In Their Own Words

MERS

“Saved” its

customers

$2.4 Billion

in

property

recording

fees

Counties

in MI and

otherstates are

suing to

reclaim

fees.



400 Years of Property Law Violated

When a closingoccurred on

sub-primemortgage

(eitherrefinance or

new purchase)

The originator

recorded themortgage in the

county clerk’s

office

However, whenthe mortgage

was sold on the

secondarymarket, allsubsequentassignments

were NEVER

recorded

As a result, thechain of title is

broken andcannot be

cured on 60M-80M mortgages

1997-present



• Legal challenges in State Supreme,

Federal Bankruptcy, Appeals and

Appellate Courts

• Home-owners are fighting foreclosure

• Investors are demanding accounting of the trusts

• Discovery process reveals fraud

throughout entire mortgage and

securitization process

• There are no mortgages to back

mortgage backed securities• Home values plummet

• Investors hold unsecured consumer

debt

Proof of Fraud is Mounting



• Original Note and Mortgage were

destroyed

• Pretender lenders dummied up fake

documents, forged by Burger King Kids

to slide foreclosures thru the courts• Real reason for robo-signing was to

hide fraud from investors

• Pretender lenders do not have original

documents because they have NO real

interest in the property

•

Attorneys committed fraud before thecourt

• Big Government and Big Business

collude to cover-up the fraud

Foreclosures Expose the Fraud



• How much?

– TARP, Credit Default Swaps, Insurance

have given investors a revenue stream

– What constitutes a default?

•

The identity of the lender andborrower were hidden

• The ethical man recognizes a debt is

owed but it is foolish to pay the wrong

party – only to have clouded title at the

end of the 30-year schedule

• How do we continue revenue stream to

MBS investors?

• All American families and communities

are affected

A Debt is Owed



But to Whom?



Anarchy & Tyranny Commence



Illegal Seizure of Private Property



MBS Global Investment

•

MBS collapse has profound impact on global economy• Securitization is a myth. All NYS security laws were violated

• There are no mortgages to back mortgage-backed securities

• Investors are holding pools of unsecured debt

• Investors have chosen to sue banks - get all their money back

•Big Government has vested interest in propping up the markets, even if it meanscovering up massive fraud

• Crony Capitalists may declare an emergency that will undermine US property

rights and harm home-owners

• TILA revision

• HR3808

• TBTF Bailout



Constitution Based Solutions



Restore The Rule of Law

•Property law isbased on state law

• Home-owners go

thru state courts

• Clear & Quiet Title

• Bankruptcy

• Cancel all Sheriff

sales, evictions of

foreclosed

properties

• NJ AG and

Consumer Affairs

investigate fraud

hold the guilty

accountable



Public Officials and State at Risk

The mortgage fraud case law, federal agency actions andabundant evidence of massive mortgage fraud have beenwidely publicized

NJ Tea Party Coalition has met with Congressman ScottGarrett, Bergen County Clerk, Bergen County Sheriff and NJAttorney General and Consumer Affairs Senior Staff

As a result, public officials may be held accountable for

illegal foreclosures, evictions and any subsequentconsequences that affect individual or public safety



To Sum it Up

ThroughMERS andillusion of

securitizationCrony

capitalistshave:

Clouded titleon 60M-80M

properties

Illegally seized7-10 million

homes(100,000month)

DefraudedMBS investors

Deprivedcounties of

$2.4 billion inland recording

fees

Impoverisheda nation

Wreckedfamilies andcommunities

Only 1executive has

beenconvicted andsentenced to

jail



It’s Time to Act

Restore• States’ Rights

• Property Rights

• Rule of Law

“America is a nation of

laws, not men”

Is true once again…

mortgage fraud- ag v2

Documents