Foreclosure Fraud For Dummies, 1: The Chains and the Stakes Posted onOctober 8, 2010byMike (This is a series giving

a basic explanation of the current foreclosure fraud crisis: This is Part One. Here is PartTwo , Part Three , Part Four , and Part Five.) The current wave of foreclosure fraud and the consequences for the economy are difficult to follow. As such,Im going to write a few posts to simplify what is going on so you can follow stories as they unfold. This isvery 101 level, and will include a reading list of blog posts and articles at each stage to help provide depth.(Special thanks to Yves Smith and Tom Adams for walking me through much of this.) Lets make three chartsof the chains involved in the process. The first is what is currently going on with foreclosure fraud

.As you can see, in judicial review states like Florida the courts require that servicers, or those who administer the bonds that are full of mortgages (securitization, residential mortgage backed securities, RMBS, are all phrases for them), say that they have everything necessary in order to have standing to bring a foreclosure. Theyneed to have the note for a mortgage, which is supposed to be in the trust part of the mortgage backedsecurities that they administer.What is breaking down here? In Florida, a judicial review state, it was found that one person was notarizingdocuments far faster than anyone could reasonably have. Forged documents necessary for the foreclosure process like the note were found. A separate court system was set up to resolve these foreclosures faster at theexpense of allowing serious challenges to the documents. Heres Smith onhow kangaroo these courts look upclose.Heres WaPo on one individualand the nightmare of trying to challenge an invalid foreclosure. Keep himin mind when you hear about deadbeats and whatnot: the current system is designed to make it difficult for anyone to challenge their case.Meet the robosigner who kicked it off here at this WaPo story.I almost feel bad for this patsy; the real battlehere is between junior and senior tranche holders, and this doofus could end up in jail in order to keepJohnPaulson rich.After reading about this guy Im asking our elites to take care of their patsies better. (Can we get aFinancial Patsy Fordism social contract movement going? If you are going to be a patsy for GMAC, you should be paid enough able to be able to buy GMACs services or something.)Why would servicers do this? One story would be that the more foreclosures they process, the more fees theyget, so there is an incentive to cut as many corners to speed through the process as possible. Hence the termforeclosure mills. You can read more about this from Andy Krolls excellent work for Mother Jones (start here ).Theres another problem though what if servicers are behaving this way because the actual notes arent in thetrust? Lets go back to the creation of these instruments.

I take a mortgage out at Joes Lending, a mortgage originator. A mortgage consists of two parts. The first is thenote, or the IOU, which is the borrowers promise to pay. The second is the mortgage, which is the security, or the lien, or the actual interest.Joes lending takes the mortgage note to a sponsor to turn these mortgages into a bond. The sponsor was oftenan investment bank like Bear Sterns. Now that investment bank puts an intermediary in between itself and thetrust. This intermediary is usually called a depositor, and sometimes there are several of them in the chain.Whats the worry here? Well many of these mortgage originators were fly-by-night shops, shady enterprises thatcollapsed the moment they hit trouble. And many of them cut corners and one of the corners they may have cutwould have been to send the note to the trust. Specifically, there is worry that many mortgage originators never sent the notes to the depositors. Originators wanted volume to get fees and may not have done all the paperwork correctly. There are a lot of things mortgage, things like thenote, title insurance, supporting documents. But the note is the most important.

Why is this important? Well the trustees usually sign several certificates saying that they have verified all thedocumentation in these trusts. Many of these trusts are under New York trust law which is particularly clear andstrict when it comes to these matters. With this in mind, tackle these three posts by Yves Smith (one two three). So connect the two together, and you can see why we might have a systemic crisis on our hands:

There are roughly $2.6 trillion dollars in mortgage backed securities. The Wall Street Journalstarts to explainhow this will be a battle between holders of junior and senior tranches of debt. It also exposes the servicers,which include the four largest banks, to extensive legal liabilities by those who bought these securitizations thatwere signed off as being properly administered and created.One result is that this has lead homeowners to reasonably demand to see the proper documentation before theyand their families are put out on the street. Read Ryan Grim and Shahien Nasiripour from June, Who OwnsYour Mortgage? Produce The Note Movement Helps Stall Foreclosures.Katie Porter is an expert who has done extensive research into this area and often blogs about it at credit slips.See the blog posts:How to Find the Owner of Your MortgageandProduce the (Bogus?) Paper.Porter found that this was extensive in her research, seeMisbehavior and Mistake in Bankruptcy Mortgage Claims(Amajority of mortgage claims are missing one or more of the required pieces of documentation for a bankruptcyclaims. Fees and charges on claims often are poorly identified and do not appear to be reasonable. The bankruptcy data reinforce concerns about the overall reliability of the mortgage service industry to chargehomeowners only the correct and legal amount of the debt and to comply with applicable consumer protectionlaws). By rushing the process, unreasonable and excessive foreclosure fees can get applied to homeownerswhen there may not even be the proper documentation to have the standing to bring foreclosure at all.So keep these frameworks in mind when you see the debate unfold in the next weeks. It is a problem of systemic risk, and it is a problem for the currently cratered securitization market. It will need to be addressed,the sooner the better. But how?

UPDATE: I forgot to thank Tom Adams, a contributor to naked capitalism, for the help he gave me inunderstanding the topic in the original article. Its updated above. Foreclosure Fraud For Dummies, 2: What is a Note, and Why is itSo Important? Posted onOctober 11, 2010 byMike (This is a series giving a basic explanation of the current foreclosure fraud crisis: Here is Part One.This is PartTwo, Part Three , Part Four , and Part Five.) The SEIU has a campaign: Wheres the Note? Demand to see your mortgage note.Its worth checking out. But first, what is this note? And why would its existence be important to struggling homeowners, homeowners inforeclosure, and investors in mortgage backed securities?Theres going to be a campaign to convince you that having the note correctly filed and produced isnt thatimportant (see, to start, thisWSJ editorialfrom the weekend). This is like some sort of useless cover sheet for aTPS form that someone forgot to fill out. That is profoundly incorrect.Independent of the fraud that was committed on our courts, the current crisis is important because the note is acrucial document for every party to a mortgage. But first, lets define what a mortgage is. A mortgage consistsof two documents, a note and a lien:

The note is the IOU, its the borrowers promise to pay. The mortgage, or the lien, is just the enforcement rightto take the property if the note goes unpaid. The note is crucial.Why

does this matter? Three reasons, reasons that even the Wall Street Journal op-ed page needs to take into account. The first is that the note is the evidence of the debt. If it isnt properly in the trust then there isnt clear evidence of the debt existing. And it cant be a matter of lets go find it now! REMIC law, which governs the securitization, is really specific here. The securitization cant get new assets after 90 days without a tax penalty, and it cant get defaulted assets at all without a major tax penalty. Most of these notes are way past 90 days and will be in a defaulted state. This is because these parts of the mortgage-backed security were supposed to be passive entities. They are supposed to take in money through mortgage payments on one end and pay it out to bondholders on the other end, hence their exemption from lots of taxes; the tradeoff is that they cant be de facto managers of assets, and thats what going to find the notes would require. For Distressed Homeowners The second is that it also matters a great deal for homeowners who are distressed. The note lays out the terms of late fees and other penalties. As we will discuss in the next section about mortgage servicers, the process of trying to get people behind on their payments current instead of driving them into bankruptcy has broken down. But for now its clear that mortgage servicers dont have great incentives to get distressed homeowners records correct. Theres well-documented evidence that extra fees are tacked on to mortgages that have fallen behind, fees that arent following the terms of the note. This is usually only found out in bankruptcy where there is a lawyer (and multiple parties), not in foreclosure cases. But if homeowners wants to challenge whether what the servicers claim is the correct final due amount, the terms of the note are necessary for the court. This will matter a great deal for many homeowners. Small, marginal differences in the total owed could allow for a short sale. It could determine if the homeowner has any equity in their home. And this can only be determined by producing the note. For Investors, Who Took This Seriously at the Beginning Last reason: you can tell its important because all the smartest finance guys in the room thought it was important. Lets look at a Pooling and Service Agreement form from 2006between GS MORTGAGE SECURITIES CORP., Depositor, and DEUTSCHE BANK NATIONAL TRUST COMPANY, Trustee. (h/tAdam Levitin for this example.) Lets reproduce the chart from part 1 to see the chain between depositors andtrustees who oversee the trust

[t]he poor quality of papers filed by Fleet to support its claim is a sad commentary on the recordkeeping of a large financial institution. Unfortunately, it is typical of record-keeping productsgenerated by lenders and loan servicers in court proceedings. In re Wines, 239 B.R. 703, 709(Bankr. D.N.J. 1999).Is it too much to ask a consumer mortgage lender to provide the debtor with a clear andunambiguous statement of the debtors default prior to foreclosing on the debtors house? In reThompson, 350 B.R. 842, 84445 (Bankr. E.D. Wis. 2006).(Source.) Notice that consumer rights groups were flagging this as a major problem back in 1999 and 2002 because judges were noticing it was a major problem in their bankruptcy courts. If the late 1990s to 2006 periodis a Renaissance period of servicer fraud then we can contrast it with the period we live in now, the Baroque period of servicer fraud. Whatever unity there used to be between the forms and functions of the sloppydocumentation and outright fraud in the art of servicing have become detached.The forms of fraud have gone high art: serving documents on people who could never have been served, signing10,000 affidavits a month, etc. They are all well covered, and well list more later perhaps. Hereare some of myfavoritesfrom last year,the reading list in Part One has even more. But what I want to focus on is the function of servicer fraud. What Do Servicers Do? A Case Study in Bad Design and Worse Incentives

Servicers in a mortgage-backed security have two businesses. The first is transaction processing. This meanstaking in your mortgage money on one end and walking it over to the crazy tranches and payment waterfalls onthe other end. This is clean, efficient, largely automated, requires little discretion and works very well, andimplicit in it is that it is most profitable when you can harness economies of scale.Its considered a passive entity in fact, so there are no taxes applied in this passthrough mechanism. If servicers went active, say by looking for mortgage notes not in the trust 90 days after the fact or mortgagenotes that are not in the trust that have defaulted, which is what theyd likely have to do to get out of thisforeclosure fraud crisis, theyd face very severe tax penalties.Their other business is to handle default situations. In addition to the fixed fee they get for servicing eachindividual mortgage they get paid from default fees like late charges. They get to retain most, if not all, of thesefees.So right away they have an incentive to not find ways to negotiate to get a mortgage to a good state. They alsohave a strong incentive to keep a steady stream of fees and charges going to their books rather than to investors.So anything that puts servicers in charge of negotiating mortgages, say the Obamas administrations HAMP program, is designed to fail.Because even without bad incentives, doing good work on modification is costly, time consuming, requiresindividual expertise and experience and doesnt benefit from automation or economies of scale. Which is to sayit is the opposite structure of their normal business.And there are additional worries. Many of the servicers work for the largest four banks Wells Fargo, Bank of America, Citi, and JP Morgan and these four banks have large exposures to junior liens. These are second or third mortgages or home equity lines of credit that would have to be wiped out before the first mortgage can be modified. The four banks have almost half a trillion dollars worth of these exposures and, from the stress test, are valuing them at something like 85 cents on the dollar. Keeping a homeowner struggling to pay the second lien would be more worthwhile to these middlemen banks than getting him or her into a solid first lien to the benefit of the bond investor.So keep these in mind as you read about the servicers here. There have been worries that they, as a designed institution, were simply not qualified for this job going back a decade. They have massive conflicts with the investors they are supposed to be working for. They profit when homeowners collapse and lose money whenthey are brought up to a normal payment schedule (made current). And if the instruments dont have the notesnecessary to bring standing to carry out the foreclosures they have to take a massive tax hit in order to take thenote into the trust. And regulation to handle this isnt in place. No Regulator because for all the talks of regulatory burden, there is no current federal government agency that regulates theservicers. Not the Federal Reserve. Not the Treasury. This is what happens when the financial industry writesthe deregulation. Instead you have a patchwork of state regulators and attorney generals. Notice how President Obama has nobody to turn to and tell the press that So and So is on the case. In theory the OCC regulatesservicers if they are part of a bank or a thrift. This must fall to the new regulatory counsel and the Consumer Financial Protection Bureau to investigate, where it will properly belong.(The Fair Debt Collections Act, which applies to debt collectors, doesnt apply to servicers. Here might be a funidea for an enterprising staffer if there is no note producible, are servicers still legally servicers and thusexempt from the Fair Debt Collections Act? Just a thought.)Is it any wonder that servicers are rushing these foreclosures and making a mockery of the courts and producingsystemic risk in the process? There needs to be an investigation of what is being done and why, because this problem is not taking care of itself.(Special thanks to Katie Porter and Adam Levitin, who you can read at credit slips, as well as Tom Adams and Yves Smith, who you can read atnaked capitalism, for in-depth discussions on this material.) Foreclosure Fraud For Dummies, 4: How Could This Explode into aSystemic Crisis?

Posted onOctober 11, 2010 byMike (This is a series giving a basic explanation of the current foreclosure fraud crisis: Here is Part One, Part Two, Part Three , this is Part Four and Part Five. ) Right now the foreclosure system has shut down as a result of banks own voluntary actions. There is currentlya debate on whether or not the current foreclosure fraud crisis could explode into a systemic risk problem that perils the larger financial sector and economy, and if so what that would look like. No matter what happens, the uncertainty about notes and what is currently going on with the foreclosure crisisis terrible for the economy. Getting to the heart of this problem so that negotiations can be worked out isimportant for getting the economy going again. There is little reason to trust what comes out of the servicers andthe banks in whatever they conclude at the end of the month, and the market will know that. Only thegovernment can credible clear the air here as to what the legal situation is with the notes and the securitizations.But I wanted to get some unlikely but dangerous scenarios on the table in which this blows up. Bangs, notwhimpers. The kind where Congress is pressured to act over a weekend. I had a discussion with Adam Levitinabout how this could explode into a systemic problem. Title Insurance Market Breaks Down First scenario involves title insurance. Specifically if title insurers decide to take a month off from writing titleinsurance even on performing and current loans to investigate what is going on with note transfers.If that happened there would be no mortgage sales (except for those involving cash) in the country. The systemwould simply stop. Everyone with an interest, from realtors to Wall Street to construction to huge sections of the economy, would face a major crisis through this short-term pinch. There would be a call for Congress to stepin immediately.You can tell that the title insurance market, which is largely concentrated and also holding very little capital for a nationwide crisis scenario, is investigating the current problems. They are holding off on certain types of foreclosed properties; if they decide to hold off all together you could see a scenario where Congress is pushedto act immediately. Lawsuits a Go-Go The second would be a wave of lawsuits. As we discussed in Part Two, many of the servicing agreementsallowed for the trustees to force the depositors and sponsors to purchase mortgages without notes. That would be 100 cents on the dollar for mortgages worth pennies. If the trustees dont take action, the investors could suethem. And the tranche warfare on this issue is intense, as foreclosures versus a few more payments radicallychange the balance between junior and senior tranche holders (See Tracy Alloway on tranche warfare here ).Heres what this could look like. Read left side up for what the lawsuit screems and looks like and the right side down for the response,

Much of the activity would center around the four largest participants in these areas, the Too Big To Failinstitutions of Wells Fargo, Bank of America, Citi and JP Morgan.And many of these mortgage-backed securities are cheap. So in an interesting scenario you could see hedgefunds buying MBS for pennies just for the option to sue firms that are likely backstopped by the government.If title insurance froze, or if the financial markets had a panic over fears of waves of lawsuits, there would be pressure for Congress to do something. Much of the law is New York trust law, so it isnt clear Congress can act. But there will be pressure.Because if this bad-case scenario happens, which there is a small but reasonable chance it could, progressivesneed to have a clear sense of what they want in exchange for negotiations when the financial industry comesflying in over the cliff, a list of demands and questions to replace the in-large-part steamrolling of TARP over anyones interests but the banks. Even if that doesnt happen, but the slow bleed of the current dysfunctionalmortgage market continues, progressive wonk policy initiatives that fix this crisis and get the mortgage marketgoing again should be at the front of the debate. Well cover this in Part 5. Foreclosure Fraud For Dummies, 5: The Necessity of Government Action and Ways Out of The Crisis Posted onOctober 12, 2010byMike (This is a series giving a basic explanation of the current foreclosure fraud crisis: Here is Part One, Part Two, Part Three , Part Four and this is Part Five.) Heres a guess: In one month, the large banks will conclude that there are no problems with its foreclosure processes. The massive fraud that was committed on the courts was the result of a few bad apples, but those arenow gone and its back to business as normal.At

this point, either as a citizen or as a financial market participant, would there be any reason to believe them?Is there any reason to believe that the servicer and foreclosure mill fraud is over? That securitizations actuallyhave the proper legal documentation necessary? That borrowers and lenders are actually getting a chance tocome to mutually beneficial situations? Is there any reason to believe they arent lying?Because servicers arent currently regulated. They have a patchwork of state regulators and the OCC mayregulate their parent company if it is a bank or thrift, but theres no current government agent to provide anyaccountability here. So without action, theres going to be no one to confirm or deny that anything has actuallychanged in the housing market.In some ways this narrative already reminds me of the BP oil spill in the gulf. The Obama administrationlargely left it to BP to tell the government and the public what was wrong, hire the contractors and then also totell everyone what the environmental damages were. It will surprise no one that the information BP sent outwas wrong (see, for example, Kate Sheppard,Not an Incidental Public Relations Problem), but for better or worse, the Obama administration is now linked to whatever course and information BP chooses to pursue.Why not choose a different course for this one? One that emphasizes social justice through powerful bankshaving to follow the rule of law, corporate responsibility to not commit fraud, provides a space where those whoare weak and poor get a fair say instead of being bulldozed over by the rich and strong, and actually starts to digout of the mortgage crisis that we are in. Check out Mike LuxsExploding foreclosure fraud issue: Anopportunity for Democrats to turn the tide. Not only is it relevant, but it demonstrates that theres a good chancethis is going to get worse before it gets better. Why not get in front of it, and change course from the disastrous path weve been taking? What Just Went Wrong in the Government Response? Because what weve done to this point hasnt worked. Shahien Nasiripour and Arthur Delaney wrote thedefinitive account of the failure of the HAMP program,Extend AND Pretend: The Obama AdministrationsFailed Foreclosure Program.Instead of continuing HAMP, its time for a fresh response.Pat Garofalo of the Center for American Progress has The Fix Is Over: Mortgage Foreclosure Scandal Offers New Hope for Homeownerswhich has a lot on what a new foreclosure relief program could look like: allowing housing counselors and other public entities to approve mortgage modifications directly,and if the borrowers servicer doesnt challenge the modification in 90 days, it automatically becomes permanent. Such a step would go a long way toward streamlining the program and getting borrowers who qualify through the maze of bureaucracy in a timely, clear fashion without leavingthem in limbo for months on end.Mortgage mediation programsin which a bank must meet with a borrower, in the presence of a judge and housing counselors, before finalizing a foreclosureshould also be expanded..Another new favorite policy option everyone should start considering: REMICs bestow enormous tax breaks to investors; these breaks should be revoked for any residential home mortgage loan holding entity that forecloses on more than a specified percentage of all of its mortgages. We have to remember what went wrong with HAMP: the servicers were in the drivers seat. We need a process that is involuntary, government-run and is standardizable on both the modification and on the foreclosure end. Between this and a clearing out of the current crisis to confirm change has actually happened we can start on away out of this crisis.Source:http://rortybomb.wordpress.com/2010/10/08/foreclosure-fraud-for-dummies1-the-chains-and-the-stakes/ Yep, me again...I had to turn this into a PDF file because of the NEED ( mine and others

) to better understand the mess created by the bankers and lawyers. When I found this on the web ( site noted above as the source ), I knew I had tomake this information available to as many people as possible because of the damages created by the lawyers( Congress; by passing legislation, allowing it all to take place, and shipping jobs overseas to destroy the people, and the nation. ), and banks ( Lobbying; for our destruction, and perpetrating this fraud on the peoplewith the support of our elected representatives ). Hope this infuriates you! You will find more web sites of interest[ Here ].Courtesy of,Phil Daniels12 Of 15

i Heres a question thats been bothering me for a while:Ive been poking around county recorder websites for while. At least in my state, a real estatetransaction typically involves recording a deed transferring the property and a deed of trust that givesthe lender a lien on the property. I remember reading someone (maybe Tanta at CalculatedRisk) sayingthat you could require that the note also be recorded. So the question is: if notes were recorded wouldthat solve the problem with not being able to locate them? Would a copy of a recorded note be anadequate substitute for the original? Or would the note have to be rerecorded every time it changedhands? Which would be why we have MERS, right?Mers being a huge issue.Peterson, Christopher Lewis, Two Faces: Demystifying the Mortgage Electronic Registration SystemsLand Title Theory (September 19, 2010). Real Property, Probate and Trust Law Journal, Forthcoming.Available at SSRN: http://ssrn.com/abstract=1684729AndPeterson, Christopher Lewis, Foreclosure, Subprime Mortgage Lending, and the MortgageElectronic Registration System (October 5, 2009). University of Cincinnati Law Review, Vol. 78, No. 4, 2010. Available at SSRN: http://ssrn.com/abstract=1469749 ii Terminology is frequently misused. Although mortgage note is not incorrect, it is confusing, and itgenerally just means note. There is a mortgage, meant to be recorded, which generally has to berecorded to be a perfected lien. Since mortgage is often used interchangably with the broader termshome loan or real estate loan, I actually prefer the term security instrument for precision. Andthere is the note. Notes are unrecordable. Statements about how notes are unrecorded is a major peeve of mine. They arenot meant to be recorded. They do not conform to recordation standards.Suggestions to the effect that they should be recorded are a good tipoff to take whatever else a poster says with a grain of salt. Regrettably, this suggestion is frequently part of too many posts. Notes are unrecordable. In addition, the original can be like cash and meant to be kept secure. Sendingit to a county for recording would be gross negligence by whomever did it.Did I say notes are unrecordable and theyre not meant to be recorded? AND Deed of Trust = security instrument. Another reason I prefer that term. iii

 Last reason: you can tell its important because all the smartest finance guys in the room thought it was important. I would non-concur here. The note is important not because the SGITR think its important, but becauseits fundamental to proving debt. Theres an old saying: A students become professors, B students ********************************************************************************** Yep, me again...I had to turn this into a PDF file because of the NEED ( mine and others ) to better understand the mess created by the bankers and lawyers. When I found this on the web ( site noted above as the source ), I knew I had tomake this information available to as many people as possible because of the damages created by the lawyers( Congress; by passing legislation, allowing it all to take place, and shipping jobs overseas to destroy the people, and the nation. ), and banks ( Lobbying; for our destruction, and perpetrating this fraud on the peoplewith the support of our elected representatives ). Hope this infuriates you! You will find more web sites of interest[ Here ].Courtesy of,Phil Daniels Heres a question thats been bothering me for a while:Ive been poking around county recorder websites for while. At least in my state, a real estatetransaction typically involves recording a deed transferring the property and a deed of trust that givesthe lender a lien on the property. I remember reading someone (maybe Tanta at CalculatedRisk) sayingthat you could require that the note also be recorded. So the question is: if notes were recorded wouldthat solve the problem with not being able to locate them? Would a copy of a recorded note be anadequate substitute for the original? Or would the note have to be rerecorded every time it changedhands? Which would be why we have MERS, right?Mers being a huge issue.Peterson, Christopher Lewis, Two Faces: Demystifying the Mortgage Electronic Registration SystemsLand Title Theory (September 19, 2010). Real Property, Probate and Trust Law Journal, Forthcoming.Available at SSRN: http://ssrn.com/abstract=1684729AndPeterson, Christopher Lewis, Foreclosure, Subprime Mortgage Lending, and the MortgageElectronic Registration System (October 5, 2009). University of Cincinnati Law Review, Vol. 78, No. 4, 2010. Available at SSRN: http://ssrn.com/abstract=1469749 ii Terminology is frequently misused. Although mortgage note is not incorrect, it is confusing, and itgenerally just means note. There is a mortgage, meant to be recorded, which generally has to berecorded to be a perfected lien. Since mortgage is often used interchangably with the broader termshome loan or real estate loan, I actually prefer the term security instrument for precision. Andthere is the note. Notes are unrecordable. Statements about how notes are unrecorded is a major peeve of mine. They arenot meant to be recorded. They do not conform to recordation standards.Suggestions to the effect that they should be recorded are a good tipoff to take whatever else a poster says with a grain of salt. Regrettably, this suggestion is frequently part of too many posts. Notes are unrecordable. In addition, the original can be like cash and meant to be kept secure. Sendingit to a county for recording would be gross negligence by whomever did it.Did I

say notes are unrecordable and theyre not meant to be recorded?ANDDeed of Trust = security instrument. Another reason I prefer that term. iii Last reason: you can tell its important because all the smartest finance guys in the roomthought it was important. I would non-concur here. The note is important not because the SGITR think its important, but because its fundamental to proving debt. Theres an old saying: A students become professors, B students go to Wall Street, C students become the judges. While this isnt strictly true in my experience(except for the professors), it is true that judges think the note is important, and I listen to them over the SGITRs, generally. While it is important, there is another problem the negotiability of those notes is not always obvious, and it is frequently the case that they are not negotiable instruments, and thus not under the UCC. AsProf. Dale Whitman (Nelson & Whitman, Real Estate Transfer, Finance & Development) writes in are cent law review article (How Negotiability Has Fouled Up the Secondary Mortgage Market, and What to Do About It ):There is simply no way to resolve this question [of negotiability] conclusively. Yet, it seems bizarre that the negotiability of the most widely used mortgage note form in the nation (Fannie Maes), employed in many millions of transactions, is uncertain and that no one has bothered to do anything to clarify it. It will be up to the courts, and as Whitmans article makes clear, this is an issue that has not been extensively addressed. He argues that the securitizes simply didnt care whether the note was negotiable .In addition, I would amend this statement If it isnt properly in the trust then there isnt clear evidence of the debt existing. There is plenty of evidence of the existence of the debt (that is, there isa whole loan package including copies of the note), but what is not clear is who is the lawful obligee/payee after transfer[s]. The reason why the negotiability/non-negotiability question is so important is that the have different rules for transfer, possession and claiming ownership. The assumption that the UCC rules control is not necessarily right. If the note isnt negotiable, common law mostly controls. The forced repurchase option will only be effective for solvent originators, so long as they are solvent, which wont be very long, particularly as FHA is probably going to be first in line before private labels (for sure). Here ( As more and more sites POP-UP to combat foreclosure fraud... consumer beware! ) Securitization is what happens when your promissory note for your home is sold to wall street and gets "securitized" [recorded] by the SEC [Securities andExchange Commission]. This is a short expose on this process and why it's fraudulent to foreclose after securitization has been done. http://www.youtube.com/watch?v=41nf-BDY1JE Find your home listed on the Securities and Exchange Commission ( call them and ask how to do it )...http://www.sec.gov/( You will also note how the US Government combats illegal immigration by putting this site in en Espaol )(Okay, I'll help) Finding Pooling And Servicing Agreements (PSAs) For Securitized Mortgage Loanshttp://mattweidnerlaw.com/blog/2010/05/finding-pooling-and-servicingagreements-is-key-to-killing-your-foreclosure-case/

http://ftcsearch.ftc.gov/search? q=Foreclosure+Fraud&btnG=Search&output=xml_no_dtd&ie=UTF8&client=ftc_consumer&proxystylesheet=ftc_consumer&filter=0 http://mortgage-home-loan-bank-fraud.com/ http://showmetheloan.net/States/statutes.html http://www.consumerdefenseprograms.com/sitemap/ http://www.expertlaw.com/library/limitation s_by_state/ http://www.kscourts.org/cases-andopinions/opinions/supct/2009/20090828/98489.htm http://www.law.cornell.edu/ucc/ucc.table.html http://livinglies.wordpress.com/2011/10/07/ manifesto-for-protesters-against-banks/ http://www.foreclosureprose.com/ ( Go PRO SE; it's the only way to fly? )http://www.webofdebt.com/articles/mers.php http://2auditforeclosures.com/( This and the next site are related, and fee driven, but it is for you to chose wisely )http://www.forensicauditingservices.com/default.html ( $$$$$ ) http://dc.urbanturf.com/articles/blog/produce_the_note._3_words_that_could_stave_off_fo reclosure/555/?r=334172864#comments http://www.perkel.com/pbl/index.htm http://www.freedomclubusa.com/homehttp://stopfore closurefraud.com/ http://www.loansafe.org/forum/ http://www.notacitizen.com/index.php/a rticles/98-government/70-what-is-the-united-states http://www.youtube.com/results? search_query=Post+Forerclosure+Damages&aq=f http://www.youtube.com/watch? v=TxROZCjMopI&feature=results_video&playnext=1&list=PL5C0DA0482429D224 COMPARING DEFINITIONS OF FREEDOM: THE SOURCE OF OUR DILEMMA http://www.newswithviews.com/Timothy/baldwin171.htm Just because I was there...http://www.nextag.com/marine-corps/products-html?nxtg=3740a50050b6B62A0E0A12641DE