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Back to Basics: Countrywide as a Vehicle for Fraud on Borrowers and the Courts

by Neil Garfield | November 23, 2018

Home Affordable Modification Agreement (HAMA) is really a HAMMER.

In my discussions with Charles Marshall and Bill Paatalo we frequently analyze and discuss attributes of documents and the underlying real events that occurred, which are often not connected in any manner with what is written on the documents. One such fact pattern came to our attention and I issued the commentary below.

It is not hard to see why nearly everyone can’t keep track of what is really happening, to wit: investor cash was converted to investment bank cash which was converted into underwriting and “trading” fees and profits plus loans issued in the name of remote originators who were mostly unaccountable. Neither the investors nor the borrowers received any benefit from the use of their cash and credit without their consent.

One of the interesting things that I notice about the Countrywide documents is that it identifies CW as the lender and discloses that  the loan can be transferred. What is does not say is that the loan has already been transferred to an undisclosed third party who may or may not be a lender. 
By selling forward the loans are sold before they exist. Hence CW, despite the representation on the document, is not the lender but rather a broker at best. The answer to most everything is in the gaps, not he documents or even the money trail. One of the things that people forget or never looked for is whether CW was ever capitalized with enough money to make loans, much less in the volume attributed to CW. It wasn't. This same question could be applied to Quicken Loans and hundreds of other "originators" who used that moniker because it is undefined.

The loan is with a ghost. And foreclosures are with a ghost, for the most part. In fact, that leads to the question of whether it was a loan at all or if the terms of repayment are set forth in an enforceable loan contract. If the note and mortgage (or deed of trust) name a ghost then we already know that the contract violates public policy and law, too wit: disclosure of the identity of the lender.

While there is an argument to say that the paper becomes bearer paper there are two things wrong with that line of thinking. First a mortgage is not and cannot be bearer paper if it seeks to be contract longer than one year in order to satisfy the statute of frauds. Second, the mischief of "bearer documents" is that the right to rescind and the rights to sue for violation of lending laws is eviscerated.

The signature page of the Home Affordable Modification Agreement pretty much sums up the deficiencies and illegal activities of the banks acting through layers of conduits such that the real party in interest, as in organized crime, can never be positively identified without a wiretap.

  1. It is dated 2013 which is long after CW was dead and buried.
  2. It is signed by a robosigner which means she didn't know what she was signing or why. You can be sure she was not named in any existing corporate resolution as "assistant secretary" of any company let alone "Urban Settlement Services, LLC.”
  3. It is signed on behalf of Urban Settlement Services, LLC (USS) which as its name implies is merely an agent for purposes of settlement. BUT it is not signed by USS on its own behalf. Instead it is purportedly executed on behalf of Bank of America where USS is the "attorney in fact." An attorney in fact means that there is a power of attorney. In order for the statement to mean anything it must reference or attach a power of attorney. This is never done, and it certainly is not here. So at best the assertion of attorney in fact must be ignored because it does not settle the question of whether USS has such a power of attorney, nor what might be within the scope of the power of attorney. Thus far, then, there is no execution of the instrument by any party.
  4. BOA is mentioned not as BOA but as successor to BAC Home Loans. BAC Home is merely a name change from Countrywide, which was acquired by Red Oak Merger Corp, a controlled BOA entity. Just like the nonexistence reference to a power of attorney the "Successor" moniker is used to imply that something happened in relation to the subject loan or debt. But like the missing power of attorney, there is no mention or assertion that BAC or CW owned the loan or the servicing rights at the time of the merger, nor which assets or liabilities were merged into BOA after the Red Oak merger. 
  5. The agreement implies but does not state that BOA is the owner of the debt, note or mortgage and does not state that BOA is authorized to act as servicer but certainly implies that BOA is a servicer for an undisclosed third party because all loans from CW were "sold" into the secondary market and subject to claims fo securitization. BUT the one thing that is modified by implication is that the lender is no longer CW but rather BOA regardless of whether CW ever owned the debt or servicing rights and regardless of whether or not BOA owned the debt, note or mortgage or servicing rights. There is an obvious internal conflict between the parole evidence of sale into the secondary market and "securitization" and the implied assertions by BOA. THUS THE REAL PURPOSE OF THE DOCUMENT IS UNVEILED. IT TAKES A DEBT WITH AN UNKNOWN THIRD PARTY OWNER AND TRANSFERS IT WITHOUT CONSENT TO BOA.
  6. This raises other interesting issues with MERS. MERS is a naked nominee meaning it has no power to do anything ever except on direction of its principal which in this context MUST be the party named as Lender. That defines the agency relationship. CW existed so the agency relationship is between MERS and CW. When CW sold the debt to an undisclosed third party (probably before the debt ever came into existence) it could no longer sell the debt to anyone else by definition. Nor would an assignment or any other implied assertion of transfer of the loan be valid after it had already been sold. The successor is the party who bought it not BOA who merely claims it by way of a tortured chain of implied statements. And yet MERS has title to the mortgage. It must receive instructions from CW only, unless CW transferred the right to direct MERS to a new party. It can't because it is dead. So the modification agreement is intended to cure that by inducing the borrower to sign another false document, this time naming an entirely new fake lender. In other words it is a REFINANCING to the benefit of BOA in which BOA may or may not have paid any number of parties to become the new "lender," but among those parties, none of them was CW. 

 

 

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