Foreclosure-Gate: Mortgage Loans Not Conveyed to Trusts

11-15-2010 • NakedCapitalism.com/

…. there is substantial evidence that in many cases, the notes were not conveyed to the trust as stipulated. As we have discussed, the pooling and servicing agreement, which governs who does what when in a mortgage securitization, requires the note (the borrower IOU) to be endorsed (just like a check, signed by one party over to the next), showing the full chain of title. The minimum conveyance chain in recent vintage transactions is A (originator) => B (sponsor) => C (depositor) => D (trust). The proper conveyance of the note is crucial, since the mortgage, which is the lien, is a mere accessory to the note and can be enforced only by the proper note holder (the legalese is “real party of interest”). The investors in the mortgage securitization relied upon certifications by the trustee for the trust at and post closing that the trust did indeed have the assets that the investors were told it possessed. It isn’t simply that the notes had to go through a particular chain of parties to get to the trust. All these steps had to be accomplished by a particular date, which was generally no later than ninety days after the trust closed. And all the assets conveyed to the trust had to be “performing”, meaning the borrower was current on his payments. Wells Fargo Bank was the bank that filed the most foreclosure actions in five South Florida counties in October, 2010….. The majority of these cases were filed by Wells Fargo as Trustee for mortgage backed trusts. In every case involving a trust, the original mortgage assignment to the trust was missing. Wells Fargo used Assignments prepared years later – most often within a few months of the foreclosure – and often prepared AFTER the foreclosure was filed. In many cases, JP Morgan Chase transferred non-performing loans originated by Washington Mutual Bank into these trusts. Wells Fargo’s top choice for law firms was The Law Offices of David Stern. To supply “replacement” assignments showing the trusts had acquired the mortgages, Wells Fargo used its subsidiary, America’s Servicing Company in Ft. Mills, SC. The mortgage servicing company most often used by JP Morgan Chase to get its bad loans into trusts was Lender Processing Services in Dakota County, MN.