First Financial Educators and Karen Svihus

[sfosmith]

I got snagged by an advanced fee foreclosure rescue scam that started with a group called Cal
Trust. Karen Svihus of Aptos, California was the enthusiastic agent recommending the free fraud analysis. Of coarse my free review resulted in extensive fraud in which their services of forcing the banks to reduce principal were needed.

The "case" was assigned to First Financial Educators in the Detroit area. It's been about 16 months and I have received nothing. No calls, updates or anything they promissed. Office personnel are Orlando Washington and Roland Watson. Attorney Linda Bernard in the Detroit area is advisor. I got one interview with her in a conference call last year but no action beyond a demand letter.

I lost $2800 with this plan.

[wserra]

If a lawyer is involved with something you believe to be a fraud, first go see him or her. Lawyers are subject to professional discipline. Demand an explanation of the services you received for your money; if that amounts to "none", demand your money back. Don't accept "Well, it's out of my hands"; if the lawyer was part of the original inducement, the lawyer is responsible. If push comes to shove, make it clear that lack of action will result in a disciplinary complaint. And follow up promptly.

Good luck. Welcome to Quatloos.

[Judge Roy Bean]

I got snagged by an advanced fee foreclosure rescue scam that started with a group called Cal
Trust. Karen Svihus of Aptos, California was the enthusiastic agent recommending the free fraud analysis. Of coarse my free review resulted in extensive fraud in which their services of forcing the banks to reduce principal were needed.

The "case" was assigned to First Financial Educators in the Detroit area. It's been about 16 months and I have received nothing. No calls, updates or anything they promissed. Office personnel are Orlando Washington and Roland Watson. Attorney Linda Bernard in the Detroit area is advisor. I got one interview with her in a conference call last year but no action beyond a demand letter.

I lost $2800 with this plan.

As Wes said - welcome to Quatloos.

Is this the "plan" you signed up for? - It's the classic "advance fee" debt-elimination fraud - "red flags" noted:

Karen says:
16 July 2009 at 12:46 pm

There is only one way I know of to have all your debts on your credit report satisfied. It is through a private association. The congress gave this to us and made it happen until September 30th 2009. Most people know nothing about it. Here are the FAQ’s. Call me after you have read them.
Q1 – What is the Tax Credit Process (TCP)?
A1 – The TCP is performed by a service provider (SP) with 20 + years of experience working inside the IRS. The SP is an enrolled agent with 7 + years of experience filing personal and business tax returns for their customers. It is a family business. They do things by the book and they follow the law. They will not risk their livelihood to pay off any debt. I cannot tell you exactly how they are working with tax credits to pay off debt. The SP has been interrupted by uninvited guests and they’ve chosen to use the association as a filter to receive files and communicate with new customers.
Q2 – What can the SP do for people/business owners with debt?
A2 – The unique process may be used by anybody who has debt including but not limited to mortgages, auto loans, credit cards, lines of credit, student loans, collections, charge offs and child support. We’re clarifying whether or not judgments will be accepted by the SP. Business debt may be included in the process if it is personally guaranteed (the company owners used their social security numbers to secure the loans). All debts must appear on either a personal tri-merge or a 3 bureau credit report. Business credit reports do not show trade lines and or account numbers so please supply us with your statements from your personally guaranteed business accounts. A separate TCP submission sheet will be done for the personal guarantees. TCP cannot be used to rescue houses from debt that have already been sold at auction. (in other words you must still be on title and you must still have possession of the home if you wish to include the mortgage accounts in the TCP). We will provide you enough documentation and consultation to possibly give you 3 (or possibly more depending on the state and the situation) months in the home with no mortgage payments being made (while your file is being processed by the SP). Also, if a participant has any outstanding debt with the IRS there must be a payment plan in place with the IRS. In other words it cannot be a dormant lien with no activity. All debt gets relieved and is reflected as zero balance on the credit report. You may keep all of the accounts open after the process is complete. FICO scores are not used in TCP and is available for people with good or bad credit or payment history. There is no income, asset, equity, or credit qualification required to become a participant. Married couples are eligible to pay one up front fee and the standard success fee.
Q3 – What other rules apply to participants (and their debt type) who wish to begin the TCP?
A3 – This process is available for all US residents. The debt amount
for each account to be included in the process must be at least $600. The debt must be institutional - meaning from banks, credit unions, credit card issuers, etc. – NOT your relatives, friends etc. Currently, Countrywide is only accepting 60%-80% of the loan amount. We hope that they will accept 100% payoffs soon. Bank of America has purchased Countrywide. They may implement B of A’s rules. Each participant must have filed 1040 tax returns for the last 3 years (2006, 2007, & 2008 or an agreed to extension for 2008).
Q4 – Why haven’t I heard of this before?
A4 – The TCP was developed and implemented in 2008. There is no advertising, no website and the SP wants it to remain low key in order to keep it by referral only. The association will only accept business savvy people. The service provider is extremely loyal to the association and will only accept new customers who have been filtered through to them by the association. Nobody will have direct contact with the SP. This will ensure that we’ll be able to control the TCP flow of new business and make it available as long as the tax laws remain the same.
Q5 – How long does it take to see results?
A5 – Once your package is processed by the SP you should have all of your accounts paid in full in 60 days or less. When you have everything on the checklist you can forward the complete file to one of the processing centers. An ORIGINAL Form 100 and an ORIGINAL Hold Harmless agreement is required. Scanning all of your submission will speed up the process. The SP requires a hard copy of the submission as well as the interactive submission sheet for accounting adjustments. When the SP reviews the file and approves it for debt relief, the participant will be required to sign another document for the SP.
Q6 – How many people do you know who have made it successfully through the process?
A6 – We have some friends of friends who have provided testimonials and we should have our first association members on the call sharing their success stories by the end of June or sometime in July.
Q7 – What are the fees & how may I pay them?
A7 – The fees are $2,500 – $5,000 to begin processing a file 1% of the outstanding debt. (please ask the person who invited you to the call for more information on the fee breakdown). If for any reason the SP cannot complete the TCP for a participant, all of the money will be refunded other than a $125 processing fee. The $125 is a hard cost incurred by the SP and it cannot be refunded because it goes towards paying the SP staff. You may pay this fee by any and all means necessary including with a credit card, by Pay Pal, etc. Also, there is a 20% success charge which will be due after the TCP is complete. This may be paid in a variety of ways including:
A – all at once by the sale of a home or property (recommended for unemployed people and available for anyone else)
B – over 5 years (paid monthly) at 0% interest
C – new loans may be easy to secure once the participant is debt free
(they should be flooded with offers from many creditors)
D – we may work out a separate agreement depending on the circumstances Q8- How does one become a referral source and what is the compensation?
A8 – Please ask the people who invited you to the call. We recently formed our association and we’re in the final stages of creating our rules, compensation structure, etc. We will fairly compensate everyone involved in referring people to us. It will be a small portion of the application fee and a small portion of the success fee too. It will certainly be a nice income to supplement and or replace most people’s income sources. We will start conducting specific conference calls soon for those people who are interested in the referral source opportunity.
Q9 – What does the SP require to start the TCP?
A9 – A) Become a member of the association by submitting an application (form 100 form – will be given to you). This document must be signed in blue ink by all participants (husband and wife). B) Provide an image of SS Card (for all dependents) and driver’s license or other government issued form of ID such as a passport or ID card at 150% zoom with a diagonal line through the image and “void copy” written in red ink 3 times across or on the side without interfering with the image/photo – if married couple, both driver’s licenses must be submitted. C) 2006, 2007, & 2008 tax returns (only the first two pages with the signature page included) D) Provide a 3 in 1 (all 3 credit bureaus – Transunion, Equifax and Experian) (we need one that displays all of your account numbers for payoff purposes) you may obtain a free credit report from http://www.annualcredit.com – you will need to provide a WORD (customer checklist will be provided for you) document with the full account numbers. You may need to cut and paste the details directly from the internet onto another document for us. Some reports will not be provided to you in WORD or PDF format so please make sure that you give us the report in WORD or PDF form. All image documents should be converted to PDF, jpeg, efax, tif files easily convert when opened with Adobe Acrobat. E) Application fee to be made payable to one of our trustees and it must be in the form of a cashiers check, money order, or it can be processed through PayPal for a
2.9% fee (added to the initial fee). F) Complete the TCP Submission Checklist – From your credit report, please type in the account numbers and names of the creditors on a word document as well as the current balance. While we discourage using any credit cards during the process, if absolutely necessary, please scan current statements if different from the TCP submission and forward those to the processing center. G) The entire package must be reviewed by the trustee with the applicant (please e-mail it in PDF form) before it is sent by priority mail with tracking to the trustee’s address. This will ensure that it is complete and there will be no loss of time due to incomplete packages. If you’re in a 911 situation with your home we will need your: AA – mortgage note BB – deed of trust CC – notice of default DD – notice of trustee’s sale AA – DD from your first mortgage lender to begin stalling the foreclosure. If your first mortgage was funded in the last 3 years we may require some additional documentation to strengthen your case against the lender. These documents would include your: AAA – Federal Truth in Lending BBB – Hud-1 or Settlement Statement CCC – ?
Q10 – What if the SP cannot process a potential participant’s file for any reason?
A10 – We have other avenues to provide debt relief. We would be happy to discuss those with people on a one on one call. Please ask the person who invited you to the call to schedule that separate call with Kirby.
Q11 – Can I get just credit card debt eliminated?
A11 – Yes. However, you must pay all of the fees including the 20% at the time of application and acceptance.
Q12 – May I advertise to generate leads/customers?
A12 – We prefer that you use your warm circle of influence. We want to keep it small now and we’ll be ramping up with sophisticated software tracking systems and staff soon. You may wish to acquire lists of people who have resetting (pay option) loans. Ask Kirby for more details on pricing and customization of those lists specific to zip code, loan amount, etc.
Q13 – May I start out with some of my debt and add more after I see some results?
A13 – A participant cannot select which accounts they want paid off (pick and choose) by adding some later in a certain year. Furthermore, if the laws change and this process is not available in 2010, a potential participant could be very disappointed. It makes good economic sense to have as much debt paid off as possible while the opportunity exists.
Q14 – How will this affect my credit rating?
A14 – Your FICO score will improve because your debt will be paid off and show a zero balance on your credit report (see info below to learn more about your FICO score). FIVE FACTORS Payment History = 35% Debt Ratio: Balance/Limits = 30% Length of Credit History = 15% Types of Credit = 10% Number of Inquires = 10% FIVE SOLUTIONS Remove the “Bad Credit” “Rapid Rescore” your existing credit Add a “Seasoned Trade line” Add different “Types of Credit” Remove “Inquires”
Q15 – Can I use my credit cards or accounts after starting the process?
A15 – Please refrain from using them during the 60 days that you’re in the process.
If an emergency occurs and you need to make a charge, please let us know which account you used and how much you charged.
Q16 – How will this process affect my ability to get a loan or re-finance?
A16 – The TCP will greatly enhance your ability to secure various lines of credit for many reasons. Please see A14 and set up a time to speak with a trustee for more details.
Thanks for reviewing the details of this unique process. Our goal is to provide these solutions to as many people as possible and as fast as possible while keeping the integrity of the service provider and while maintaining the high level of service that is required to deliver the solutions in a timely and an efficient manner. The association is built on integrity, it’s by referral only, and membership is reserved for business savvy people and or those who are willing to learn the basic truths of the monetary system (that aren’t taught in school).
Q17 – Do I need an appraisal of the property to do this process?
A17 – No, the value that is the appreciation and success fee is based upon the total amount of the debt relieved through the application of the tax credits.
Q18 – If someone has a leased vehicle can it be included?
A18 – The payoff on an auto lease will depend on the amount reflected as the original financed amount. If only the “financed” amount is shown on the credit report and or the most recent statement, the payoff will only be for the lease period and the car will have to be returned at the end of the lease period. However, if the balance of the car’s full price is listed, then it will be paid off in full. The worst case would be to have only the lease price paid off and then at the end of the lease period, refinance and include the price in next TCP.
Q19 -What will happen when the service provider (SP) has approved my file?
A19 – You will receive a document from the SP in the mail. Please sign it in blue ink, keep a copy of it and return it the SP by private courier with a tracking number (Fed Ex or UPS). Please do not use USPS and please do not request a signature for the delivery of the letter as this could cause unnecessary delays.
Q20 – How do I know if my debt is being paid off (if I’m experiencing success)?
A20 – You may:
A – call the toll free number on your account statements
B – monitor credit reports from reporting services
C – wait for statements from the creditors to arrive
Q21 – How do I protect my identity?
A21 – Identity theft is major concern for many people. Please contact your insurance company to learn more about plans to make you feel more comfortable and you may wish to use http://www.lifelock.com/
Please pull your credit report before you subscribe to an identity protection service.
Please review this list of what we will NOT (tolerate) be discussing on the call: 1 – politics 2 – 1099 OID (ZYA) 3 – any negative comments (please keep those to yourself and discuss any of those with the people who invited you to the call – we’re always open to improving the TCP and we welcome your constructive criticism, just not on the introduction call) 4 – any other topic that has nothing to do with this process
Thank you for your time. We appreciate your interest in the TCP and we’re looking forward to initiating a long lasting business relationship with you and we’re looking forward to establishing a long lasting friendship with you too. Best, The Association – REVISED 6-22-09
I would like to invite you on to the call Sat 12:00 PM PDT or Tues 6:00 PM PDT.
Hope this helps the people that are attracting financial freedom!

Keep up the goood work! ! !

Karen

Karen Svihus
831-688-8253
rosebud88@charter.net

http://cal-trust.org/about/ has a revealing note on it:

An “international trust” is as the name denotes… that the trust is international or “in-between nations”. In-between nations is defined, in this instance, as being in a state of not being in a nation and therefore outside of any national jurisdiction. This is universally known as being in ‘common law’ and is recognized and utilized by banks, kings, queens, presidents, prime ministers, politicians, corporation owners, the ultra wealthy and other less wealthy people who are educated and aware of the benenfits [sic] of trusts.

And FYI - Bernard should not be hard to find:

As managing partner of Linda D. Bernard and Associates, PLC in Detroit, MI, Linda argued and won three precedent setting cases in the Michigan Supreme Court. She is licensed in state and federal court in Michigan, Massachusetts, the District of Columbia, and Pennsylvania; the U.S. Supreme Court, U.S. International Court of Trade, and the U.S. Court of Claims. Linda is an AAA arbitrator; mediator; Michigan Civil Rights Commission Hearings Referee; and Administrative Hearings Officer.

She served as: staff attorney for Ford Motor Co.; Supervising Assistant Corporation Counsel and founder of the Contracts and Business Law Division for the city of Detroit; General Counsel of the Massachusetts Port Authority; President, CEO and Chief Counsel, of Wayne County Neighborhood Legal Services (WCNLS); Director of the Detroit Film Office; and as a Developer of Affordable Housing and Mixed Use Developments. At WCNLS she increased revenues from $2M to $10M, customers from 6,000 to 50,000, created 17 new programs and law centers, managed millions of dollars, and hundreds of staff and volunteers. Her work as a contracts expert, labor law specialist, strategic problem solver and negotiator changed the way business is done for one $2 billion dollar client.

Clearly, you've been had.

But as wes points out, Bernard is a good starting point.

[Omne]

Um..I hate to point this out but you paid $2800 in order to stiff your creditors of, presumably, far more money.

This kind of reminds me of most con jobs that depend on the greed of the mark. You wanted something for nothing effectively at the expense of another.

Hard to work up much sympathy.

[Judge Roy Bean]

Um..I hate to point this out but you paid $2800 in order to stiff your creditors of, presumably, far more money.

This kind of reminds me of most con jobs that depend on the greed of the mark. You wanted something for nothing effectively at the expense of another.

Hard to work up much sympathy.

Actually, in far too many cases people went looking for help with an opportunistic mortgage servicer bent on racking-up fees and bogus charges. If you had a sub-prime loan and had equity, you were the perfect mark.

The "lures" over the years seemed to start with loan auditing to point out flaws that you could supposedly force the servicer to respond to and correct. Along the way the idea of negotiating on behalf of borrowers became popular (not everyone is equipped to deal with people who are trained to take advantage of them - especially if they were taken advantage of in the first place).

The whacko-theory crowd jumped in and muddied the water along the way, playing on fear and ignorance and offering magic programs that would not only make the servicer back off, but would produce all kinds of paper that would eventually result in you owning the home free and clear.

Some of these programs relied on familial and church relationships to proliferate; early participants touted their expected success and promoters kept making up success stories and spreading the word through multi-level marketing schemes - those are where you'd find the truly greedy.

In the mean time, victims dwindled in number for a variety of reasons, not the least of which was borrower equity evaporated making it somewhat less attractive to foreclose. Then servicers and their foreclosure mills got caught with their pants down and the courts started paying attention.

Debt elimination schemes are still out there, but you have to be more than just obtuse to fall for them today.

[wserra]

What JRB said.

I have a whole lot more sympathy for someone whose home is being foreclosed from under the family than for someone who maxes credit cards buying stuff and then tries to get over. See "Guedel, Heidi".

[Pottapaug1938]

The Judges's remark about debt elimination schemes fourishing through familial and church relationships reminds me of the many times I've seen people make stupid investment decisions.

To give a few examples: they sell their mutual fund shares -- well after the market has hit the skids -- and put their money into money market funds, where it stays until well after the market has begun its recovery, unaware that the interest gained rarely keeps pace with inflation. They invest in a mutual fund which is poorly suited to them, simply because they know someone else (in a different economic situation) who did well in that fund. They invest in a loaded fund because an insurance agent they know decides to become a broker-dealer in mutual funds as a sideline, and is hoping to boost his commissions; or they invest in other high-commission items instead of in something which would keep more of their money available to them.

I once had a guy tell me "I'd rather trust the word of my carpenter buddy down at the bar than the word of YOU people"; and I once heard an 85-year-old woman insist that she wanted her money in aggressive growth mutual funds because that's where her hairdresser (early 20s) had her money. And then, when these people lose their shirts, it's OUR fault, because we're suddenly "the experts".

If I was an expert like these people expect me to be, I'd be writing this from my oceanfront estate, while my staff keeps me well supplied with drinks, etc....

[Judge Roy Bean]

And this is the kind of thing that some people found themselves up against:

http://www.courthousenews.com/2011/06/23/37618.htm

"The Order provides alarming detail: that 'affidavits filed in pending mortgage foreclosure cases by the law firm of Fisher and Shapiro were altered without the affiants' knowledge. The affidavits were altered in such a way that included changing the content of the original affidavit by removing the signature page and reattaching the signature page by the affiant to the altered content. The alteration of the contents in the affidavits included, but were not limited to, adding attorneys' fees and costs, adding insurance costs, inspection costs, preservation costs, and/or taxes incurred on the property."

[sfosmith]

Um..I hate to point this out but you paid $2800 in order to stiff your creditors of, presumably, far more money.

This kind of reminds me of most con jobs that depend on the greed of the mark. You wanted something for nothing effectively at the expense of another.

Hard to work up much sympathy.

No. I did not post for sympathy. I want to record the scam so that others will steer clear of this group. I made a mistake, especially considering the fact that the local District Attorney had just sent a form letter warning of scammers preying on the homeowners.

Your point of something for nothing is not well taken when you look at the Wall Street securitizations. The investors to whom the investment banks sold stocks were bilked. They received a temporary income stream but not the collateral. Notes were not placed in the pools per the agreements (PSA). That is why you are seeing investors and trustees suing banks demanding buy backs.

The facts are, that the banks are trying to get a free house. Not the owners.

After default the banks collect insurance. Do you think the investors get the funds? After AIG pays without recourse, the banks pretend to own the loan, take the house, and get paid again!
So the bank double dips, and settles with the investors for pennies on the dollar.

[wserra]

Your point of something for nothing is not well taken when you look at the Wall Street securitizations.

Are you saying that the fact that others try to get something for nothing means that it's OK for you to do the same?

[Omne]

The investors to whom the investment banks sold stocks were bilked. They received a temporary income stream but not the collateral. Notes were not placed in the pools per the agreements (PSA). That is why you are seeing investors and trustees suing banks demanding buy backs.

And why is this relevant to you paying $2800 to get out of your mortgage debt, which you voluntarily took out, and stiffing the bank?

[sfosmith]

Your point of something for nothing is not well taken when you look at the Wall Street securitizations.

Are you saying that the fact that others try to get something for nothing means that it's OK for you to do the same?

No. You misconstrue my point. You assume that something is owed because it is demanded. Banks are foreclosing on loans they do not own. When they succeed, the capital does not return to the investors. How do you think they are paying these billions in bonuses?

[sfosmith]

The investors to whom the investment banks sold stocks were bilked. They received a temporary income stream but not the collateral. Notes were not placed in the pools per the agreements (PSA). That is why you are seeing investors and trustees suing banks demanding buy backs.

And why is this relevant to you paying $2800 to get out of your mortgage debt, which you voluntarily took out, and stiffing the bank?

The investors were defrauded. In most cases, the bank cannot be stiffed, because they don't have an interest in the property. The interest (Note) was supposed to go into a REMIC tax free trust regulated by IRS rules, the Trust agreement, New York State law. Didn't happen in millions of loans.

The FHA recently filed suit against the major banks for 196 billion over this very thing.

So the pyramid began to collapse in 2006. Two years later, Congress issues debt obligations to bail them out. This, along with the insurance payouts for defaults by AIG and others. And who bailed out AIG? You did.

When the banks received insurance for default, the note is paid. The obligation is satisfied. That's the law. Just because the banks did not stamp the note "paid" doesn't change anything. The insurance was paid "without recourse". That means: "Here's your $300,000, we don't care about the note".

[Judge Roy Bean]

...
You assume that something is owed because it is demanded.

Herein lies the rub - in the vast majority of cases, a borrower did move into a home and lived in it and made payments for some period of time. Unless the borrower fell into a situation where they could not pay, the most common issue surrounds how much is actually owed. These situations almost always wind up with the borrower on the short end of the deal with a threatened or actual foreclosure.

Banks are foreclosing on loans they do not own.

In some cases, yes. In many cases it's a servicer or trustee trying to foreclose on a loan they don't have evidence readily at hand to demonstrate they are the party with the right to foreclose. In those cases, they use the services of other parties to manufacture documents - sometimes in the guise of "memorializing" certain events, other times as pure forgeries.

Courts have been more than willing to work from the premise that a borrower living in a home got it as a result of someone else having been paid at the closing. Therefore, someone not paying for it doesn't deserve to live in it and foreclosures were simply rubber-stamped even in judicial foreclosure states.

When they succeed, the capital does not return to the investors.

Actually, that may or may not be true but I wouldn't make a blanket assumption. Investors, via the trustees, are not without arrows in their legal quivers - and on loans with insurance, it does not cover the total - it's was a "credit enhancement" vehicle used to improve the pool's image to investors.

How do you think they are paying these billions in bonuses?

I think you're confused about the inner workings and are parroting things you have heard.

Foreclosures are profitable for some of the players, but to equate them with "billions" in bonuses among banks in general is magical thinking.

[sfosmith]

Judge, I will grant that there is an obligation. The question before the courts, both state and federal, is to whom is it due? Who are the holders in due course? The banks come in as interlopers waiving a note (or a forged note) and claiming right to collect under UCC section 3. If it was securitized into a trust, then the note, or collateral, is governed under the terms of the trust agreement. The note cannot be paid as a bearer instrument. UCC section 9 governs the securitized asset.

For a bank to stand in court with a note and claiming the entire amount due is similar to someone swiping your automobile pink slip and claiming ownership.

The REMIC trusts are empty shells. Investors know they were sold stock certificates without collateral being delivered per the Prospectus and PSA (Pooling and Servicing Agreement). Lawsuits are mounting, and 50 state attorneys general are under pressure to settle this out.

If you or I had done this, we would be in the slammer.

[Judge Roy Bean]

Judge, I will grant that there is an obligation. The question before the courts, both state and federal, is to whom is it due? Who are the holders in due course? The banks come in as interlopers waiving a note (or a forged note) and claiming right to collect under UCC section 3. If it was securitized into a trust, then the note, or collateral, is governed under the terms of the trust agreement. The note cannot be paid as a bearer instrument. UCC section 9 governs the securitized asset.

Indeed, but as we are discovering over time, these entities can "write their way around" the UCC in their agreements and the courts are not in agreement on the issues.

For a bank to stand in court with a note and claiming the entire amount due is similar to someone swiping your automobile pink slip and claiming ownership.

Actually, no. That's not a very good analogy.

The REMIC trusts are empty shells. Investors know they were sold stock certificates without collateral being delivered per the Prospectus and PSA (Pooling and Servicing Agreement). Lawsuits are mounting ...

Some of the REMIC trusts are riddled with faulty paperwork - but not all of them. There were legitimate and responsible lenders and the majority of loans are performing. As far as the mounting lawsuits, some of the plaintiffs are coming to the courts with unclean hands, pleading ignorance when knowingly gambling on the products of predators.

... and 50 state attorneys general are under pressure to settle this out.

The attorneys general are (and have almost always been) a political side-show acting as if they were in charge of something they're not. Most of what they're doing is because of the Administration's (DOJ's) lack of will to prosecute members of the protected class. (Just talking about a criminal investigation will get you kicked off the team - as in what happened to the NY AG.)

If you or I had done this, we would be in the slammer.

If we acted alone, you're probably correct. If we were acting with others from within a corporation that has the proper image and influence, not a chance. See: http://loansharks.blogspot.com/2011/07/ ... stice.html

[Arthur Rubin]

Judge, I will grant that there is an obligation. The question before the courts, both state and federal, is to whom is it due? Who are the holders in due course? The banks come in as interlopers waiving a note (or a forged note) and claiming right to collect under UCC section 3. If it was securitized into a trust, then the note, or collateral, is governed under the terms of the trust agreement. The note cannot be paid as a bearer instrument. UCC section 9 governs the securitized asset.

Could someone explain why the UCC applies, rather than common law on contracts?

Also, could someone explain why the house shouldn't be forfeited to the court, and let further legal proceedings determine who owns the note. It's clear that the "owner" has no claim to the property.

[Prof]

The process goes like this for home loan securitization. First, an investment banker collects (purchases) a number of notes which are secured by mortgages/deeds of trust. These are held in trust under the terms of a trust indenture. The Trustee issues fractional interests in the pool -- called "bonds." This is a securitization and the result is a Mortgage-backed Security.

The bonds issued by the trust under the trust indenture are not negotiable instruments and are governed by Art. 9 of the UCC or by state and federal securities law (e.g., the blue sky laws on the state level, the '33 and '34 Acts on the federal level, etc.)

The enforcement on the underlying assets, the notes and collateral for the notes, is wholly governed by state law. As to the enforcement of the notes, Art. 3 of the UCC controls. While a state law, Art. 3 has been adopted in all of the States and the District. Possession of the original note with proper endorsement is the gold standard for enforcement, although there are limited alternatives, such as the provisions dealing with the lost, stolen or destroyed original note.

As to the collateral, enforcement of claims agains the dirt is governed by state law which is not uniform. For example, Texas is a "deed of trust" state which allows non-judicial foreclosure. The trustee under the deed of trust gives notice of default and posts the property for foreclosure on 21 days notice. All property is then sold on the first Tuesday of the following month.

Florida is a judcial foreclosure state. I think it is also a "mortgage" state. Enforcement of rights under the collateral requires judicial action.

MY APOLOGIES TO LAW DOG. HIS VERY SHORT EXPLANATION IS AT LEAST AS GOOD AS THIS ONE.

[sfosmith]

The process goes like this for home loan securitization. First, an investment banker collects (purchases) a number of notes which are secured by mortgages/deeds of trust. These are held in trust under the terms of a trust indenture. The Trustee issues fractional interests in the pool -- called "bonds." This is a securitization and the result is a Mortgage-backed Security.

That was how it was supposed to work. In practice, bonds were "sold forward" which means certificates were sold proceeding from loans not yet placed. The purpose was to raise capital to fund loans from which to extract multiple fees. Now there is evidence emerging that "certificates" or "stocks" were preferred, or issued above the value of the collateral. This mortgage meltdown is connected to the leveraging of these mortgage backed securities in the world wide casino Wall Street created rather than homeowner defaults. When the pyramid began to collapse, marketing of mortgages to those who could not afford it, especially predator loans with teaser rates, ran at full speed to keep the system funded. Default insurance was in place to cash in on the certain future default of millions of homes.

[Judge Roy Bean]

... Default insurance was in place to cash in on the certain future default of millions of homes.

You're confused on the insurance issue. No insurer covered potential loan losses at anywhere near 100%.