Wednesday, February 15, 2012

Securitization Audit - A Waste of Foreclosure Victim Money

Securitization Audit – A Waste of Foreclosure Victim Money

By Bob Hurt, 15 February 2012

Clearwater, FL                                                  For Immediate Release

NOTE (added on 4 June 2015):  Go to these web sites to learn how securitization auditors and their gimmicky sales outfits spread the Black-Hearted LIE that their worthless products have some value:

As the article below and my comments in response to naysayers prove, securitization audits give ZERO value to mortgage victims and foreclosure victims.

I give my phone number and email contact at the end of the article.  USE it if you have a mortgage problem and face foreclosure.  READ the content at the two sites I linked above.

Remember:  you are an idiot if you waste money on a securitization audit.  I made this point gently more than 3 years ago, and the point has even more truth today because I HAVE WARNED YOU.

DON'T be an idiot.  DEMAND a refund.  Report the auditor as a scammer to the state Attorney General.


A truly crazy craze has hit the foreclosure defense communities of America.  It goes by the name of “securitization audit” or some variation thereof.  The nature of the securitization audit service is such that only the crazy will foolishly waste money on it.

Okay, so we cannot fairly call ignorant foreclosure victims “crazy.”  Why?  Because they cannot easily know that a securitization audit is just another scam intended to bilk them out of yet more money they cannot afford for a service they cannot use.  Except perhaps to replace the old Sears Catalog in their outhouse.

So, let’s just say most foreclosure victims are uninformed about the uselessness of securitization audits.  Obviously.  Otherwise they wouldn’t keep wasting money on them.

So, we have undertaken this “press release” to inform the uninformed so they will not waste their hard-earned money on useless Securitization Audits.

Let us start by explaining the nature and alleged purpose of the securitization audit.  Then we shall analyze its achievement of the purpose.

What is Securitization? Securitization is the financial practice of pooling various types of contractual debt such as residential mortgages, commercial mortgages, auto loans or credit card debt obligations and selling said consolidated debt as bonds, pass-through securities, or Collateralized mortgage obligation, to various investors. The principal and interest on the debt, underlying the security, is paid back to the various investors regularly. Securities backed by mortgage receivables are called mortgage-backed securities, while those backed by other types of receivables are asset-backed securities.

What is a Securitization Audit?  The securitization audit consists of the activity of compiling a report of the rules and agreements regarding securitization, and the trail and timing of assignments of beneficial interest in the note and mortgage from the loan originator to the party foreclosing the loan for non-payment.

What is the Purpose of a Securitization Audit?  The audit service provider alleges that foreclosure victims can use the audit to stop the foreclosure or cloud the title by proving that the foreclosing party does not have the right to foreclose.

Does the Securitization Audit Fulfill this Purpose?  NO, it does not, Statistically, NEVER.
Why Doesn’t the Securitization Audit “work”?  The Securitization Audit does not work because it does not change the essential facts of the case:

  1. The borrower signed a note and mortgage giving the lender the right to sell the loan and the owner of the loan to foreclose the loan for non-payment and force a foreclosure sale of the mortgaged realty
  2. The lender lent the funds to the borrower
  3. The borrower used the funds to buy residential realty
  4. The borrower took possession of the residential realty and occupied it.
  5. The borrower started paying payments according to the note’s requirements
  6. The borrower stopped making timely payments
  7. The loan servicer called the note due and payable, giving notice to the borrower
  8. The note assignee or mortgagee have the right to foreclose according to the terms of the note and mortgage.

What Vital Thing Doesn’t the Securitzation Audit Do?  The Securitization Audit does not question whether or to what extent the following “Deal-Killer” flaws underlie the Note and Mortgage:

Tortious conduct of the lender or agents in making the loan.  Examples:

  1. Loan application tampering by the mortgage broker;
  2. Over-valuation of the realty by the appraiser.
  3. Breaches of the note or mortgage contract by the lender or lender’s agents.
  4. Violation of any a variety of laws/regulations that justify fine or rescission of the loan.

You see, the Securitization Audit service provider claims that the foreclosure victim can use the audit to stop the foreclosure dead in its tracks.  Some providers imply the foreclosure victim can get the house free and clear.

Why Does the Securitization “Miss the Boat” for Foreclosure Victims?   The Securitization Audit ignores the factors that could constitute a cause of action against (reason to sue) the lender.  Such a cause of action, equivalent to predatory lending, could make the lender squeal for a settlement to avoid a nasty, noisy lawsuit.  The lender knows that a public lawsuit would tarnish the lender’s reputation and make other victims clamor for suit or settlement awards.

What is the Core Problem of the Securitization Audit Strategy?  The securitization Audit service provider tries to focus the foreclosure victim’s attention on the problems with the foreclosure of the loan rather than the problems with the loan itself.  It presumes the loan has validity, a terrible strategic and tactical blunder.  Personal injury attorneys can much more easily prevail against a predatory lender who cheated the borrower when making the loan, than can foreclosure defense attorneys prevail against the lender for some foreclosure flaw.

Why Can’t a Foreclosure Defense Attorney Use the Securitization Audit?  The foreclosure defender has no use for the securitization audit for several reasons. 

  1. The judge focuses on the INJURY TO THE PLAINTIFF in a foreclosure lawsuit, or to the Defendant in a quiet title lawsuit in non-judicial foreclosure (deed of trust) states.  The judge will cause the court to redress the injury. 
  2. The typical Securitization Auditor cannot function in court as an expert witness, for want of qualification. So the audit’s information will not get entered into evidence because no expert can testify to it.
  3. The judge can plainly see any information about securitization which the SEC or lenders and others in the securitization process have posted on the world wide web for the whole world to see with a web browser.  Such “self-authenticating” evidence tells the story of who assigned the note to whom
  4. Whoever shows up with the note can foreclose it, so the Securitization Audit has no effect on that.
  5. Even if the judge dismisses a case for robo-signing, wrong plaintiff, etc, the bank ALWAYS corrects the documents and either re-files or appeals the case, and, statistically, the bank always wins the foreclosure regardless of what the foreclosure defense attorney does.
  6. The mortgage, which the borrower signed, plainly gives the lender or nominee (mortgagee) the legal right to force a foreclosure sale for no-payment of the note.
  7. In Deed of Trust states, the trustee will foreclose

Does the Use of a Securitization Audit Delay Foreclosure?  In a non-judicial foreclosure (deed of trust) state, the audit data will not stop or delay the foreclosure.  In judicial foreclosure states, the audit data might contains information about robo-signing or improper assignment.  In that case, the judge might dismiss the case.  But this only delays, and does not stop, the foreclosure.  Eventually, the foreclosure plaintiff will re-file the case after correcting the documents, and the court will grant the foreclosure. 

Do Foreclosure Defenders Successfully Argue Against Split of Note from Mortgage? Some Foreclosure defense attorneys will argue that the securitization splits the note from the mortgage, and that gives neither the owner of beneficial interest in the note nor the mortgagee the standing to force a foreclosure sale.  They argue that the mortgagee did not get injured by non-payment, and the note interest owner’s name doesn’t appear on the mortgage, and therefore the court can order foreclosure, but not sale of the mortgaged realty. 

Why Doesn’t The Court Buy that Argument?  Trial and appeals courts rule against this argument consistently. You can see why in this excerpt from the US Supreme Court in Carpenter v. Longan, 83 U.S. 16 Wall. 271 (1872):

“The mortgaged premises are pledged as security for the debt. In proportion as a remedy is denied the contract is violated, and the rights of the assignee are set at naught. In other words, the mortgage ceases to be security for a part or the whole of the debt, its express provisions to the contrary notwithstanding.

“The note and mortgage are inseparable; the former as essential, the latter as an incident. An assignment of the note carries the mortgage with it, while an assignment of the latter alone is a nullity”

Why Do Foreclosure Courts Nearly Always Grant the Foreclosure?  The Court MUST give relief and remedy to the injured party, the lender or assignee.  Period.  The borrower breached the note contract.  The breach injured the lender.  The mortgage requires that the borrower must pay off the note or forfeit the realty.  The Court will order the use of the proceeds of the foreclosure sale to pay off the note.  The Court will give the borrower the balance after payoff of liens, or it will award a deficiency judgment to the lender.

The Court MUST do this.

The Securitization Audit, even in the hands of a highly skilled attorney, cannot avoid this hard-core reality of contract law.  Look at just a few court rulings that prove this point:

  • "[S]ince the securitization merely creates a separate contract, distinct from plaintiffs' debt obligations under the Note and does not change the relationship of the parties in any way, plaintiffs' claims arising out of securitization fail."  Lamb v. MERS, Inc., 2011 WL 5827813, *6 (W.D. Wash. 2011) (citing cases); Bhatti, 2011 WL 6300229, *5 (citing cases);
  • In re Veal, 450 B.R. at 912 ("[Plaintiffs] should not care who actually owns the Note-and it is thus irrelevant whether the Note has been fractionalized or securitized-so long as they do know who they should pay.");
  • Horvath v. Bank of NY, N.A., 641 F.3d 617, 626 n.4 (4th Cir. 2011) (securitization irrelevant to debt);
  • Commonwealth Prop. Advocates, LLC v. MERS, 263 P.3d 397, 401-02 (Utah Ct. App. 2011) (securitization has no effect on debt);
  • Henkels v. J.P. Morgan Chase, 2011 WL 2357874, at *7 (D.Ariz. June 14, 2011) (denying the plaintiff's claim for unauthorized securitization of his loan because he "cited no authority for the assertion that securitization has had any impact on [his] obligations under the loan, and district courts in Arizona have rejected similar arguments");
  • Johnson v. Homecomings Financial, 2011 WL 4373975, at *7 (S.D.Cal. Sep.20, 2011) (refusing to recognize the "discredited theory" that a deed of trust " 'split' from the note through securitization, render[s] the note unenforceable");
  • Frame v. Cal-W. Reconveyance Corp., 2011 WL 3876012, *10 (D. Ariz. 2011) (granting motion to dismiss: "Plaintiff's allegations of promissory note destruction and securitization are speculative and unsupported. Plaintiff has cited no authority for his assertions that securitization has any impact on his obligations under the loan")

Do you see?  Securitization has no relevance to whether the borrower owes and must pay the debt or the mortgagee may force a foreclosure sale.

What If I Want to Buy a Securitization Audit Anyway?  Securitization issues have such an esoteric and arcane nature that NO FORECLOSURE VICTIM SHOULD EVER PURCHASE a securitization audit.  Only the foreclosure defense attorney should obtain a review and analysis of securitization issues, IF and ONLY IF the attorney considers it  necessary to advance the client’s cause. 
What Do Foreclosure Defense Attorneys and others Say?

  • Matt Weidner, Matthew Weidner Law Firm, St. Petersburg, Florida

We all need a real discussion here about whether loan audits have any value at all.  Let me be clear, 100% clear again….


Too many clients have blow thousands of dollars on something that is totally worthless…if the person who prepared the report cannot be qualified as an expert over the strenuous objection of counsel, it just does not get in. And getting an “expert” qualified is next to impossible in this area.
We’re all like scientists cracking a very complex code.  Now, too many people get involved with loan audits or securitization reviews THAT HAVE ZERO VALUE.  ZERO VALUE. ZERO VALUE.
One thing everyone must keep in mind is that if whomever does an “audit” (whatever the heck that means) cannot be qualified as an expert in a court of law, THE AUDIT HAS ZERO VALUE.  The court will not consider one single word on the page.  So for everyone out there selling audits and for everyone out there thinking about using any of this garbage, you must ask whether the report can be qualified as an expert.

  • Mark Stopa, Stopa Law Firm, Tampa Florida
I asked for a copy of the audit, and, weeks later, I received literally dozens of pages of incomprehensive gobbley-gook.  It wasn’t even written in English – it was random numbers thrown together in a completely nonsensical way.  There’s no way any judge could read those documents and see that the Note/Mortgage had been 85% paid.  Heck, I couldn’t read those documents and conclude as much, and neither could my client.
My point, simply, is that before any homeowners rush out to pay for an audit, they should be aware of what’s required for that audit to do them any good in their court case.

  • Brian Caputo, Canupp Law
In the last 6 weeks I have met with three families that had paid up to $2,100.00 for an audit.  All three of these “audits” were three ring binders filled with documents from the Securities and Exchange Commission Home page and articles from the newspaper detailing successful mortgage defense decisions.  These products are problematic for a number of reasons:

  1. The documents from the SEC are free and available to the public.
  2. The newspaper stories, while informative, cannot be used as precedent to a judge.
  3. The analysis does nothing to breakdown what has happened with your payments after they were received by the Mortgage Company.
  4. The “expert” who is rendering the opinion would never be accepted by a court to testify in an expert capacity.
  5. The analytical process supporting the audit conclusion is flawed and that leads to an impossible opinion.
  6. None of the analysis brought to me by clients have included a review of the money paid by the homeowner.
As of today most judges in state courts and bankruptcy courts have not had a chance to fully grasp the ongoing fraud regaring the securitization process and the documents necessary to forclose upon a home.  Arguments made on “note ownership” alone often prove to be unsuccessful in court.  However, when you appear before the judge and you are able to support securitization or note ownership arguments, with evidence that also supports shenanigans with the loan payments– your legal hurdles will be much easier to cross.  As a rule, judges and juries do not have to be taught about why the misapplication of money is illegal!

Fraudsters are using a documents-checking process known as a mortgage securitization audit as a means of scamming foreclosure-threatened homeowners… Even when the process is legitimately carried out, the Federal Trade Commission suggests it's worthless.

How Do I Choose between Securitization Audit and Mortgage Fraud Examination?  Imagine yourself as a foreclosure victim, or a homeowner with an “under-water” mortgage, one where you owe the mortgage company more than the value of the house.  You have $1500.  You want to spend it wisely to fight the foreclosure.  Where to you spend it?  Do you spend it on a mortgage fraud examination service, or on a securitization audit?
As the foregoing expose’ has revealed, only a fool would spend it on the audit because the audit will not stop the foreclosure and will not get you the house free and clear or a cash settlement, and the typical foreclosure does not have the skill to select a good service provider, determine the merit of the audit, or use the audit effectively if at all in a foreclosure defense.

Do Foreclosure Defense Attorneys Commit Malpractice?  Some professionals in the mortgage-related industries believe attorneys defending a contract breach complaint commit malpractice IF they don’t aggressively examine the mortgage-related documents for evidence of fraud, tortious conduct, contract breaches, and other violations.  It takes a lot of work and skill to do that, skill most lawyers don’t have.  So, most foreclosure defense attorneys only want to drag out or delay the foreclosure, a violation of the rules regulating the bar and simple business ethics.  Typically such “pretender defenders” charge $1500 to $2500 “retainer” (gift) to get started, plus $500 to $1000 a month for as long as they keep the foreclosure victim in the house.  They typically know the victim will eventually lose the house within 6 to 24 months.  The victim could have saved that money and took a keys-for-cash deal from the lender without paying a lawyer, and had enough money altogether to buy a house free and clear at a foreclosure auction. Foreclosure victims don’t need a lawyer to do that.  

Why Should I Buy a Mortgage Fraud Examination?  You ought to spend the money on a mortgage fraud analysis because with the evidence in the corresponding report, the court might rule that the lender or lender’s agent defrauded you or breached the contract.  If so, the Court might order the lender to pay you treble damages.  Why?  Because the Court must redress YOUR injury.  The damages award might provide you with enough money to justify a rescission order by the court.  If it does, you might get your house free and clear to settle the damage claim, or a hefty cash award to reduce your loan balance.  And the jury might award you punitive damages sufficient to let you retire at a young age. 

For proof, see the West Virginia Quicken Loans case where the court ordered the foreclosure victim punitive damages of $2.1 million, plus the house free and clear, and all attorney fees paid.

How Do I Find a Competent Mortgage Fraud Examiner?  You find a competent mortgage fraud examiner by calling me, Bob Hurt at 727 669 5511, or just Email Me.  The Chief Examiner, a personal friend of mine, has 38 years’ experience examining and analyzing legal documents in order to find fraud, tortious conduct, breaches, and other violations and flaws.  Nobody on the planet does a better job of examining the mortgage and foreclosure related  documents and preparing a report that any competent attorney can use to demand a settlement from or sue the lender.

Can I Use the Mortgage Fraud Examination Report Even if My House is in Foreclosure?  Yes, you can.  In fact, it makes a lot of sense to do so if you have purchased or refinanced your home within the past 10 or 12 years.  People who can make a mortgage payment can also usually feel less financial pressure, so they can typically find a way to pay an attorney for a couple of hours of work to negotiate a settlement with the lender.

What Kind of Attorney Should I Use To Settle or Sue?  If the examination report reveals a cause of action sufficient justify suing, you should seek out a competent personal injury attorney to negotiate settlement with or to sue the lender.  It makes more sense to negotiate the settlement, and then to sue only as a last resort.

How Do I Order my Mortgage Fraud Examination Report?  To order your examination and report, CALL for a Mortgage Fraud Examination at this number NOW:

Bob Hurt
727 669 5511 
Click Here to E-mail Me

Learn how to attack the validity of the loan at


Mike said...

You miss the point of the audit entirely, It helps the discovery of , two things..

1st your note and deed were bifurcated(securitization was flawed) rendering the deed of trust , mortgage Null.

2. it will discovery a broken chain of title ..that shows the lender trying to foreclose was no lender at all, but a servicer for a broken securitized mortgage.

these are very effective in litigating a defense.

broken chain of title
improper assigments by MERS

Mike said...

also dont confuse a proper securitization audit, with a forensic audit, they do entirely diffetent things. while some of the information of the securitization audit can be found easily on the SEC website, a bloomber terminal report can deternime whether the loan itself has any default.. if you read enough into the reports, anyone can DIY them, except for the Bloomber terminal, that takes training. securitization when properly done can be foreclosed because there is a clean and clear chain of titile, but a flawed one cant, and thats what these reporty usualy find...

Bob Hurt said...

Regarding Mike's comments, let's say a foreclosure plaintiff shows up in court with the original note indorsed in blank. Maybe even the SEC has no clue who else has possessed that note. It simply does not matter. First of all, in the 1872 Carpenter v Longan ruling at the Supremes said nothing separates the note from the mortgage, so "bifurcation" means nothing. Whoever brings forth the note can enforce the note according to the UCC article 3.

For some weird reason people seem to lose their analytic faculties when dealing with foreclosures. The court MUST redress the holder's injury which the borrower caused by failing to discharge the note on schedule or when called.

Everything but finding fraud, torts, breaches, and legal errors underlying the mortgage constitutes a failing stall tactic in 99.9% of the foreclosures because the borrower will nearly always lose the house.

uthinking? said...

How about the fact that..."You funded your own loan". It was your Promissory Note...a negotiable instrument that the banks made money from... The banks never lent you any money...They used your own selling it and kept it for themselves because the banks' mentallity is that we are not supposed to know what they were doing.Common Sense should tell you that the banks should give you the proceeds of the sale of your Note and charge you a "Servicing Fee". And then you pay the banks for the nextxxx number of years as agreed upon. That is fair and proper... But if they kept the money from the sale of YOUR NOTE..... hehehehe, your house is not "Free and Clear" as most of you insinuate...THE HOUSE IS PAID FOR AND SHOULD BE CLEARED with a Full Reconveyance. Get it?????

Bob Hurt said...

Apparently YOU (uthiniking) don't "get it." Your note constitutes potential future money. The loan constitutes right now money which the seller pockets within a few days after closing (or uses to pay off the old loan). The lender must get that money from the Fed or some other investor and repay it. Typical lenders sell the loan (the right to collect the future money from the borrower) for a point or two around the time as they make the loan. IN any case, it's none of the borrower's business where the lender gets the money or how the lender repays it. The borrower signed the note and mortgage, must repay the note according to its terms, and must forfeit the house otherwise according to the terms of the mortgage.

As to the legal soundness of your theory that the borrower funded his own loan, show me a court ruling in support of the assertion and I'll give it some serious consideration.

ceeceeharris said...

mr hurt, how can i contact you by email regarding a personal issue with bank of america

Unknown said...

I'd like to say Bob you don't know what your are talking about Securitization Audits work! Ive personally have used them and have many clients who have used them and now we are challenging the banksters on the validity of the debt in its self.

Your sharing information that is not correct. Shame on you you need to understand what you are talking about before you tell people crap about your personal feelings. The laws are for the people and they have been broken and when you prove to court room how they have been uttered upon, they should all go to jail! Period. Also when a bank securtises it's loan its make ten to fifteen times the said dollar amount! Why did banks need robosigners to give them title?
Where did there paper work go?
How could they lose the most important document?
Becasue the trusts tell them to destroy them! You didn't want people to know that did you!
Learn what trust you are in PSA find the 424b5 and it will list everyone who can be a party to your loan and the rules the banksters need to follow, of which most don't because most people like you don't understand the system so get it right before you share your ideas of whats wrong!

Bob Hurt said...

You can contact me here:

Mark Freeman, I won't call you a bozo, but I shall say that you do not have a clue what it takes to defeat foreclosure and get the house free and clear or get a financial settlement. Securitization is irrelevant to the mortgage and foreclosure process. Foreclosure virtually ALWAYS goes through to completion. So if you sell securitization audits, you are a scammer. Banksters can violate the PSA but that does not injure the borrower at all. Call me at 727 669 5511 and I'll explain how you can become RIGHT in this matter.

Unknown said...

Bob in MODERN MONEY MECHANICS at the bottom of page six is says

" Of course, they do not really pay out loans from the money they
receive as deposits. If they did this, no additional money would be created. What they do when they make loans is to accept promissory notes in exchange for credits to the
borrowers' transaction accounts. Loans (assets) and deposits (liabilities) both rise"

This to me sound like the bank uses the note with the borrowers signature as the money. The contract or Deed says the bank lends its money but which is nothing but a lie. What gives the bank the right to sell the note if the bank never invested a penny?

Bob Hurt said...

Anthony, we have a system of lending in America, and Modern Money Mechanics does a pretty good job of explaining it.

But, you did get a loan, you did buy the house with it, you did sign the note and mortgage, and you must forfeit the house if you don't pay. See your state constitution.

No law shall impair the obligation of contracts.

All persons shall have access to the courts for redress of injury and justice shall be administered without sale, denial, or delay.

The court, or trustee, MUST give redress to the lender UNLESS you prove the lender injured you first.

Bob Hurt said...

One more point, Mike. Carpenter v Longan settled the Bifurcation issue. The note and mortgage are INSEPARABLE, making bifurcation impossible.

Indorsement in blank, or assignment of the note, does not break the chain of title. MERS keeps track of the note, and MERS is the legal owner, recorded at the courthouse. Where's the break? Nowhere.

MERS always assigns the mortgage these days when a loan goes into default. A bank gets it and prosecutes the foreclosure.

SEcuritization audits are ABSOLUTELY WORTHLESS (exceptions - rare as chicken teeth).

Unknown said...

Bob,you said Modern Money Mechanics does a pretty good job of explaining it. But then you ignore every word it says.

Bob "you did get a loan"

But where did the money come from? MMM said it came from my promissory note and the bank has no money in the alleged loan!

Bob "you did buy the house with it"

True but again who funded the loan? Once again MMM says the money was created out of thin air when I signed the promissory note. So with out my signature on the note no money could be created.

Bob "you did sign the note and mortgage"

True but why did the bank not sign it too? I thought you must first have two parties before you can have a contract? My Deed and note recorded at the court house only has my signature only.

Bob "you must forfeit the house if you don't pay.

I'm not trying to get my house for free. But the bank should not get it for free either. MMM says again the bank has NO money in the alleged loan so what gives the bank the right to take the home?

Bob "See your state constitution"

My state constitution says a contract is between two parties and both parties have to sign the contract. My Deed and note only has one signature my. Also one party has to have something of value in the contract to make the other party liable. My part was the signed promissory note. Again MMM says the bank has no money in the contact so looks like I'm the damaged party. Because the bank stole my note.

Unknown said...

One more thing Bob MMM also says when my note is deposited.
"Loans (assets) and deposits (liabilities) both rise"

Now how on earth when you are lending out money, the more you lend the more you have? This can mean only one thing. The bank is depositing the note as a asset and the liability means they owe the depositor for his signed promissory note. But instead the bank steals the value of it and calls it a loan.

Unknown said...

Bob where are you????

Bob Hurt said...

Anthony, you obviously don't understand mortgage loans. First, show me the provision in your state constitution requiring two parties to sign. The borrower signs a unilateral adhesion agreement, validated by courts throughout the USA. It requires NO lender signature, and neither does a credit card agreement OR a credit card charge slip.

You cannot change the fact that the borrower receives money from the loan, and owes it back according to the terms in the note, or must forfeit the collateral according to the terms in the mortgage/deed of trust.

Every superior court and public trustee in the land forecloses almost every day based on the foregoing principles. WHAT IS WRONG WITH YOUR BRAIN? The law means what the courts say it means, NOT what Modern Money Mechanics says. Why do you think the FED stopped publishing that pamphlet?

Wake up and smell the coffee. I have explained that securitization audits waste money, and now I'll say that loan modification constitute an even worse scam, leaving the borrower with a much bigger debt and balloon that he cannot repay.

The ONLY SOLUTION TO FORECLOSURE OR AN UNDERWATER MORTGAGE DEBT is to get a competent examiner to examine the mortgage professionally, then negotiate for settlement with the lender or sue the lender for the causes of action the report reveals.

Anyone wanting to do that can call me at 727 669 5511. OR Email Me.

Bob Hurt said...

This court ruling completely blows a hole in the brain of the Vapor Money argument. Only bozos use it. Read the whole thing online.

[Cite as Wells Fargo Bank, NA v. Ward, 2006-Ohio-6744.]
Wells Fargo Bank, NA successor by :
merger to Wells Fargo Home Mortgage,
Inc., :
Plaintiff-Appellee, : No. 06AP-745
(C.P.C. No. 05CVE09-9912)
v. :
Theresa Ward aka Theresa S. Ward et al., :
Defendants-Appellants. :
Rendered on December 19, 2006
Lerner, Sampson & Rothfuss, and Pamela S. Petas, for
Theresa Ward, pro se.
APPEAL from the Franklin County Court of Common Pleas.


As noted above, appellant contends that the agreements she entered into
with appellee are void because she did not receive any "legal tender," and because
No. 06AP-745
nothing of value was loaned to her; rather, appellant maintains the transaction by
appellee was based upon a mere bookkeeping entry.
{¶18} Courts in other jurisdictions have consistently rejected this "so-called 'vapor
money' theory." Frances Kenny Family Trust v. World Savings Bank, FSB (N.D.Cal.
Jan. 19, 2005), No. C 04-03724 WHA, unreported. In Demmler v. Bank One, NA
(S.D.Ohio Mar. 9, 2006), No. 2:05-CV-322, unreported, in which the defendants made a
similar argument as appellant in the instant appeal, that court discussed this theory as
* * * [T]he Court concludes that the complaint is utterly
frivolous and lacks any legal foundation whatsoever. * * *
Suffice it to say that all of Plaintiff's claims * * * stem from the
same basic premise. Plaintiff alleges that the promissory note
he executed is the equivalent of "money" that he gave to the
bank. He contends that Bank One took his "money," i.e., the
promissory note, deposited it into its own account without his
permission, listed it as an "asset" on its ledger entries, and
then essentially lent his own money back to him. He
contends that Bank One did not actually have the funds
available to lend to him, but instead "created" the money
through its bookkeeping procedures. He further argues that
because Bank One was never at risk, and provided no
consideration, the promissory note is void ab initio, and
Defendants' attempts to foreclose on the mortgage are
therefore unlawful.
Plaintiff offers no authority for this patently ludicrous
argument. Similar arguments have been rejected by federal
courts across the country. See Frances Kenny Family Trust
v. World Savings Bank, No. C04-03724 WHA, 2005 WL
106792 (N.D.Cal. Jan. 19, 2005) (sanctioning plaintiffs and
rejecting their "vapor money" theory); Carrington v. Federal
Nat'l Mortgage Ass'n, No. 05-cv-73429-DT, 2005 WL
3216226, at 3 (E.D.Mich. Nov. 29, 2005) (finding
"fundamentally absurd and obviously frivolous" plaintiff's claim
that the lender unlawfully "created money" through its ledger
entries); United States v. Schiefen, 926 F.Supp. 877, 880-81
(D.S.D.1995) (rejecting arguments that there was insufficient
consideration to secure the promissory note, and that lender
had "created money" by means of a bookkeeping entry); * * *
No. 06AP-745
Rene v. Citibank, 32 F.Supp.2d 539, 544-45 (E.D.N.Y.1999)
(rejecting claims that because lender did not have sufficient
funds in its vault to make the loan, and merely "transferred
some book entries," the lender had created illegal tender).__

Unknown said...

Bob "show me the provision in your state constitution requiring two parties to sign" OK Bob your are right on this one!

Bob "You cannot change the fact that the borrower receives money from the loan, and owes it back according to the terms in the note"

According to the terms in the note the borrower was to receive money from the lender not bank credit from the bank depositing the note. If I stole your car and sold it and then took the money and give it back to you as a loan would you pay me back the money?

Bob "Modern Money Mechanics says. Why do you think the FED stopped publishing?"

Could it be because it shows just how bank loans really work?

As for the court rulings that you posted where the courts rejected where the banks had no money in the loan. Not one case did the court order the bank to show proof that they loaned their money not one! Why???

This March 20, 2013 "Cold Feet: Bank Walks Away from 9 Yr Old Forclosure"

This is what happens when the court orders the bank to show proof!

Faith Brashear said...

The secularization audit shows how they American People were used in a $500 trillion dollar racketeering scheme.

It's original purpose was find the flaws of bifurcation and robo- signing. Not all states agree on the perfect chain of title and many states still will allow foreclosures without originals.

What auditors who actually perform this audit have found, is the key as to why these loans are illegal, they just did not have all the pieces to actually put this together until last December when the first arrests were made on the LIBOR rigging.

Any deed that has the words "Fannie Mae/ Freddie Mac in uniform with MERS was placed within a pool and offered out to investors on a RIgged Libor index.

I shared this with the criminal investigator with the FDIC who BTW pay out 70%-90% when these loans foreclose back to the banks.

The banks rigged the libor index to control payouts to investors.

I have educated more attorneys that I care to share and butted heads with many more.

You go after the endorsements, these audits show you where to look. In the banks arrogance they do not have proper signatures.

Plus you go after the specific foreclosure protocol foreclosure regs via the state you are in. They never record the proper beneficiaries as they are re-assigned through the process.

Mers passed through, they never invested a dime.

Bains is a great case that rips Mers a new one in the state of Washington. This attorney was my personal attorney at one point.

But Debrunner and Gnomes still are allowing these criminals to continue wrongful foreclosures.

I am the one who brought it to the attention of the 49 Attorneys Generals that the National Mortgage Settlement was a scam to get the AG to act as debt collectors. New York's AG is actually threatening to sue two banks already.

This was after fighting to stop Nationstar to foreclose without recourse on innocents who were modified but who's loans were transferred.

Any loan that was used for the purpose of the perpetuation of illegal activities is not enforceable period. Plus the fact that these audits clearly show how these banks bypassed the secondary market,meaning anyone who was contracted as a "privilege" to sell these loans would have had to have a securities license.

You want to know the truth of what I found via the use of what BOB calls a useless waste of money.

The next time you get held at gun point by the CFPB because they are trying to hide this from the American public, you come let me know. Or are you already aware that they actually rigged the ISDAfix as well. They just haven't announced it yet. I know exactly what went down.

They are not a waste of money, they are supporting examples of how these frauds were perpetuated.

I highly encourage anyone one who has one, or does research, to send page 1 of every prospectus of every pooling and service agreement for every trust discovered to your government official NOW.

Because the SPV created to avoid double taxation on these "trusts" never had the deed until a flurry of transfers that began in 2012. Without the deed there is nothing more than a note.

This is called tax evasion. So include the IRS in your emails as well.

If you want to learn how they did this in detail and exactly who was involved, my book will be out soon enough.

Defrauded Nations - Faith Brashear

Bob Hurt said...

Anthony, when you sign the note and mortgage you certify that you have seisin of the estate, you have received a loan, and you convey the estate to the lender for the purpose of the mortgage, in other words as collateral to guarantee you will repay the loan. That very plain language makes you liable for repayment. And no amount of securitization arguments will change that reality. Only one party must sign an adhesion contract, so the note and mortgage don't need the bank's signature. Furthermore, it does not matter where the money came from because you agreed you received the loan and will repay it.

It amazes me that you think those vapor money arguments will get you anywhere. I have already shown you a court ruling that sent them to oblivion.

Bob Hurt said...

Faith, your verbiage demonstrates your paucity of understanding of the significance of the mortgage loan. It does not matter what happens in the assignments, indorsements, and securitization. THE BORROWER STILL OWES THE DEBT AND MUST FORFEIT THE COLLATERAL for default. In non-judicial foreclosure states, it all happens fairly automatically because virtually EVERYBODY seems to agree that it is not fair to make a mortgagee wait forever to get repaid or take, or force a sale of, the collateral.

Your disputes about the shady deals associated with banks' handling of the note surely may matter to the IRS, the FBI, the SEC, the FDIC, or the OCC, but they don't matter to foreclosure judges. Foreclosure proceedings operate in equity, where the judge MUST render a fair ruling. That ALWAYS means the borrower in default gives up the house to foreclosure auction, or the bank takes it. PERIOD. Don't you pay attention to court rulings?

As to securitization arguments, I posted over a dozen such FAILING arguments in my Blog entry entitled "Neil Garfield - Expert of Bozo?" here:

Read it and heed it. And stop selling junk securitization audits as a path to avert or avoid foreclosure. Such audits are an utter and absolute waste of money.

Unknown said...

Here you go BOB.

Unknown said...

Ok now that im really confused I have a question. I fell behind on my payments and was working with my lender to do a loan modification. They said just send one more payment by a certain date so I did. Then suddenly when i called i had a new mortgage provider. I continued making payments to them although I was behind. Then suddenly they sent my payment back to me. When I inquired they said they wanted the full amount I was behind. I told them I could not afford it. I had been making full payments regularly but was behind. I tried making a full online payment and it would not accept it. Frustrated I filled out a Respa audit and sent it out. answered some of the questions but not all. When I inquired about them not accepting my payment they said they wanted the full amount I was behind. I was also told they are not foreclosing. So I asked what to do. They said to make a settlement offer and they would talk to their boss and contact me and let me know if it was accepted or not. Didnt hear anything back from them at all. About a year later I get a call from them trying to collect money. I hashed through my last correspondence asking what the owners response was to find out they didnt know. That was about 4 years ago. They have not foreclosed. I pull my credit report and they are still reporting it as missed payments. So I dispute it and loose. So is there any action I can take to make them take some kind of action. Release the loan or forclose?

Your New Step said...

-- Part 1 --

"Did they loan money in the bank before you walked in the door, or did they loan money they created after you walked in the door?"

I think this question lies at the root of the controversy altogether. In 1872 (Longan) as I recall we were (happily) 'in-between' central banks. The Nelson Biddle Bank of the United States was shut down by Jackson, so money was something real, and as such, when deposited, existed somewhere, and its existence was a natural predicate to its being lent. The money then (gold/silver coin) was the thing lent, and when a loan was made it was the thing traded for in exchange for a promise to repay on terms and conditions that to cover the future value of the money lent a higher amount of gold/silver (a greater weight of it to be precise) would be repaid at a future date.

Today, in our exaggerated hyper-fractionalized fiat system, it is a bare fact that what is 'lent' is a fiction. The banks have no gold/silver to lend, nothing substantial/physical they hold to 'loan' in exchange for a promise to 'repay'.

What happens is in this monetary system as we all have it now is 'money' is 'debt' and 'debt' is created *AFTER* one makes a promise to repay.

When it comes to a real estate promissory note, it is the promise of the note, evidenced by the endorsement of the promissor (the guy that signs the note) that is marketed, and, as I noted, *after the fact* 'sold', where somewhere down the line the federal reserve banking system 'creates' an equivalent amount of new debt in the form of x federal reserve notes (property btw of the federal reserve, evidence of debt and nothing like physical money, like gold/silver), and at *that* time, *after the fact* the so-called 'money' shows up and is 'lent' to the 'borrower'.

So even though it can clearly shown in court (it is not that difficult) that the bank's in fact do not lend anything, but only market the 'borrower's' promise after the fact, wherein dent is created to then 'fund' the obligation created by the promise, even if the court could somehow 'get it' and realize this is a fraud and not a loan at all, a more foundational question to resolve is did the 'borrower' receive anything of value in exchange for this quixotic promise?

The cold, inescapable fact is the 'borrower' was a willing participant in a debt for money system, monetize-my-promise, to convince a seller of real estate (in this case) to give up title, and sign a grant deed, transferring title to the 'borrower'/buyer, wherein the seller physically moves out and takes the debt-funding to purchase another house.

The problem the court's have is what to do if they recognize formally that the truth is there never were and 'loans'? Exactly how are they supposed to unwind all the transactions tied to the fraud to put everyone back where they were in the first place?

It would be an indictment against the monetary system foisted upon us, and would unhinge the entire economic superstructure, which would lead to one heluva collapse - the 'bankers' would see to that. Nelson Biddle did it to strike back against Jackson, but that is child's play compared to what the modern fiat 'banking' families would do if some upstart sovereignty (like the US Congress) got the 'bright' idea to send them packing and opted for a monetary system that had a far higher level of integrity.

To get rid of the ruling class fiat bankers (which is the very system that keeps them in power - how much power would *you* have if you controlled the very creation of 'money'?) would no doubt be very painful, but in the end very worth it.

But to expect a judge to rule against it is unlikely. Nonetheless, it is the truth, and not only are courts *supposed* to be interested in the law, but also matters of equity, which have as essential branches truth and justice.

Your New Step said...

-- Part 2 --

is it equitable to indict a fraudulent monetary system to force a fundamental change in the nation for the better, and to root out a scourge that constantly compromises national security? Or is it equitable to say the truth is a lie, that there was a loan of money when there wasnt in fact, to preserve the status quo, because it 'isnt fair' that somebody gets a 'free' house?

But what if the guy who signed the note had no idea what he was participating in at the time he signed the note? What if he had known, and had an opportunity to consider all the potential ramifications, and upon consideration of the same decided *not* to sign, *not* to empower a corrupt monetary regime with *his* signature?

The truth is *every* time we sign the promissory notes we are participating in the fraud and perpetuating it. The beast needs our promise. Although the 'money' is not real, our sweat, hard work, and lives are, the very *real* things we must invest to make good on that empowering promise that perpetuates, ultimately, a ball and chain existence on planet earth.

I don't know about you, but I would rather exchange my time for something real, and certainly not do anything to empower the sinister cabal to engage in the black arts, which invariably compromises the freedom of us all.

That is why we need to get rid of the fiat system.

As far as the small picture, all one in a mortgage jam has to do is press the alleged 'lender' to prove up the money they held prior to the fact and lent out to the borrower. They cannot do it because it never happened.

Finally, if fraud cancels out a contract ab initio, consider the first line of every promissory note:

"For a loan I have received"

Note the word "loan", and note, more importantly, the past tense of the word "received".

I ask anyone who ever signed a promissory note, did they check the balance of the purported 'receiving' account to see if 'funds' came in *before* they signed their note?

Well, I'll help you out here. The 'funds' never came in *before* you signed the note.

The fact that the promissory note, which is created by the 'lender', their form document for the promisor to sign, that it would purposely have the language in the past tense that a loan was received prior to the signature on the note when, in fact, they know in advance nothing is ever lent *before* the signature, and that only a *credit* is issued *after* the signature, is the simplest evidence the 'banks' know they are being dishonest, manipulating language, and playing games with the law to take an advantage they should not have.

When this kind of game playing leads to a collapse in your real estate 'equity', I don't think it is unreasonable to go to court, point out the fraud, and get a little justice.

Your New Step said...

-- Part 3 --

some typo fixes:

The word 'dent' above = debt

somewhere up there bank's is supposed to be banks

court's = courts

never were *and* loans = never were *any* loans

Bob Hurt said...


I suggest you get your mortgage examined comprehensively by a professional in order to find all the causes of action underlying the loan. If you owe and don't pay a valid note, you will eventually lose the house or renegotiate the deal. You have no negotiating hammer UNLESS you find causes of action against the lender (how did the lender injure you?). The mortgage exam gives you the hammer. Of course, you might wait and see if they ignore you for 5 years (depending on your state) and then sue for quiet title by virtue of expiration of the statute of limitations for foreclosure. But a mortgage exam gives you the tool you need to force the lender to settle or face litigation in which you might win punitive and compensatory damages and get your legal fees paid.

Read the articles at, and contact me if you want a mortgage exam.

Bob Hurt said...


You have some valid complaints about the money system. But banks do not create the mortgage loan money by depositing the promissory note. Courts have resoundingly debunked that vapor money theory across the land. For a little tutorial on the vapor money theory see my comments above and see this:

"Plaintiff alleges that the promissory note he executed is the equivalent of ‘money’ that he gave to the bank. He contends that [the lender] took his ‘money,’ i.e., the promissory note, deposited it into its own account without his permission, listed it as an ‘asset’ on its ledger entries, and then essentially lent his own money back to him....He further argues that because [the lender] was never at risk, and provided no consideration, the promissory note is void ab initio, and Defendants’ attempts to foreclose on the mortgage are therefore unlawful.” Demmler v. Bank One NA, No. 2:05-CV-322, 2006 WL 640499 at *3 (S.D. Ohio Mar. 9, 2006).

While the vapor money theory has not been addressed by any court within the 8th Circuit, it and “similar arguments have been rejected by federal courts across the country.” McLehan v. Mortgage Electronic Registration Sys., No. 08-12565, 2009 WL 1542929 at *2 (E.D. Mich. June 2, 2009) (citations omitted). See, e.g., Thomas v. Countrywide Home Loans, No. 2:09-CV-00082-RWS, 2010 WL 1328644 (N.D. Ga. Mar. 29, 2010); Andrews v. Select Portfolio Servicing, Inc., No. RDB- 09-2437, 2010 WL 1176667 (D. Md. Mar. 24, 2010); Barber v. Countrywide Home Loans, Inc., No. 2:09-CV-40-GCM, 2010 WL 398915 (W.D.N.C. Jan. 25, 2010); Kuder v. Washington Mut. Bank, No. CIV S-08-3087 LKK DAD PS, 2009 WL 2868730 (E.D. Cal. Sept. 2, 2009); Rodriguez v. Summit Lending Solutions, Inc., No. 09cv773 BTM(NLS), 2009 WL 1936795 (S.D. Cal. July 7, 2009); Johnson v. Deutsche Bank Nat’l Trust Co., No. 09-21246-CIV, 2009 WL 2575703 (S.D. Fla. July 1, 2009); Gentsch v. Ownit Mortgage Solutions Inc. No. CV F 09-0649 LJO GSA, 2009 WL 1390843 (E.D. Cal. May 14, 2009). Thus, the vapor money theory is not a valid route to recovery, and Plaintiff’s claims based upon it must be dismissed."

Bob Hurt said...


You don't seem to like the fact that I have openly attacked and identified as scams both securitization audits and those who provide them. I stand by that position on the basis of proof of workability. I know of a handful of cases (no more than 5) in which appeals courts have allowed a foreclosure defense in the form of denial of jurisdiction based on lack of standing because of broken chain of title of ownership of beneficial interest in the note or assignment to the trustee after the closing date of the trust. ALL OTHER COURTS have rejected these arguments, and in fact New Jersey's Supreme Court has ruled in the Guillaume case that foreclosure plaintiffs do not need standing in order to foreclose a valid note.

But I have made a different point in my assessment of mortgage and foreclosure issues. As I see it, a potential for two battles exist:

The Foreclosure - here the lender attacks the borrower for failure to make timely note payments, and seeks to force a sale of the house or take it over to get repaid. The lender ALWAYS wins an effort to foreclose a valid note. Even if the borrower wins a temporary dismissal (as in Glaski or Erobobo), the lender corrects the paperwork and refiles the foreclosure and wins, and the borrower loses the house and all the expense of litigation.
The Mortgage - here the borrower attacks the lender for torts, breaches, and legal errors underlying the loan. The borrower able to prove the causes of action always wins compensatory damages and legal fees/costs, and possibly punitive damages.

You seem to focus your efforts and attention on helping borrowers win the Foreclosure Battle. I focus on helping them engage in and win the Mortgage Battle.
If you really want to help people, pay attention to the articles and blog entries I have written.


stevem2011 said...

" But banks do not create the mortgage loan money by depositing the promissory note. "

that is exactly what member banks are empowered to do in the federal reserve scheme. money = debt; debt = money.

the debt instrument is the predicate. the courts can rule the earth is flat for their own sake. but i have analyzed thousands of so-called loans, and i found none that 'funded' until *after* the note was endorsed - none.

and indeed unless the 'borrower' signed the note, the deal would not close. since nothing had been lent prior to the signature, no harm no foul.

yet the promissory note, the alleged 'lender' prepares and deposits into escrow has language that says for a loan "received". but that is never the case. that is a simple observable bookkeeping fact.

'money' is not 'lent'. it is created by a promise to pay, the promise is sold into the banking system, new debt is created, and it loops back to the 'borrower' as a loan.

find one 'loan' that 'funds' prior to the execution of the promissory note, where the note 100% of the time has the signatory (falsely) testating to the fact they have already "received" something (which up until that moment they have not), and i will send you via us mail 1 ounce of gold.

apparently it is inconvenient for the courts to acknowledge the simple truth of the matter. the problem is Longan (for example) was adjudicated at a time when money was not debt. after 1913 money became debt, yet the courts keep making assumptions about money as it was prior to 1913.

so the language and terms are tortured by the court to suit the bank's fiction.

on this point you are wrong.

where you are right is the courts will not likely acknowledge the truth on this point.

But the courts eventually change their minds on important things. Dred Scott lost his case, but today no court would say a black man is 3/5s of a human being.

it is better to go to the court and state truth than to have a blog and avoid the truth by saying the big court ruling here and there were irritated at someone who dared raise the truth in their courtroom.

and there are similar veins of truth connected to loan securitization, while inconvenient, and courts allow after the fact work arounds, still raise credible issues as to whether or not the party who makes a claim on the note actually has it.

while you might be right inasmuch that it is hard to prosecute a claim related to securitization / chain of title issues (see glaski), that does not mean there are fundamental issues tied to the process, that if given a fair hearing, would not yield some fruit.

Shelton Beach said...

Bob, Since the note and the mortgage are inseparable, if an entity, shall we say Nationstar, has the mortgage, must they not necessarily hold the note? How can they foreclose if they cannot produce a wet ink document? What gives them the right to foreclose using a photocopy of a document? If an entity can use a copy of a document to foreclose, what is to prevent a homeowner from copying his copy of the note and deed, giving them to his brother-in-law and having his brother-in-law foreclose on his house, selling it at auction, and splitting the proceeds? Sounds ridiculous. But I have been fighting foreclosure for almost 6 years and I can tell you that the crap banks and Wallstreet are pulling is very much akin to having my brother-in-law foreclose. We lost a Truth-in-Lending lawsuit against Wells Fargo because apparently there is no such thing as "Truth-in-Lending". Judge Jim Pappas, a federal judge in Pocatello, Idaho wrote that ruling for the plaintiffs (my wife and me) would "have profound consequences on the banking industry..." That was almost three years ago and several more cases have been litigated here in Southern Idaho. Now Pappas writes in Rinehart v. First Tennessee Bank, (Case 11-41210-JDP) "Thus, under Idaho law, the trustee of a trust deed may initiate a nonjudicial foreclosure when the borrower is in default, but only if all the assignments of the deed of trust, and any appointment of successor trustees are properly recorded. By requiring that any assignments be recorded prior to foreclosure, the Idaho legislature highlights the importance of a proper and transparent chain of title.....Idaho courts have required strict compliance with Idaho's trust deed statutes." So it seems at least one federal judge thinks an uncorrupted chain of title is important. We are on the verge of filing another lawsuit, this against Nationstar, alleging that they have no right to foreclose because of a corrupted chain of title. You have given us cause to reconsider. Any comments?

Golddigger2014 said...

Well you all have written so many comments. How about telling me, who do you recommend to look at Mortgage, assignments over years? I am seeking a person that can review a pooling agreement and validate in an asset can be assigned to the security. This mortgage was assigned to cover their track on non-foreclosure and illegal lockout and civil theft. Plaintiff files a suit in one court to get their home back due to non-foreclosure. Defendant comes back with invalid assignment of mortgage and file foreclosure 10 months after lockout. So with that said who can audit these instruments?

mogel007 said...

Securitization mistakes that a securitization audit can show doesn't stop foreclosure? Think again:

Bob Hurt said...

If you want a comprehensive mortgage examination by a competent professional, call or write me:

727 669 5511 or

Bob Hurt

Unknown said...

Just thought people need to know where the money comes from in the banks own words!

This complete booklet is was originally produced and distributed free by:
Public Information Center
Federal Reserve Bank of Chicago

“Of course, they do not really pay out loans from the money they
receive as deposits. If they did this, no additional money would be created. What they do when they make loans is to accept promissory notes in exchange for credits to the
borrowers’ transaction accounts. Loans (assets) and deposits (liabilities) both

"Two Faces of Debt" by Federal Reserve Bank of Chicago Sept. 1992

"Such newly created funds are in addition to funds that all financial institutions provide in their operations as intermediaries between savers and users of savers"

"I Bet You Thought" Federal Reserve bank of New York Dec. 1977

Commercial banks create checkbook money whenever they grant a loan. Simply by adding new deposit dollars to account on their books in exchange for a borrower's IOU.

So just remember when the banks takes your home "the banks does not have a dime in the loan" but yet they get your house for FREE!!!

kate said...

Dear Bob, I just came across your blog and had a quick comment. First I am a finance attorney. The reason why a securitization audit would be useful is for standing. However, an audit wouldn't be useful on every type of trust account that holds mortgages. Some of the trust accounts require that if a mortgage becomes non-performing, that the servicer is required to remove the non-performing loan and replace it with a similar performing loan. Not every trust account had this requirement. For any one of these types of accounts, the servicer was required, and the Trustee had to ensure, removal of the bad loan. Failure to do so would be a breach of fiduciary duty. If a loan stayed in the account and the original trust pursued the foreclosure, the court would be a participant in the Fiduciary's breach of its duties. That is why the securitization audit would be relevant in some cases. Homeowners should read the trust prospectus before requesting an audit.

Bob Hurt said...

Thank you for sharing your understanding of the value of a securitization audit in some instances. If you know of any cases where an appeal court has opined in alignment with your considerations, please post it here.

As I see the matter, the maker of the securitized note, the borrower, never became a party to either assignment of the note OR the Pooling and Servicing Agreement that created the securitization trust. Furthermore, no consequence of the securitization or assignment injures the borrower. Thus, the borrower has no standing to attack, defend, or enforce the assighment or a provision of the PSA.

In most cases, the Depositor or Trustee indorsed the note in blank. That gives the possessor (holder) or agent unfettered standing to enforce it through foreclosure, regardless of whether someone violated terms of the PSA.

Assignments of the note, the PSA, and descending squabbles do not concern the mortagor, and numerous courts have opined so.!topic/Lawmen/kDi_d2VRkWY

Unknown said...


I believe you are off with regard to the bifurcation argument, as there was a decision here in NY, and upheld at the appelate level, dealing specifically with MERS and the separation of mortgage and note. While I agree that the terms of the PSA do not directly relate to a homeowner, the fact that the PSA is the instrument used to empower the Trust in an enforcement action, and is brought in by virtue of the foreclosure action, is sufficient for the defendant homeowner to question whether the loan was properly securitized and ever put into the Trust. This has also been validated by the courts. The question does not come down to whether the borrower signed an agreement. The question does not come down to whether there is a mortgage and note. The question comes down to who legally holds the note. In a securitized Trust, it is also a matter of timing. IRS and NY Trust LAw, and the terms of the PSA are specific in the chain of assignments. Where the terms dictate a transfer before a closing date, and that takes place three years later, the first question is whether the trust may accept the mortgage and note. If the answer is no, then the mortgage and note reverts back to the previous holder. Who might that be? the SPE? The originator who has since gone out of business? I think that much of this can provide info in assisting a homeowner. There is no magic bullet. I also agree that come securtization audits are over-priced mumbo jumbo. You also cannot be yoour own expert. BUT... if you have raised standing, then at least one has a path with which to follow. In our loan, we were notified that we were part of a class action settlement over predatory lending. We declined the settlement.

Unknown said...

Also, here in NY a defendant can raise the question of whether the Bank has standing to foreclose, so long as they do not do it at the 11th hour. It's a valid question. After all, the servicer is acting on behalf of a Bank who is serving as Trustee for a pool pof mortgages. The terms of the mortgage and note are absolute. Who is in legal posession of those instruments is the question. Sure, if I hold them they I am in possession... except when the rules stating what I can possess and when I must have them by differ from what my stated role is.

Bob Hurt said...

Mogel007, you mention the Horace v Lasalle opinion. I believe the court of appeals would have reversed it because the circuit ignored in in this case:

Courts all over the land have deprecated anomalous rulings like Horace, Glaski, Erobobo, etc because the borrower is not a party to the PSA and does not get injured by its parties, AND so the borrower lacks standing to dispute or enforce the PSA or an assignment in court, and also because it has nothing to do with whether the borrower breached the note, and also because a holder of a note endorsed in blank ALWAYS has the right to enforce it under the UCC.

Bob Hurt said...

Jo Fars, I have said and still say that the rare (anomalous) securitization argument appears to win, but courts have deprecated them for very good reasons (see my comment above).

But the main point here lies in the expense of litigation to the mortgagor - it is TERRIBLE. And so the mortgagor should not waste any money seeking a Pyrrhic victory. By that I mean you know that the securitization argument will ultimately fail. The bank will straighten out its paperwork, refile the foreclosure action, or appeal, and WIN. The borrower gets a few more months in the house and then suffers credit rating destruction for TEN YEARS. A keys for cash or short sale deal makes far more sense. But it makes MOST sense to get the mortgage examined by a competent professional, and then ATTACK the Lender and lender's agents on the basis of the newly discovered torts, breaches, and errors underlying the mortgage.

Here's how that works:

For a lot more info, go to this site:

Bob Hurt said...

FYI, everyone should read the Permanent Editorial Board of the UCC comments from November 2011 regarding security in mortgages:

Attorney Gregory Bryl said...

While raising securitization-related issues in court can sometimes benefit a borrower, I am yet to come across a single instance where paying for a "securitization audit" has benefited a borrower.

The information produced in a "securitization audit" is either equally available to both the borrower and the "auditor" (as public information) or is available to neither. And where it is unavailable, an auditor's speculation on what "likely" happened with the loan based on the loan's statistical parameters and the auditor's access to the Bloomberg terminal is both inadmissible and irrelevant to any court proceeding.