No Promissory Note means banks like B of A sold un-backed securities instead of mortgage-backed securities. This is not a simple case of sloppy paperwork as the mainstream media would like you to believe. The evidence suggests it is layer upon layer of widespread criminal activity. Here’s the way I explained it in a post called “The Perfect No-Prosecution Crime.” In October, I wrote, “There was “rampant” mortgage fraud in the loan application process according to the FBI as far back as 2004. (Click here to see one of many stories of the FBI warning of mortgage fraud.) There was real estate document malfeasance when the original Promissory Notes and loan documents were “lost.” The Promissory Notes were required to create tens of thousands of mortgage-backed securities (MBS). No “note,” no security. No security means the special IRS tax status for the MBS were improperly obtained. Because there were no documents, the rating agencies fraudulently made up triple “A” ratings for the securities. When the whole mess blew up, big banks hired foreclosure mill law firms to create forged documents. That phony paperwork was and is being used to wrongfully remove homeowners from their property. That is foreclosure fraud.”
Mortgage-backed securities have to meet what is called “contractual representation and warranties.” That basically means the MBS are required to be free of fraud and be exactly what the seller says they are. Do you think mortgage-backed securities are free of fraud? Do you think these securities are the triple-A rated risk free investment the big Wall Street banks claim?—NO WAY! The banks are going to be forced to buy back all the toxic mortgage junk they sold.