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Foreclosure-Gate: What Happens When Mortgage Backed Securities Are Empty?

In what may the start of realization in the securitized paper market, we have the following: Defendants’ failure to strictly comply with the terms of the PSA means that the loan at issue was never properly transferred to the trust. Any transfer of mortgage loans, such as Plaintiffs, was mandated to comply with New York Trust law and the terms and conditions of the PSA governing conveyance of mortgage loans into the Trust. PSA pp 155 and 36. This the Defendants did not do. The Court finds that the “Assignment”, recorded on December 30, 2009 in the Washtenaw County Register of Deeds, serves to transfer nothing. The alleged conveyance failed to comply with the terms and conditions of the PSA and New York Trust law which governs the PSA. The alleged conveyance stated that MERS assigned the Mortgage and Promissory Note to USB, however, there has been no evidence presented to support the chain of the required assignments and endorsements of the mortgage and note as required by the terms and conditions of the PSA. And there you have it folks. Formal, judicial recognition by a judge who actually looked at the PSA and the documents in question and came to the same conclusion that I and a handful of others did a few years ago and have been pointing out since: These institutions are "foreclosing" on loans they have no legal right to foreclose upon as they don't own them. The corresponding fact that goes with this, and its truly ugly, is that the MBS investors were sold an empty box that does not in fact contain assets. There should be a strong prosecutorial response to this: It certainly appears that these events were not "isolated incidents" but rather were pervasive through the years of the bubble and perhaps even before. This has severely damaged land title records in that the debts incurred are not actually being paid, as the entity being paid doesn't own anything and the entity actually owning the debt is receiving nothing! Where are the damn handcuffs?

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