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Wednesday, August 5, 2015

40M Securitized Loans, $7 Trillion Bucks..so are Most Foreclosures from Securitized Loans?

As published 2012, in NY Business Law Journal....

Complete explanation of securitization, yes, FM and FMac devised it..........

http://tollefsenlaw.com/wp-content/uploads/2014/08/Standing-defense-mortgage-foreclosure.pdf

"Prior to securitization most residential loans were kept in a portfolio as “whole loans.” The loan was usually serviced by the institution that originated the loan. Fannie Mae and Freddie Mac developed the business model of securitizing the cash flow from residential mortgages. "

The GSEs insured investors in securities backed by residential mortgages. The government-insured Fannie and Freddie loans, therefore, had very high credit ratings. Fannie and Freddie loans were underwritten to very strict standards.11 In the late 1980s and early 1990s the business model expanded, and private label, non-GSE, noninsured products became available to the general public from various investment banks.


Practical Matters As a practical matter, collateral attacks on the chain of title of interests in real property are not an invention of creative attorneys representing certifi cate holders seeking to put back non-performing loans. Nor are these attacks an invention of crafty foreclosure defense lawyers seeking to find a loophole in a foreclosure proceeding to protect homeowners.

Failures in accurate and transparent recordkeeping that are consistent with recording statutes and bona fide purchaser law are already creating litigation and will continue to do so. It is apparent that the custodians, servicers and trustees charged with the lawful transfer of RMBS loan documents between and among RMBS participants did so without regard to the preservation of the bona fi de purchaser status of downstream possessors of those interests.


We are now at the stage where RMBS foreclosure plaintiffs are forced to rely on contortions of the Uniform Commercial Code, securities law, trust and estates law, the incident-precedent rule and real property law to maintain standing in foreclosure actions.   

None of this would be necessary if RMBS participants were not in such a rush to “get their deals done” and cash in on their securitizations. There is nothing wrong, unlawful or illegal with the theoretical structure of the RMBS transaction. 

The practical problem is that RMBS participants simply did not follow their own rules, to the detriment of interest in real property ownership principles that span two millennia. 

How our legal system addresses this widespread failure on a county by county level will determine the quality and reliability of our recorded land records for the foreseeable future of our State and Nation.

 **Note from Foreclosure research blogger--in CA, as we have stated, the CA Supreme Court will be ruling on Yvanova and the other 2 cases re "standing" later this year, 2015.  It is believed that Yvanova will show that she has "standing" and the other 2 cases will be used in contrast and compare. Yvanova will likely be considered the Glaski-type of case that survives Federal strikeout (in other words, the Fed Cts will not likely get rid of foreclosure cases that are in line with Yvanova...) 


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