Perambulate

This writer will attempt to explain in simplicity and in specificity the complexity. If one has not yet gathered from the first sentence the perpetuation of the financial fiasco was brought forward using a game of words.

When word games are mixed with money usually it results in a complex mush that everyone swallows. The beginning in it self is not defined in specificity. The writer is referring to evil in the beginning. Simply put, the evil of word games has been upon this Earth since Eve listened to the lies of Satan the Devil. This writer in reluctance refers to law school as the first step in teaching evil how to properly lie in a court of law. It is not a fault of a professor’s teaching but the fault of the individual that game the knowledge taught.

A reason for the need for speed resides in the article “Explaining the Housing Bubble”1 written by ADAM J. LEVITIN & SUSAN

M.WACHTER. Yes, there was a very definite reason for speed; it was to satisfy greed.

In the days before high speed electronics and electronic digitized files, paper which is today still the current legal mechanism for negotiating secured notes secured by real property requiring that the Indorsee of the note file of public record their purchase of the note signifying a transfer of a security interest in the real property. This antiquated paper method created a serious
1

http://ssrn.com/abstract=1669401

delay issue for high speed creation of investment vehicle(s). Filing of public record an assignment of the security interest in the real property upon each of the Note’s negotiation resulted in a delay of time for the creation of an investment trust vehicle. To feed the appetite of Wall Street’s greed and need for money NOW, the paper method had to be circumnavigated or eliminated. Only problem is state laws would not allow for circumnavigation of a state’s legal requirements therefore a smokescreen was deployed. As noted in many court(s) opinions upon any attempt to penetrate the smokescreen such action was met with a game of “word crafting” by the banks lawyers which resulted in favorable decision but usually in contradiction to law. In many cases, opposing counsel to the banks simply did not make a correct argument as there was a lack of understanding and application of true and correct facts.

Many lawyers in this writer’s opinion have abused the teachings of their law professor(s) and found a way to perambulate around truth. Criminal law provides that even a criminal is allowed representation requiring evidence to show “Beyond any Reasonable Doubt” As required by law, prosecuting a criminal requires more than a “Preponderance of Evidence” to find the evil guilty. In applying evidence to support civil law in this area, it appears that “Beyond any Reasonable Doubt” is the height of the bar and when such bar is met, many civil judges look beyond the evidence in disregard to law. Where it may be true that somewhere in the future a party with rights to enforce an instrument for value could in fact obtain a judgment and attached such judgment to real property to obtain equitable relief is not usually the issue brought before a court in a foreclosure proceeding. Such future potential recovery should not short circuit the steps in due process of law.

The United States Constitution guarantees each person a right of due process of law, and if a judge is to ignore such right, what injustice has been done to the people, The United States and to the Constitution?

First Gear – “Creation of an obligor’s mortgage”

Already a perambulation has come into play.

One must realize that a

modern day mortgage by technicality is not but one part but two parts. The two parts in tandem are that of the note and the mortgage that secures to note. In this writer reviewing of mortgages in decades past it was not uncommon to find the note and mortgage were combined into one single document. To comply with recordation requirements the mortgage was filed of record to provide constructive notice. Such filing of the mortgage resulted in the note also being filed of record which has never been a legal requirement. One truth told today is the fact that a note has never needed to be filed of record. One has to consider that a Mortgage Broker was not required to know of laws that came into play after the Mortgage Broker closed the mortgage. The Mortgage Broker was already consumed with knowing the laws (TILA, RESPRA, etc…) for lawfully closing the mortgage and as such a Mortgage Broker was never intended to know laws that did not apply to the closing the transaction. It is rare to see an instance where a lawful Mortgage Broker did not follow federal, state laws and lenders requirements. Mortgage Brokers in general filed the mortgage of record in the name of the originating lender’s name and transferred possession of the note along with the mortgage to the lender that funded the mortgage loan. Possible that a Mortgage Broker in instances registered the mortgage with the Mortgage Electronic Registration System (MERS) identified by an 18

digit Mortgage Identification Number (MIN number). Further possible that after registering with MERS the mortgage loan documents were scanned into an electronic digitized electronic file and then the tangible note and mortgage along with the electronic digitized file was transported to the funding lender. Very simple to see in this scenario that the Mortgage Broker was operating as an agent for a lender and as such no assignment of a mortgage (security securing the note) required no assignment of mortgage to be filed of record as no assignment of the mortgage actually occurred.

Second Gear (Old Way) – “Originating Lender’s Indorsement”

For an Originating Lender to refurbish the money supply in the olden days, the Originating Lender under cover of a Bailee’s Letter (A legal mechanism that guaranteed the selling lender by law legal rights to the mortgage loan until a purchaser tendered payment) would offer up the mortgage to a purchaser. To facilitate and in compliance with the Uniform Commercial Code Article 3 or a states equivalence the Originating Lender would as Indorser indorse the note in blank and provided the perspective buyer with a copy of a prepared blank assignment of the mortgage (assignment of the security instrument to buyer). Upon purchaser acceptance of the Originating Lender’s offer, the new owner of the mortgage loan would tender payment to the Originating Lender and purchaser would file of record the blank assignment perfecting the mortgage in the purchasers name which provided notice to the world that the purchaser was now the secured party of record and the purchaser of the note, the Bailee’s letter would become a part of the mortgage loan package upon the purchaser’s acceptance. Upon purchaser obtaining legal rights to the mortgage loan and to replenish the money

supply, the purchaser would pool the instrument together with intent of selling an intangible interest in the payment streams. Creating such secondary market intangible (securitization) at this point in time is absolutely legal and is in accordance to applicable law and would reduce the note in value. As negotiation of the note has already occurred, the purchaser being of record the mortgagee and owner and holder of the note stood perfected in all manners with rights to enforce the note and in an alternate the right to enforce the mortgage upon default of the note and all is legal.

Third Gear (MERS Way) – “Originating Lender’s Indorsement”

For an Originating Lender to refurbish the money supply in modern electronic day, the Originating Lender upon registering the Mortgage Loan within the MERS system would offer up the mortgage to a purchaser usually not under cover of a Bailee’s Letter. Evidence supports that prior or simultaneously upon the Mortgage Loan being scanned into electronic digitized format and registered upon the MERS Registry, an intangible obligation was created at closing evidenced by a statement within the mortgage that an interest in the mortgage loan could be sold. One only would need to search and find as evidence a Pooling and Servicing Agreement (PSA) to prove such creation occurred. To provide an illusion that negotiation was in compliance with the Uniform Commercial Code Article 3 or a states equivalence the Originating Lender would as Indorser would indorse the note in blank (creating a bearer instrument) and provided the perspective buyer with a copy of a prepared blank assignment of the mortgage (assignment of the security instrument to buyer). Upon purchaser acceptance of the Originating Lender’s offer, the new owner of the mortgage

loan would tender payment to the Originating Lender and update the MERS Registry that the purchaser purchased the offering. In applying perambulation the purchaser attempts to persuade the purchaser of the intangible obligation (Investor, etc…) has also purchase an enforceable right to the note and the mortgage securing. To comply with Internal Revenue Service (IRS) laws, a Real Estate Mortgage Investment Certificate (REMIC) has to be both bankruptcy remote and allow for pass through of payment(s). To circumnavigate the time delay of dealing with tangible paper negotiation of the note and filing an assignment of the mortgage upon each negotiation of the note, the intangible obligation was created by the purchaser of the tangible mortgage loan package and as Account Debtor sold the intangible obligation to an investment trust vehicle. Such intangible obligation under Uniform Commercial Code Article 9 could only have been secured by the payment stream. An investor who purchased the trust certificates only holds an illusion that such investment was collaterally back by the tangible mortgage.

Fourth Gear – Intangible Default One truth be told, if the tangible obligation is in default there is a high probability that the intangible obligation is in default. Where an intangible Obligee (FNMA, FHLB, etc…) or his agent (trustee, servicer, master servicer, sub servicer, law firm, etc…) has been subject to an Intangible Obligor’s default, such legal collection action is limited to the Intangible Obligor as Account Debtor. Whereas the Account Debtor has sold all interest in the tangible obligation the Account Debtor as only passing

through payments will have suffered no injury as a result of a Tangible Obligor’s default.

Afterburn – The Perambulation

Whereas a Bank has underwritten the investment trust vehicle’s trust agreements and made certification to the collateral; it is not surprising to see the Bank also acting as agent for the Intangible Obligee try to perambulate responsibility. As to continuation for the need for speed and how Credit Defaults Swaps and Obligations factor in, refer to the article written by ADAM J. LEVITIN & SUSAN M.WACHTER as noted in the beginning of this writing.

Okiee Dokiee, the writer will explain how the title of the document came about. In the 2002 movie “The Time Machine” Professor Hartdejen was encapsulated by a stream driven vehicle, where after the Professor stopped the vehicle from running away, the owner offered the Professor if he would like a perambulation. Why walk when you can ride…

Sign up to vote on this title
UsefulNot useful