This is general information only and not a substitute for legal advice from a lawyer licensed in the jurisdiction in which the property is located.


The (REMIC) trusts are unfunded, the trust has no assets, the trust couldn't and didn't ever buy the loan, and that the "servicer" was designated by a trust who didn't own the loan and had nothing to with the loan. But the certificate holders are recognized by the judge as the probable "lender" even if they are not secured by the DOT/mortgage.

The point here is that there is money owed and the debt exists regardless of whether or not the note and DOT/mortgage are void. THAT is the last part of the analysis. The remedy is the same as TILA rescission regardless of what the reason is - return the note to the homeowner who is not a "borrower" from anyone in the "securitization chain", release the encumbrance and give back all the money the borrower ever paid because they were not entitled to collect it in the first place much less enforce it. The obvious fact is that a foreclosure is impossible without the homeowner executing a new DOT/mortgage to the real "Lender."

This is where people get confused because it sounds like I am saying that the debt simply disappears. It doesn't. But it is doubtful that the investors are going to make demand for payment from homeowners directly or even though a new or old "servicer." In order to do that they would be tacitly admitting "securitization fail" (Adam Levitin) and that the debt is not secured by an encumbrance upon the house.

And that would make many assets of stable managed funds ineligible for retention and reveal the fact that the managers of those funds were asleep relying upon the brand reputation of the largest banks the world has ever seen. So the debt doesn't disappear but because of the multiple sales of the same loan papers, and the unwillingness of fund managers to admit they failed to do due diligence, the REAL debt might never be claimed or enforced.

Definition:  A real estate mortgage investment conduit (REMIC) is "an entity that holds a fixed pool of mortgages and issues multiple classes of interests in itself to investors" under U.S. Federal income tax law and is "treated like a partnership for Federal income tax purposes with its income passed through to its interest...

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