Illegalities of Securitization Trusts - 1 Reason to Sue

Asset-Backed Security Trusts purchased Notes = not a "Loan" with Trust Deed

Most purported "loans" by Washington Mutual, Indymac, Countrywide, and many other "lenders" in the past 5 years were actually disguised purchases of Notes by Pools or "Special Purpose Vehicles" (SPV) created by Lehman Brothers. These SPVs , as fronts for Securitization Trusts were pre-funded by investors for the express purpose of purchasing said Notes to enable the Trust to be the holder of Asset Backed Securities.

A Simple Summary of the Situation:

The Homeowner expects to be a "Borrower" that will receive a "Loan" from the Bank.
If the Bank funded the loan and then sold it, it would still be a loan that was sold, but the Bank does not fund it - the wire comes directly from the Bank for the Trustee of the SPV and Securitization Trust.
Lehman Brothers arranged for investors to purchase certificates in the Trust in advance, and arranged for the Trust and SPV to purchase Financial Assets from each Homeowner direclty. The Bank gets a commission as a finder's fee, but the bank never funded the loan. either the Trust nor SPV was a bank, so Usury may apply. In all cases, the Homeowner was tricked into believing the Bank funded a Loan, when the Bank just was paid a commission for finding a Homewoner willing to sell the Note, which was a Financial Asset when acquired by a Trust or Commercial Paper when acquuired by an SPV. The Bank's Commission was also for the Bank to allow its name to be on the Note and Deed of Trust/Mortgage, and often to act as Servicer to get montly fees. The Homeowner was never told the truth about who funded the transaction, because a Deed of Trust would not normally be allowed for a Financial Asset purchased by a Securitization Trust (a Security covered by Security Laws), or a Commercial Paper which is covered by the Uniform Commercial Code Division (UCC) 8, whereas Secured Transactions with a Deed of Trust are covered under UCC 9. The biggest question is:

Was it Fraudulent Misrepresentation to lie to the Homeowner?

This question is one you need to discuss with our attorney.

Was this a setup that the Bank, SPV, and Trust knew was doomed to fail?

Lenders know that Loans with Balloon Payments, Adjustable Rates, Interest Only Periods, and Negative Amortization are Doomed to Default. These kinds of loans are less secure that fixed rate loans. Lehman Brothers, the Banks, and other Lenders KNEW THIS.

Does it make you angry that they were betting you'd default?

Most Prospectuses for the Trusts outline your probable default time, and use "Credit Enhancement" like Pool Insurance to offset losses by Default and Foreclosure.

Did the Investors in the Trust get paid by Default Insurance? Then why do you still owe?

AIG was bailed out, so Default Insurance could continue to be paid?

The "Lender" named in the Note and Deed of Trust or Mortgage (e.g. Washington Mutual, Indymac, Countrywide, etc) did not fund the transaction, and therefore was not really the "Lender" at all. They acted only as a "Nominal Lender", named in the Note only to facilitate the creation of a Deed of Trust or Mortgage to secure the Note as an alleged "Loan", when it was not a "Loan", but rather the receptacle for an Asset-Backed Investment Security.   Frank J. Fabozzi and Vinod Kothari, in their book "Introduction to Securitization" state on page 5 "The asset securitization process transforms a pool of assets into one or more securities that are referred to as Asset-Backed Securities."
The ramifications of this process are that there was no "loan" funded by the "Nominal Lender". In fact, it can be alleged in court that the "Nominal Lender" was paid in full, plus a commission. Also, the Deed of Trust or Mortgage can't secure an Asset-Backed Investment Security or a Financial Asset directly purchased by a Trust (Security), and the Homeowner was tricked into thinking he was a "Borrower" of a "Loan", when he was actually a Seller of a Note to a Securitization Trust or SPV. The Trust or SPV had no right to a Deed of Trust or Mortgage to a purchased Note that was not evidence of a debt or obligation - it can't be a Secured Transaction covered under UCC 9,when it's an Investment Security covered under UCC 8. The "Nominal Lender" shouldn't be able to foreclose on an asset in an Investment Security with an invalid Deed of Trust or Mortgage, fraudulently procured under the guise of a "Loan", when it wasn't a Loan, but rather the "Purchase of a Note" into an Asset-Backed Investment Security, and the "nominal Lender" was paid in full, plus a commission for something it did not fund. Can a "nominal Lender" that didn't fund the transaction, but rather fraudulently allowed its name to be put on a Note and Deed of Trust or Mortgage to trick a Homeowner into signing a Deed of Trust or Mortgage to secure an Investment Security, assign a Beneficial Right it never had to another Beneficiary? WaMu almost never Assigns the Deed of Trust or Mortgage, but forecloses directly or through Chase, its new owner. WaMu is the Servicer, and Trust wording also calls it the Originator, but the Trustee for the Trust or SPV purchased the Notes directly - WaMu did not fund the loan. The Trust was fully formed before the purchase, and its Trustee wired the funds into escrow. The originator almost never funds directly to sell it. Fraud can be alleged that the Borrower was tricked into believing it was a loan to procure a Deed of Trust or Mortgage, and the true nature of the Transaction was not disclosed. Fraud can also be alleged (after research) that the Pool Insurance paid the Investors after multiple Defaults and Foreclosures. If they were paid, why the foreclosure? Further, fraud can be alleged that the Deed of Trust (UCC 9) is invalid for an Investment Security/Commercial Paper (UCC 8) (you can't have both). A foreclosure is improper, and should be voidable. The direct purchase of the Note by the Trustee for the Trust or SPV appears to violate the procedures specified in FAS 140 - "Statement of Financial Accounting Standards 140" by the Financial Accounting Standards Board (FASB).
The Bank signs a Mortgage Loan Purchase Agreement with a Representative of the Trust and/or SPV, yet the Bank doesn't fund the purchase of the note, and can't sell what it hasn't bought.
The Pooling and Servicing Agreement clarifies all the fine points they don't want you to know. The Assignment and Assumption Agreement clarifies further. Credit Enhancement is used to sweeten securitization trusts. Trusts containing Sub-Prime Notes usually have Pool Insurance to cover Defaults and foreclosure. If enough Notes go into Default and Foreclosure, the Insurance pays off the Investors. The Servicer usually continues to foreclose, even though the investors were paid off.
Other insurance is often procured for fraud arising in the origination process - if you win for fraud, they can collect that insurance, as well.
Indymac was foreclosing itself, but now it often forecloses through either OneWest Bank, its new owner, or through Deutsche Bank, trustee for the Asset-Backed Security.

You can join a lawsuit against your lender now.