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New Rules Making Life Easier for Banks

livinglies.me | February 11, 2020

The most basic problem is still not addressed. The Volcker rule attempted to make banks play by rules of common sense, to which the banks rely that life is more complicated than that.

The basic problem is that current law does not allow for securitization as it is currently practiced. Current law provides that only someone who has paid value for a debt can own it. And only an owner can enforce it. Current securitization makes that impossible. The sale of certificates to investors cuts off the only players who paid value from ownership of any debt, note or mortgage.

The banks are bridging this fatal gap by relying upon legal presumptions arising from the apparent facial validity of fabricated documents most of which are not facially valid on close inspection.

The old rules and the new proposed rules perpetuate the sue of false and misleading labels for instruments that are created and for players in the securitization scheme.

But the rules also tacitly ratify the erroneous presumption that by having control over the assets of the trust the banks control the assets themselves, even though they were not purchased for value by a trust, trustee or even the investors.

But the new rules do provide confirmation that the banks are controlling everything that their absence in foreclosure is a fatal flaw and their goal is revenue and not interest payments or even principal due from faulty loan products.

Most importantly their absence from lawsuits for wrongful foreclosure is highlighted --- since they are the ones controlling everything and are therefore vicariously liable for the actions of all the other conspirators seeking to sue foreclosure as a means to produce revenue and not restitution for an unpaid debt.

As for the interests of the "holders of certificates" consider this:

  1. “The entitlement to payments under the terms of the interest [must be] absolute and [can]not be reduced based on losses arising from the underlying assets of the [CLO], such as allocation of losses, write-downs or charge-offs of the outstanding principal balance, or reductions in the amount of interest due and payable on the interest.”

  2. “The holders of the interest [can]not [be] entitled to receive the underlying assets of the [CLO] after all other interests have been redeemed or paid in full (excluding the rights of a creditor to exercise remedies upon the occurrence of an event of default or an acceleration event).”[5]

And remember that the banks are securitization everything they can reach, whether they own it or not, because the issuance of securitization products, contracts, hedges and insurance are just too profitable to pass up:

The Volcker Rule currently defines the term “Loan” to mean any loan, lease, extension of credit, or secured or unsecured receivable that is not a security or derivative. Although not discussed in this article, the exemption also permits investments in certain servicing rights, certain interest rate or foreign exchange derivatives directly related to or reducing the interest rate or foreign exchange risks related to the CLO’s assets, and certain collateral certificates and special units of beneficial interest issued by special purpose vehicles.

See "Rolling Back the Impact of the Volcker Rule on CLOs"

 

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Back to February 2020 Archive

"CFLA was founded by the Nation's Leading Foreclosure Defense Attorneys back in 2007 to serve the Foreclosure Defense Industry and fight pervasive Bank Fraud. Since opening our virtual doors, CFLA has rapidly expanded to become the premier online legal destination for small businesses and consumers. But as the company continues to grow, we're careful to hold true to our original vision. For us, putting the law within reach of millions of people is more than just a novel idea–it's the founding principle, just ask Andrew P. Lehman, J.D.. With convenient locations in Houston and Los Angeles, you can contact Our National Account Specialist and General Manager / Member Damion W. Emholtz at 888-758-CFLA (2352) for a free Mortgage Fraud Analysis or to obtain samples of work product, including cutting edge Bloomberg Securitization Audits, Litigation Support, Quiet Title Packages, and for more information about our Nationally Accredited and U.S. Department of Education Approved "Mortgage Securitization Analyst Training Certification" Classes (3 days) 24 hours for approved CLE & MCLE Credit (Now Available Online)".

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