Posts Tagged ‘bank of america securities fraud’

SEC and DOJ charge Bank of America with mortgage and securities fraud

The so-called too big to fail banks

Newscast Media CHARLOTTE, N.C—If Bank of America goes down, the rest (CITI,
Wells Fargo, Chase, Deutsche Bank etc…) will follow. This is huge! The SEC usually
charges the little guys like lawyers, but now they have stepped up and are going
after the “too big to fails” as is demonstrated in this epic Bank of America lawsuit.

The Securities and Exchange Commission has charged Bank of America and two
subsidiaries with defrauding investors in offering of residential mortgage-backed
securities (RMBS) by failing to disclose key risks and misrepresenting facts about the
underlying mortgages. CONTINUE TO FULL STORY>>


Be the first to comment - What do you think?  Posted by Joseph Earnest - August 7, 2013 at 10:01 pm

Categories: News   Tags: , , , , , , ,

Mortgage fraud suit brought by NY Attorney General against MERS, BofA, Chase and Wells Fargo

Mortgage fraud

Newscast Media NEW YORK — Some of the nation’s largest banks were sued on Friday by New York’s Democratic Attorney General, Eric Schneiderman, for deceit and fraud in using an electronic mortgage registry that he said puts homeowners at a disadvantage in foreclosures. The biggest culprit in this fraudulent scheme is Mortgage Electronic Registration System Inc. or MERS, that uses an electronic
registry to track mortgages without having to pay local county fees for registering Deeds of Trust when ownership changes hands.

Schneiderman said on, “The banks created the MERS system as an end-run around the property recording system, to facilitate the rapid securitization and sale of mortgages. Once the mortgages went sour, these same banks brought foreclosure proceedings en masse based on deceptive and fraudulent court submissions, seeking to take homes away from people, with little regard for basic legal requirements or the rule of law.”

Member banks like Bank of America, JP Morgan Chase, and Wells Fargo, who actually do not own these mortgages, but are only Servicers of securitized debt obligations, can then claim the right to foreclose on a property without disclosing the actual identity of the owner of the Deed or the Note, since the majority of mortgages issued between 2001-2008 were securitized and sold on the secondary market as derivatives. Schneiderman refused to negotiate a deal that lets banks off the hook after paying a soon-to-be-reached settlement, in which banks are expected to pay roughly $25 billion for fraudclosure. Instead, the New York Attorney General is fighting for homeowners in his state and holding these banks accountable.

MERS is owned by the company, MERSCORP, which in turn is owned by a group of Wall Street investment bankers. MERS is unregistered and unlicensed to conduct mortgage lending or any other type of business in any state and has been knowingly and intentionally, illegally and fraudulently recording mortgages and conducting business in the U.S. on a large scale and systematic fashion.

MERS often splits the Note from the Deed in violation of Carpenter v. Longan, creating an unsecured debt obligation, because one entity holds the Note, while MERS holds the Deed of Trust even though MERS is not a creditor nor does its name appear on the Notes secured by such Deeds. When the Note is bifurcated from the Deed, it means the lien was never perfected, therefore neither the holder of the Note nor the holder of the Deed can foreclose on a homeowner. The reason is: A person holding only the Note lacks the power to enforce it, and a person holding only a Deed of Trust suffers no default because only the holder of the debt obligation is entitled to payment on it.

By suing for “fraud and deceit” the New York Attorney General has put MERS and the bankers in a very difficult place because by law the Supreme Court has ruled that: “Fraud vitiates everything” (Boyce’s Executors v. Grundy); also “Fraud vitiates the most solemn contracts, documents and even judgments,” (in United States v. Throckmorton). This means that all the contracts that have MERS on them become nullified by law, if there was fraud involved as the NY Attorney General alleges in his lawsuit. Any previous judgments against homeowners who were also victims of the fraudulent scheme by MERS and the banks are also nullified and void by law, as stated below:

37 Am Jur 2d at section 8 states: “Fraud vitiates every transaction and all contracts. Indeed, the principle is often stated, in broad and sweeping language, that fraud destroys the validity of everything into which it enters, and that it vitiates the most solemn Contracts, Documents, and even Judgments.”

If a document, contract or judgment is deemed fraudulent and void, no court in America is bound to honor such a judgment or contract, hence it releases the one who was defrauded from any further obligation, because the law permits the judge to declare such contracts and judgments from previous courts void. See below:

“A void act cannot be legally consistent with a valid one. An unconstitutional law cannot operate to supersede any existing valid law. Indeed, insofar as a statute runs counter to the fundamental law of the land, it is superseded thereby. NO ONE is bound to obey an unconstitutional law, and NO COURTS are bound to enforce it. (Sixteenth American Jurisprudence Second Edition, 1998 version, Section 203 (formerly Section 256)).


Joseph Earnest is not an attorney and does not offer legal advice. The information in this article is a result of his extensive two-year research and investigation, and is not meant as a substitute for seeking legal advice from an attorney.


Be the first to comment - What do you think?  Posted by Joseph Earnest - February 3, 2012 at 10:09 pm

Categories: News   Tags: , , , , , , , , , , , , , , ,

Fake mortgage-backed securities prompt AIG to sue Bank of America

AIG sues Bank of America

Newscast Media NEW YORK, New York –Bank of America’s problems continue to grow ever since the financial giant purchased Countrywide and its assets. On June 29, BofA settled an $8.5 billion lawsuit with investors for selling them mortgage-backed securities that were never mortgage-backed. The Attorneys General for all 50 states opened investigations with the bank, and inside sources speaking on condition of anonymity say a settlement in the neighborhood of $25billion by Bank of America will soon be reached, in exchange for immunity from prosecution by individual states.

Bank of America also faces several class action lawsuits, and now has to deal with the most recent lawsuit by insurer AIG seeking to recover more than $10billion in losses from Bank of America on $28 billion of investments, in what could be the largest mortgage-security-related action filed by a single investor, the report said. The AIG lawsuit is American International Group Inc et al v. Bank of America Corp et al, New York State Supreme Court, New York County No. 652199/2011.

Here’s how it works:

The homeowner expects to be a “Borrower” receiving a “Loan” from the bank. The bank then sells the loan to a Special Purpose Vehicle (a shell company) and gets paid in full without recourse, and also gets a commission as a finder’s fee, but the bank never funded the loan. The homeowner was tricked into believing the bank funded the loan, when the bank was just paid for finding a homeowner willing to sell the debt obligation. The bank’s commission was also for the bank to allow its name to be on the instrument, and often to act as Servicer to get monthly fees.

The homeowner was never told 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 Securitized Transactions with a Deed of Trust are covered under UCC 9.

The “Lender” named on the instrument did not fund the transaction, and therefore was not really the “Lender” at all. They acted only as a “Nominal Lender”, named on the debt instrument only to facilitate the creation of a Deed of Trust or Mortgage to secure the debt obligation as an alleged “Loan”, when it was not a “Loan”, but rather the receptacle for an Asset-Backed Investment Security. The “Pretender Lender” was paid in full, plus a commission, and lost interest in the debt obligation.

Also, the Deed of Trust or Mortgage can’t secure an Asset-Backed Investment Security, and homeowners were tricked into thinking they were “Borrowers” of “Loans”,when they were actually SELLERS of a debt instrument to a Securitization Special Purpose Vehicle. An invalid Deed of Trust or Mortgage, was 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.

The investor on the other hand, who put up the money was never told that the mortgage-backed security was never mortgage backed because the majority of them do not make it into the trust, as they are resold over and over again. The pretender-lender holds on to the Note and in most cases never delivers it into the
trust as admitted by Countrywide representative in Kemp v. Countrywide, Case No. 08-18700-JHW.

None of this is revealed to the homeowner or investors at closing, hence the fraud lawsuits that are being filed. Insurers like AIG were taken for a ride, because most of these mortgage-backed securities that they insured never became assets of the trusts. The trusts were either empty or had bad mortgages.

The Pooling and Servicing Agreement, the document that governs the trust Section 2.01(a) states:

(a)“Each Seller concurrently with the execution and delivery hereof, hereby sells, transfers, assigns, sets over and otherwise conveys to the Depositor, without recourse, all its respective right, title and interest in and to the related Mortgage Loans…”

The Depositor then assigns the mortgage to the Trustee who deposits it into the trust for the benefit of the Certificateholders. If the mortgage is either a non-qualified mortgage delivered into a trust, or is simply not delivered into the trust, these defects can never be cured because when a mortgage is securitized the act is irreversible. You cannot unscramble the eggs.


2 comments - What do you think?  Posted by Joseph Earnest - August 8, 2011 at 10:10 pm

Categories: News   Tags: , , , , , ,