Yves over at Naked Capitalism has dug up confirmation of what I've been saying now for more than two years and have had on "background" and could not "out" the sources of - the practice of not complying with both MBS securitization offering circulars and black-letter state law was both pervasive and intentional.
One of my colleagues had a long conversation with the CEO of a major subprime lender that was later acquired by a larger bank that was a major residential mortgage player. This buddy went through his explanation of why he thought mortgage trusts were in trouble if more people wised up to how they had messed up with making sure they got the note. The former CEO was initially resistant, arguing that they had gotten opinions from top law firms. My contact was very familiar with those opinions, and told him how qualified they were, and did not cover the little problem of not complying with the terms of the pooling and servicing agreement. He also rebutted other objections of the CEO. They guy then laughed nervously and said, Well, if youre right, were ****ed. We never transferred the paper. No one in the industry transferred the paper.
WE NEVER TRANSFERRED THE PAPER. NO ONE IN THE INDUSTRY TRANSFERRED THE PAPER.
Got it folks?
This was not an accident and the dog didn't eat anyone's homework.
THE MAJOR BANKS AND LENDERS ALL INTENTIONALLY FAILED TO COMPLY WITH BOTH THEIR OWN OFFERING DOCUMENTS AND BLACK-LETTER STATE LAW.
Even better - in 2009 The Florida Banker's Association ADMITTED that they have been intentionally destroying the original "wet ink" signatures and documents:
The reason many firms file lost note counts as a standard alternative pleading in the complaint is because the physical document was deliberately eliminated to avoid confusion immediately upon its conversion to an electronic file. See State Street Bank and Trust Company v. Lord, 851 So. 2d 790 (Fla. 4th DCA 2003). Electronic storage is almost universally acknowledged as safer, more efficient and less expensive than maintaining the originals in hard copy, which bears the concomitant costs of physical indexing, archiving and maintaining security. It is a standard in the industry and becoming the benchmark of modern efficiency across the spectrum of commerceincluding the court system.
I don't care what's a "standard" if it does not comport with the law!
This is like saying that "dealing crack is a standard in the gang industry, therefore, we can sell it even though Federal Law says that we should go to prison for doing so."
Incidentally, for those who will chime in that "electronic copies are just as good", no they're not. They're not secured, they're not cryptographically signed and verified by the originator, and they are trivially easy to tamper with.
I'd accept that an electronic copy is ok provided that the original is scanned, encoded, and digitally signed by the consumer at the point of origination, and that consumer then takes the original and a copy of the electronic document with him, with all of this being disclosed and approved by the consumer. If I PGP-sign a document or file it is extremely difficult to tamper with it in a way that cannot be detected. But without that sort of signature and encoding in the presence of the consumer, along with the consumer being the one that gets the paper copy, it is essentially impossible to prove that the document was not tampered with. "Wet signatures" and originals are required for exactly this reason - it makes tampering dangerous as it can usually be detected quite easily.
This is massive, pernicious and OUTRAGEOUS fraud folks.
If you hold private-label MBS wake the hell up and get your lawsuits going, because these big banks that put this stuff together will not survive this and the only way you get anything back is to be first in line.
Folks, this is not small potatoes or something we can overlook.
We are talking about intentional, pernicious, industry-wide fraud perpetrated upon the public, upon the government, upon homeowners and upon investors to the tune of trillions of dollars.
We MUST NOT tolerate this.
Each and every institution involved must be held to criminal account for their willful and intentional acts in this regard.
Bail these people out? Hell no. They deserve a speedy and public trial, to be immediately followed by the proper sanction imposed for intentional acts taken to destroy this nation and it's financial stability. This is terrorism, exactly as Bin Laden intended (destruction of our economy) and should be met with an identical punishment.
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