Sunday, February 6, 2011

WAMU Investment Securities Trusts Purchased the Note, Not a Loan 2005-2008

According to WAMU FRAUD.COM

Asset-Backed Security Trusts purchased Notes are not Loans entitled to Trust Deeds


Most "loans" made by Washington Mutual in the past 5 years were actually purchases of Notes by Special Purpose Vehicles created by Lehman Brothers. These Special Purpose Vehicles were Securitization Trusts prefunded by investors for the purpose of purchasing Notes to enable the Trust to be an Asset Backed Security.

The "Lender" named in the Note and Deed of Trust or Mortgage (e.g. WAMU) did not fund the transaction, and therefore was not really the "Lender." They acted only as a "Nominal Lender" only named in the Note to facilitate the creation of a Deed of Trust or Mortgage to secure the Note as a Loan, when it was not a Loan, but was rather an 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."

Securitization is one type of structured finance, and in the case of WaMu as a "Nomimal Lender" applies to the inclusion of most "Notes" into Asset-backed Securities. No loans were funded by the "Nominal Lender", in this case WAMU. It can be alleged in court that the "Nominal Lender" was paid in full, plus received a commission.

The Deed of Trust or Mortgage cannot secure an Investment Security. Thus the Homeowner was tricked into thinking he was a Borrower in a Loan, when he was instead a Seller of a Note to an Investment Trust. 

The Investment Trust had no right to a Deed of Trust or Mortgage to a purchased Note that was not a Loan. The "nominal Lender" should not 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 was not a Loan, but rather the "Purchase of a Note" into an Asset-Backed Investment Security, with the "nominal Lender" paid in full, plus a commission for something it did not fund.
Can a "nominal Lender" that did not 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.  WAMU forecloses directly or through JPMorgan Chase, its alleged new owner.

WAMU is the Servicer. Trust wording also calls it the Originator however the Trust purchased the Notes directly.  WAMU did not fund the loan.

The Trust was fully formed before the purchase.  It wired the funds into escrow. The originator almost never funds directly to sell it.

Fraud  may be alleged in that the Borrower was tricked into believing it was a loan to procure a Deed of Trust or Mortgage, and the true nature of Transaction was not disclosed.
Fraud may also be alleged (after research) that the Pool Insurance paid off the Investors after multiple Defaults and Foreclosures. If they were paid, why can they foreclose on the homeowner?
Further, fraud may be alleged in that the Deed of Trust (UCC 9) is invalid for an Investment Security (UCC 8) (you cannot have both).  A foreclosure is improper, and should be voidable.

Consult with your attorney if you suspect you are the victim of fraud by securitization.

1 comment:

  1. Very insightful. This little known item has been carefully veiled. Evidently the fear is those with mortgages with Chase, originally through Washington Mutual might raise the question. Then, any conceivable result is possible.