Ask the Expert: Foreclosure Defenses

November 28, 2009

Dear Daniel;

How are you as I am hanging in there - and you cases in court? We won again and I think to have keyed in on this important and critical means for approaching any case whereby the loan was sold to a registrant for holding the asset in a trust.  The purpose of the trust and the securitization is primarily recognition. It's all way to convoluted and difficult to understand.

But I contend it will never pass scrutiny when challenged. But my point is this. You are in bankruptcy with a party that I can show has NO claim to your real property. No claim means they the seller of the loan sold it off, realized a gain and can never approach the subject matter again. And do they come back? Yes of course and you need to challenge the receivership and courts to hear arguments the lender is not in fact a secured creditor.

In a securitization the asset is the receivable not the home. The home is the security for the receivable adding to its value. That loan is sold from the lender to the registrant, who owns the seller and has sponsored the trust. Trust upon wiring good funds out allows the lender / Depositor to recognize a gain or loss on the trade. Up-front gains recognized from the securitization and sale of a pool of loans.

Profit is recorded for the excess of the sales price and the present value of the estimated interest income that is expected to be received on the loans above the amounts funded on the loans and the present value of the interest agreed to be paid to the buyers of the loan-backed securities.

Under the pooling and servicing agreement, the depositor will assign all its rights, title and interest in and to those representations, warranties and covenant including the seller's repurchase obligation) to the trustee for the benefit of the certificate holders.

The money travels back the same path to the trust and now is exchanged with shares or equities such as collateralized debt Offerings' or "CDO" certificates. The stock has replaced the receivable as an asset for booking purposes. Your lender has kissed away forever the worthless Real Estate secured by a deed of trust. The value of the receivable is only as good as the amount of liabilities your carrying to finance it. But the stock, shares or equities are triple AAA rated and get extremely good leverage for borrowering. So here you go and I contend the following:

You holder in due course and creditor is actually not a creditor. The lender sold the loan and all rights to the loan under GAAP & Gain on Sale Accounting rules. Any Subsequent controls by the seller after transfers are grounds for "derecognition" and bringing in a receiver.
Note the conflict none the less and read where the trust says the following from one indenture to another -Therefore the seller will be obligated to repurchase or substitute a similar mortgage loan for a mortgage Loan as to which there exists deficient documentation that materially and adversely affects the interests of the certificate holders in the Mortgage Loan or as to which there has been an uncured breach of any representation or Warranty relating to the characteristics of the Mortgage Loans that materially and adversely affects the interests of the certificate holders in that Mortgage Loan.

The value of the security is banked on and not the collateral "as in your home". So why leverage you home at all? That is what givers the receivable such a great rating by the agencies. But none the less the lender and the trust "lost the note" (get it) to their defenses when the lender Depositor Sold the loan and the Trust and registrant elected to use the stock as a security versus the real property.

The only way the lender can regain any control often property will be through a trustee Sale and there they bid for the home like anyone else. The depositor will make no representations or warranties with respect to the Mortgage Loans and will have no obligation repurchase or substitute Mortgage Loans with deficient documentation or that are otherwise defective. IndyMac Bank is selling the Mortgage Loans without recourse and will have no obligation with respect to the certificates in its capacity as seller other than the repurchase or substitution obligations described above.

They can barley claim they met the provisions of GAAP for a controlling interest under FAS 140 – 3. This while they maintain all kinds of reps and repurchase commitments seen as violating gain on sale accounting rules and call for derecognition. They are pushing this mess off to realtors for big commission and Trust attorneys who doo recovery and paying big $$$ if they can get the house back.

No lender at an executive level would ever do these things I can assure you. Fraud like we have never seen before or I am sure ever again.

Maher Soliman

Expert.witiness@live.com