I was wondering how long it would take for this sort of complaint to show up.
This is from Michael T. Pines, who has earned himself a history of doing rather, well, extraordinary things to fight what he has alleged are illegal foreclosures against his clients. That extraordinary level of activity recently earned him a suspension of his law license.
Not content to take that lying down, he has filed a rather interesting complaint, suing cities and their counsel.
The bottom line is that he contends that the vast majority of the foreclosures that are taking place are unlawful. They’re unlawful because the purported lender has no standing to foreclose as that lender suffered no injury.
The essence of the claim lies in the allegation that after all the credit enhancements, default swaps and other items are netted, the lender suffered no loss:
After default, even though the mortgage loan is technically paid in full if a proper accounting were done, and legally the Securitizers have no right to collect, the Securitizers, usually through “servicers”, pretend the loan is still owed by the borrowers.
And how did this happen? Well, beyond the credit enhancements and “protection”, we have this allegation:
31. The Sponsor is supposed to arrange for title to the mortgage loans to be transferred to an entity known as the Depositor, which then was supposed to transfer title to the loans to the trust, including the promissory notes.
32. As mentioned, the assignment of the notes and mortgages never properly occurred and this is the subject of countless lawsuits by the borrowers such as Property Owners.
33. The obligor of the certificates in a securitization is supposed to be the trust that purchases the loans in the collateral pool. However, this cannot be true because title to the mortgage loans was never perfected. The trust is a mere conduit that has no power to do anything, and has no real trustee.
34. The Pooling and Service Agreements provide certain time deadlines by which transfers were to be made, and these were not met.
35. When a trust has no assets it cannot satisfy the liabilities of an issuer of securities (the certificates). According to the Investor Cases, the law therefore treats the Depositor as the issuer of an asset-backed certificate.
In other words, the trusts are empty. And if the alleged “trust” never took in assets in the first place it cannot suffer damage from non-payment since it never actually owned the paper. Again, there’s no harm and thus no standing.
Who knows how far this goes. But if it gets legs……