Tag Archives: antitrust


Securitization is NOT a “Traditional Mortgage Loan” Operation

Posted on June 27, 2013

Note by CEL/Deo Vindice:  Monopoly and Patent Are Different Names for the Same Economic Reality, opposite sides of the same coin.  But while they were originally designed to abolish or prohibit monopolies and monopolistic practices, the Antitrust Laws still on the books (especially 15 U.S.C. §§1-15 et seq.) are at best poorly enforced and more often ignored.  In the opposite direction, and inconsistently, modern Intellectual Property/IP Law is tending towards “eternal” patents, trademarks, and copyrights.  So if Securitization is Patented—it may become a Perpetual Monopoly—Unless We Fight it Now!  If the people have no will, they will accept the slavery of Communism (which is, after all, a system of governmentally managed monopolies).  This battle can be envisioned and framed initially through dialogue in the courts, but it can only be resolved politically—by changing the law and by the people taking control of the Constitution and Government again. 

Contrary to the mythology of Judicial Activism, the Courts only modify the law or create new law when ordered to do so by the Political Powers that be, as in the cases of Civil Rights in the 1950s-1960s and Abortion and Gay Rights in the 1970s-1980s and more recently.  In essence, the Courts are created by and dependent upon the legislative and executive branches—they have no ability to support themselves through taxation or to enforce their decree without the rest of the government.  That is why litigation must only be regarded as an “adjunct process” of law making, or law enforcement, or even clarification of the law.  It is quite obvious that, at the present time, Congress and the Executive support legal obfuscation….

patent-hero-size-100019219-gallerySecuritization is a relatively newinnovation given the operation of the traditional mortgage loan industry over the last 70 years.

What is routinely overlooked is the fact that this entire new process and product development has been patented in the USTPO extensively by the banks. The loans that were sold at the turn of the century through present day are NOT traditional mortgage loans. This fact is further complicated because there was no meeting of the minds when the contracts were formed. Additionally, there are multiple defects that should literally void documents or cause defective products to be recalled.

This is a very complex subject. Many times it is too complicated for the average foreclosure court and defense attorney without additional education. “These [securitization patent issues] are the patent-law_shutterstock_300arguments that need to be made but they need to be in the context of a complex business litigation court not in a foreclosure/equity court,” voiced an experienced paralegal to a law professor, “[T]hese loans require the knowledge of various areas of complex litigation law – securitization, patent, real estate, finance, trust, etc.  It’s not as simple as John Doe signed a note and mortgage, failed to pay the note and mortgage and therefore since we hold the note in our hot little hands we can take John Doe’s house.” 

The reason that this is not just a simple routine foreclosure process is because the new products that were sold to homeowners are defined in new patented processes. Patents are for “new” inventions or discovery – for new products and/or process.

35 USC § 100 – Definitions

When used in this title unless the context otherwise indicates—
(a) The term “invention” means invention or discovery.
(b) The term “process” means process, art or method, and includes a new use of a known process, machine, manufacture, composition of matter, or material.

new35 USC § 101 – Inventions patentable

Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title.

35 USC § 102 – Conditions for patentability; novelty and loss of right to patent

(a) Novelty; Prior Art.— A person shall be entitled to a patent unless—
(1) the claimed invention was patented, described in a printed publication, or in public use, on sale, or otherwise available to the public before the effective filing date of the claimed invention; or
(2) the claimed invention was described in a patent issued under section 151, or in an application for patent published or deemed published under section 122 (b), in which the patent or application, as the case may be, names another inventor and was effectively filed before the effective filing date of the claimed invention.

1935 Patent pending instructions - late version closeupThere are numerous patents on securitization, REMICs, Mortgage Electronic Registration Systems, Inc., etc. For example, Paperless process for mortgage closings and other applications [Click Here for MERS Patent PDF] relates to paperless transactions and the mortgage industry in particular, and more specifically to the closing, registration and custody of electronic mortgages.” The patent even used new terminology – these are “electronic mortgages” – not traditional mortgages. It’s debatable whether the documents could even be called “mortgage” – it is more like achit in comparison to all the shadow banking and backdoor antics that occurred.

This MERS patent was filed on January 18, 2005 with its Priority Date of February 10, 2004 and published October 26, 2010. This is considered a “new” invention. The patent acknowledges:

“[T]he mortgage closing process is traditionally very paper intensive and tedious. Borrowers must affix wet signatures to many, many documents and lenders subsequently must physically copy, distribute, register and store the signed documents.”

It might as well have read,

“Hey man, not us – no paper documents needed. We’ll give anybody one of these new electronic mortgages – as long as they can breathe. We’ll flood the market with these defective  loan products and force it down their throats.”

However, and remember this was written back in 2004 (or earlier), behind the scenes there were changes being made to local and federal statutes that would support this “new” methodology, albeit without full disclosure to the borrower. The patent continues:

“The Mortgage Industry Standards Maintenance Organization (MISMO) has laid the foundation for paperless, electronic mortgages by defining the SMART Document specification. SMART is an acronym for Securable, Manageable, Archivable, Retrievable, and Transferable.”

Matrix - System FailureThe problem here is that the homeowner (aka borrowers) were never informed that the traditional mortgage lending process had been materially altered.

In order to securitize these loans it appears that the documents MUSTbecome electronically transferable and in order to achieve electronic transfer-ability the UETA statutes must be precisely followed and UETA section 16 in most states require “explicit agreement” by the mortgagor at the creation of the document.

These issues NEED to be raised in order to be adjudicated.

FLAW #1:  Making reference to Mortgage Electronic Registration Systems, Inc. in a mortgage does not appear to be sufficient to provide “explicit agreement” pursuant to the UETA statute. Notwithstanding the fact that Mortgage Electronic Registration Systems, Inc. is just a shell corporation and NOT the registry system which is actually owned and operated by MERSCORP, Inc. and the MERSCORP, Inc. membership. Even if the words“Mortgage Electronic Registration Systems, Inc.” were a trade name for the system (which it is not) it does not indicate an ”explicit agreement” is being obtained from the borrower when he signs the mortgage.

Furthermore, there are states such as New York and Washington that have not yet endorsed the UETA and eSign statutes. Even if the federal statute becomes the fallback position – it does not waive the necessity for electronic transfer-ability (per the patents) in this “new”  patented securitization process.

h3“Your honor, how did that loan become an asset of the REMIC trust, as the plaintiff alleges, when there is no explicit agreement by the homeowners here to allow for the electronic transfer of the documents which is a necessary element in the securitization process?”

This is not a traditional mortgage process. The courts must begin to recognize the factsbehind the securitization curtain are a truckload of patents – “new” patents designed to create “new” products that are essentially defective because the laws were not followed.

It’s as if we are wading through a sandbox with a lot of kids who had failed to follow the rules and would rather ask for forgiveness than for permission. This is not just some little ministerial mistake and the cover-up goes so far up the ladder that it is appalling. Judges with integrity are beginning to realize the scam but in order for them to sink their teeth into the crux of the problem – the source or the root of the issues must be raised. These convoluted issues stem from the conception of the patented securitization and electronic process.

If there was ever a question as to the fraud that could be committed through the use of electronic signatures – just take a gander at the abuse of the securitization process.

As Adam Levitin stated in Standing to Invoke PSAs as a Foreclosure Defense:

“A major issue arising in foreclosure defense cases is the homeowner’s ability to challenge the foreclosing party’s standing based on noncompliance with securitization documentation. Several courts have held that there is no standing to challenge standing on this basis, most recently the 1st Circuit BAP in Correia v. Deutsche Bank Nat’l Trust Company. (See Abigail Caplovitz Field’s cogent critique of that ruling here.) The basis for these courts’ rulings is that the homeowner isn’t a party to the PSA, so the homeowner has no standing to raise noncompliance with the PSA.

I think that view is plain wrong.  It fails to understand what PSA-based foreclosure defenses are about and to recognize a pair of real and cognizable Article III interests of homeowners:  the right to be protected against duplicative claims and the right to litigate against the real party in interest because of settlement incentives and abilities.”

patentIt also fails to take into account that there are numerous (hundreds) of NEW patents that are in play with this process. These are not traditional mortgages! These documents are clearly defective loan products. From the lack of explicit agreement per UETA to the rigged LIBOR interest rates to the phony baloney ShellGame-MERS – a straw man and a fake, these loan documents should be scraped as defective products.

Professor Levitin continues:

“Let me put it another way.  Homeowners are not complaining about breaches of the PSA for the purposes of enforcing the PSA contract.  They are pointing to breaches of the PSA as evidence that the loan was not transferred to the securitization trust.  The PSA is being invoked because it is the document that purports to transfer the mortgage to the trust.  Adherence to the PSA determines whether there was a transfer effected or not because under NY trust law (which governs most PSAs), a transfer not in compliance with a trust’s documents is void.  And if there isn’t a valid transfer, there’s no standing.  This is simply a factual question–does the trust own the loan or not?   (Or in UCC terms, is the trust a “party entitled to enforce the note”–query whether enforcement rights in the note also mean enforcement rights in the mortgage…)  If not, then it lacks standing to foreclosure.” [Read more]

You honor, what is it about this information you do not understand, yet? The biggest problem, aside from the judiciary worrying about their pensions if the banks collapse (which isn’t going to happen if the 1% that fight the banks actually win their cases), is that foreclosure defense attorneys are not always prepared to bring up new arguments or demand in-depth discovery because it takes too much time per case and they often have hundreds of clients to represent. But these issues must be addressed. And if they cannot be addressed in a regular foreclosure court because of the complexity – then possibly panels need to be established and the elements argued to the more legally prepared and astute judiciary without a conflict of interest in that they own stock in the banks.

trolllFinally, somebody please tellPresident Obama that maybe he ought to concentrate on the securitization Trolls that created the patents and swoop down and carry off these violators since they did not follow the procedures and violated their own patents.

Or maybe another Supreme Court determination like the recent DNA case is necessary. Because land recordation is the very essence, in other words, the DNA of our country.

In a recent Supreme Court DNA patent case Justice Thomas wrote, “We have ‘long held that this provision contains an important implicit exception’” that is, “Laws of nature, natural phenomena and abstract ideas are not patentable.’” [emphasis added]

At the very least, securitization documents should not be allowed to be called “mortgage loans.”

A special thank you to Alina, Jack, Deb, Steve and Deontos for their in-depth discussions. Please take the time to read through this important post and pass along to your friends and family.

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  1. As usual Virginia did a great job of seeking and finding and exposing. Thanks to all that participate in this digging out the truth. Such an unbelievable crime against the people. Great Job! I shared this with many.

Carrie Lynn Luft’s Second Amended Complaint against Mortgage Note Securitization and Related Documents in the Middle District of Florida

Carrie Lynn Luft’s May 13 2013 FINAL Draft Second Amended Complaint with CLASS ACTION for Predatory Lending & Securitization ©

07-30-2008 USDC SDNY CITIGROUP GLOBAL v ACCREDITED HOME LENDERS Case 1-08-cv-03545-RJH Document 15 First Amended Complaint

Citi-Luft Motion to Dismiss Second Amended Complaint

Carrie Lynn Luft to Mark N. Muller 05-31-2013 Request for Three Stipulations ©

06-11-2013 Carrie Lynn Luft’s Motion for Extension of Time to file Response to Muller MtD Second Amended Complaint  ©

06-11-2013 Motion for Extension of Time ©

Citi-Luft Response to Motion for Extension of Time to File Motion to Disqualify MHM et al

Citi-Luft Affidavit of Gerard Bellesheim (signed)

06-24-2013 Carrie Lynn Luft’s Motion to Convert Citigroup’s Motion under 12(b) to Summary Judgment and Reply to Citigroup’s Response to Motion for Extension of Time to file Response to Muller MtD Second Amended Complaint ©

06-26-2013 Carrie Lynn Luft USDC Middle District of Florida Clerk’s Docket

06-26-2013 US District Court MDFLa Carrie Lynn Luft v Citigroup Global-AHL et al

© All Editorial Copyrights Reserved by © Carrie Lynn Luft & Charles Edward Lincoln III—No Claim Made to Original Government Works, Public Record or to any registered Trademarks of Public or Private Companies—For Educational and Instructive Use as Whitepaper on Mortgage Finance Policy seeking additional Dialogue and Commentary. ©

State Control over the Economy, Part I: JPMorganChase & Washington Mutual

Attention today (Monday September 29, 2008) has been focused on the House of Representatives in Washington, D.C., which made a “show vote” against “socialism” and government bailout of the financial industry.  Yet everyone over the age of 6 knows that today was just partisan showmanship, and that Congress will rescue the starving billionaires and “small timers” (i.e. mere millionaires) on Wall Street as surely as they will vote themselves a pay raise sometime in the next few years and create more exemptions for fraud or acts of oppression committed by government officials.  No one in the Republican leadership or the 94 Democrats who joined them in voting down the Republican President’s bill admitted that it is GEORGE W. BUSH’S America, the nightmare of corporate welfare and immunity for financial sleight of hand artists, largely envisioned by Daddy George H.W. and implemented by and under William Jefferson Clinton, which is collapsing.  Populism will blame Wall Street, but it was Bill Clinton’s repeal of the Glass-Steagal Act in 1999 and all the concommitant removal other “brakes” places on the rampage of international bankers on cocaine which has led to the current meltdown.  Why is it that we are amazed at the puppet theatre played out in Congress today?  The members on both sides of the aisle are actually clamouring for yet MORE government intervention because we have repeatedly voted for the worst of the worst of both Republicrat and Democan Parties over the past two decades.  The Republican leadership made it pretty clear that the ONLY reason Bill 3997 failed today was because Nancy Pelosi opened her mouth and said a few semi-rational and coherent things about the effects of deregulation and greed on the collapse of the most insane paper-money manufacturing scheme (securitized mortgages) in the history of the world.  But until SECURITIZED MORTGAGES ARE EITHER ABOLISHED or fully regulated like ALL OTHER SECURITIES in this country, the exponentially increasing risks will continue to pile up. 

As of the present moment, I think that insufficient attention has been played to the government’s intervention in the collapse of Washington Mutual.  Late Thursday night, an incredible thing happened: Washington Mutual made known to the government that it was on the verge of collapse, and OVERNIGHT the government brokered a takeover of Washington Mutual whereby 100% (or something very close) to the government insured deposits, loans, credit card accounts, and other “assets” of Washington Mutual were transferred to JPMorganChase while 100% (or something very close) of the corporate liabilities (i.e. equity shares and bonds, implying UNSECURED obligations of the bank) were declared WORTHLESS. $1.8 BILLION in financial manipulation OVERNIGHT. 

Where is the “wall of separation between government and the private sector these days?”  Since when, in a non-Communist, non-Fascistic economy, can the government in effect order a merger of two major businesses without shareholder consent or litigation of any kind?  This is called a “Command and Control” or “Fiat” economy.  Nothing of this level of dictatorial efficiency was ever achieved or implemented in Nazi Germany, the U.S.S.R., or anywhere else to the best of my knowledge.  The Kings of England up through William of Orange, Adolph Hitler, Joseph Stalin, and Mao Tse-Tung all had more constituencies with whom to contend and negotiate than the financial authorities who merged these two gigantic banks—which happen to be the greatest single offenders in the whole securitized “mortgage backed equity/collateral backed obligation” debacle.  The lack of discussion or any widespread dissemination of information regarding the details or the mechanisms of the Washington Mutual/JP Morgan Chase “overnight shotgun marriage” last week was just a prelude to the “show trial” in Congress today, where amateur actors tried to pretend that Congressional approval of the bailout is all but pro forma. 

The Great Leader GWB will, within a few days, achieve the complete reimbursement of his buddies in high finance if he has to do so by (hush-hush) executive orders—I have no doubt of that.  What I wonder is whether Ron Paul or anybody else on the House Floor was thinking how completely content-free the debate really was, and how pointless the show of posed opposition to the implementation of something close to pure communism in the financial sector.  IF the Federal government can, without comment, by mere announcement merge JPMorgan Chase and Washington Mutual OVERNIGHT in one week, there is really no meaningful limit to what the Government and and will do, given a week or two, with or without rubber-stamped congressional approval. 

So in short, to those of you who were in favor of the Bill 3997 bailout, I say, “be of good cheer, Big Brother will take care of you whether the Puppet Actors in Congress approve it outloud today, tomorrow or never.”  To those of you who think that Congress struck a blow for economic integrity and allowing the free markets to take care of their own greatest leaders’ failures, I would say: look at JPMorganChase and Washington Mutual merger that took place without application to the Antitrust Division of the DOJ, the Federal Commerce Commission, or anyone else, and tell me that it makes any difference what Congress does.  Look at all the dozen or so mergers of the past couple of weeks and tell me that there is a rule of law or free market economy at work here.  Where were the shareholder votes necessary to approve these mergers?  Where were the bids and white knights and marketplace speculation?  ALL of these things have been suppressed and coopted by the government to hide the failures of the corporate-communistic policies of the past 20 years.  Had the free market or even free discussion of these issues been allowed, all the truth about who is responsible for the present state of affairs, and who authorized the exemption of securitized mortgages from securities fraud regulation (and even private civil litigation complaints or demands concerning such securities fraud).  

Free Market Capitalism is dead.  Socialism is managed by and for the primary benefit of the operators and managers of the major financial corporations.  Even the small private shareholders in financial institutions can be wiped out NOT by the Market but by the Government, in a moment, in twinkling of an eye—but without any trumpets…..