Sunday, March 19, 2017

Case No. 1 - New York Mortgage, Loan Originated by Accredited Home Lenders, MERS as Mortgagee, Note Not Endorsed, Robo-Signed but Notarized Assignment Purports to Include the Note, Securitization by Credit Suisse Earned Tax-Free Income


This examination was conducted on June 3, 2016. This article contains selected parts of the findings and the examiner’s comments in full. These comments were based on the findings and the findings, in turn, were based on the examination of the documents presented. This article was last updated on March 17, 2017.

Disclaimer: The findings in this examination are factual although they are here provided for informational purposes only and are not to be construed as legal advice.

_________________________________________________________________________________


Summary

This is a full securitization audit and chain of title examination of a home mortgage loan that was granted on June 20, 2006. The originating lender is Accredited Home Lenders, Inc. The Mortage names MERS as nominee for the lender and the mortgagee of record for purposes of recording this Mortgage. The mortgaged property is located in Port Jefferson Station, New York.

The Adjustable Rate Note has not been endorsed while the Mortgage has been assigned five times. The first assignment purports to include the note.

In the absence of a corresponding endorsement of the note, none of the assignments may be considered self-authenticating.

There is prima facie evidence that the signatures of an assignor’s representative and two notarizing officials on some assignments have been forged or robo-signed or signed by surrogate signers. These are also indications that the notarial oaths have not been properly administered.

MERS executed five repititive assignments to two different entities between February 2011 and September 2014 while the note has not been endorsed. These indicate that the assignments were fictitious.

The Mortgage was first assigned by MERS as Nominee for Accredited Home Lenders, Inc. to US Bank, NA as Trustee for Credit Suisse First Boston Home Equity Asset Trust 2006-7. A search of the securitization trusts using the facilities of ABSNet® indicates that the subject loan is securitized into Credit Suisse First Boston Home Equity Asset Trust 2006-7. 

Even if the trust violated or failed to comply with the loan transfer required in securitization, it still earned or stood to earn as much as $10,408 a year from securitizing this loan. This income is tax-free. For its part, the originating lender had recovered the amount it loaned to the borrower within three months after the loan was granted. 

As of the date of examination, no action has been initiated in order to foreclose on the property that was mortgaged to secure the note on the subject loan based on the documents that were presented for examination.


The Debt & the Security

The Adjustable Rate Note

The subject loan exists according to the amount, interest rate, maturity date and the terms and conditions stated in the Adjustable Rate Note which is signed by the borrowers. This note has not been endorsed. 

The Adjustable Rate Note, the parties thereto and its terms and conditions fall within the cited definitions, as applicable, and is considered to be governed under the applicable laws.


The Mortgage

The Mortgage exists as a security on the subject loan according to the amount, maturity date, property address and the terms and conditions stated in the mentioned deed which is signed by the borrowers and the notarizing official. It represents a first lien on the title of the mortgaged property and was recorded in the county where the property belongs.

The subject Mortgage, the parties thereto, and its terms and conditions fall within the cited definitions, as applicable and is considered to be governed under the applicable laws.


The Mortgaged Property

There is an indication that the mortgaged property was over-appraised by 24% at the time of loan granting or that the borrowers were allowed to borrow at a Loan-to-Value Ratio of 100%.


Robo-Signing

First Assignment

Prima Facie Evidence

There is prima facie evidence that the signature of the notarizing official on the first assignment has been forged or robo-signed or signed by a surrogate signer.  Robo-signing in this assignment may require further investigation although it may not be necessary to prove that a felony has been committed in order to render this assignment null and void from the beginning. 


Verbiage of the Assignment

The first assignment states that for the sum of $10 and other good and valuable consideration, the assignor assigned the subject Mortgage to the assignee including the note that is secured by the Mortgage. The language used indicates the intention of the parties to bind themselves in such accord and to make it known to the public (an assignment being a recordable, and therefore, a public instrument) that the note is included in the assignment.

It is understood that “other good and valuable consideration” is not monetary; if it was, there should have been no reason for it to be stated separately from the $10. The nature of this consideration is only known to the assignor, but the note that is included in the assignment had an original amount of $332,000 with interest. 

A note is a negotiable instrument which can only be transferred by endorsement. The form of an endorsement is prescribed by law. This is known to the parties or can be presumed to be known to the parties, being financial institutions or entities that were established by financial institutions. 

A statement that the assignment for $10 covers the note for $332,000 that is secured by the security instrument being assigned is not true and incorrect. In this particular case, the note has not been actually endorsed. An assignment that contains a falsity is null and void from the beginning. Such an act may also constitute fraud.


The Notarial Oath

1. By his notarial oath in the first assignment, the notary public has certified under the laws
    of the state of Minnesota that MERS had the authority to act on behalf of Accredited Home
    Lenders, Inc., the assignor, and that it was the intention of the assignor and US Bank, NA as
    trustee, the assignee, to bind themselves to the verbiage, and to make it known to the 
    public, that the assignment covered not only the Mortgage being assigned, but the note 
    secured by it as well.
    
    Taehoony Chin, the notary public notarized this document in spite of his knowledge or 
    without verifying that:

    1.1. Any authority that was granted to MERS as nominee for Accredited Home Lenders, Inc.
           pertains only to the security instrument and not the note. Thus, MERS had no authority
           to include the note in the assignment.

    1.2. A note is a negotiable instrument which can only be transferred by endorsement. Thus,
           a statement that the assignment covers the note secured by the security instrument
           being assigned is not true and incorrect:

           1.2.1. Regardless of whether or not the note has actually been endorsed.

           1.2.2. Obviously because no financial institution would part an interest-earning asset
                     for $332,000 in exchange for $10.

2. The person who administered the notarial oath as Taehoony Chin may not be the real
    Taehoony Chin who was commissioned to act as notary public in the State of Minnesota.


Second Assignment

Verbiage of the Assignment

This assignment purports to pertain to the subject Mortgage. This means that this Mortgage was in the possession of MERS on June 20, 2012 in Iowa. This is highly improbable because MERS had already assigned this Mortgage on February 25, 2011 in Minnesota.

On the other hand, if MERS actually had possession of the subject Mortgage at the time this second assignment was executed, the assumption follows that no actual delivery took place together with the prior assignment, and, therefore, the prior (first) assignment was fictitious.


The Notarial Oath

By his notarial oath in the second assignment, the notary public has certified under the laws of the state of Iowa that MERS had the authority to act on behalf of Accredited Home Lenders, Inc., the assignor, and that it was the intention of the assignor and US Bank, NA as trustee, the assignee, to bind themselves to the verbiage, and to make it known to the public, that the assignment covered the Mortgage for $332,000.

Jesse Adams, the notary public notarized this document in spite of his knowledge or without verifying that the Mortgage being assigned was not or may not have been in the possession of MERS at the time the notarial oath was administered in the State of Iowa, and therefore MERS was executing a fictitious assignment.


Third Assignment

Verbiage of the Assignment

This assignment purports to pertain to the subject Mortgage. This means that this Mortgage was in the possession of MERS on December 24, 2013 in Minnesota. This is highly improbable because MERS had already assigned this Mortgage on February 25, 2011 in Minnesota and on June 20, 2012 in Iowa.

On the other hand, if MERS actually had possession of the subject Mortgage at the time this third assignment was executed on December 24, 2013, the assumption follows that no actual delivery took place together with any of the prior assignments, and, therefore, the prior (first and second) assignments were fictitious.


The Notarial Oath

By her notarial oath in the third assignment, the notary public has certified under the laws of the state of Minnesota that MERS had the authority to act on behalf of Accredited Home Lenders, Inc., the assignor, and that it was the intention of the assignor and Wells Fargo Bank, NA, the assignee, to bind themselves to the verbiage, and to make it known to the public, that the assignment covered the Mortgage for $332,000.

Kelley Beth Danielson, the notary public notarized this document in spite of her knowledge or without verifying that the Mortgage being assigned was not or may not have been in the possession of MERS at the time the notarial oath was administered in the State of Minnesota, and therefore MERS was executing a fictitious assignment.


Fourth Assignment

Verbiage of the Assignment

This assignment purports to pertain to the subject Mortgage. This means that this Mortgage was in the possession of MERS on April 2, 2014 in Minnesota. This is highly improbable because MERS had already assigned this Mortgage three times; on February 25, 2011 in Minnesota, on June 20, 2012 in Iowa and on December 24, 2013 in Minnesota.

On the other hand, if MERS actually had possession of the subject Mortgage at the time this assignment was executed on April 2, 2014, the assumption follows that no actual delivery took place together with any of the prior assignments, and, therefore, the prior (first, second and third) assignments were fictitious.


The Notarial Oath

By her notarial oath in the fourth assignment, the notary public has certified under the laws of the state of Minnesota that MERS had the authority to act on behalf of Accredited Home Lenders, Inc., the assignor, and that it was the intention of the assignor and Wells Fargo Bank, NA, the assignee, to bind themselves to the verbiage, and to make it known to the public, that the assignment covered the Mortgage for $332,000.

Jin Sook Kim, the notary public notarized this document in spite of her knowledge or without verifying that the Mortgage being assigned was not or may not have been in the possession of MERS at the time the notarial oath was administered in the State of Minnesota, and therefore MERS was executing a fictitious assignment.


Fifth Assignment

Prima Facie Evidence

There is prima facie evidence that the signatures of the MERS representative and the notarizing official on the fifth assignment have been forged or robo-signed or signed by surrogate signers.  Robo-signing in this assignment may require further investigation, although it may not be necessary to prove that a felony has been committed in order to render this assignment null and void from the beginning. 


Verbiage of the Assignment

The assignment purports to pertain to the subject Mortgage. This means that this Mortgage was in the possession of MERS on September 9, 2014 in Minnesota. This is highly improbable because MERS had already assigned this Mortgage four times; on February 25, 2011 in Minnesota, on June 20, 2012 in Iowa, on December 24, 2013 in Minnesota and on April 2, 2014 in Minnesota.

On the other hand, if MERS actually had possession of the subject Mortgage at the time this assignment was executed on September 9, 2014, the assumption follows that no actual delivery took place together with any of the prior assignments, and, therefore, the prior (first, second, third and fourth) assignments were fictitious.


The Notarial Oath

By his notarial oath in the assignment, the notary public has certified under the laws of the state of Minnesota that the person who signed as Janet L. Jones was the real Janet L. Jones who had authority to act on behalf of MERS, that MERS had the authority to act on behalf of Accredited Home Lenders, Inc., the assignor, and that it was the intention of the assignor and US Bank, NA, as trustee, the assignee, to bind themselves to the verbiage, and to make it known to the public, that the assignment pertained to the Mortgage in the amount of $332,000.

1. Andrew M. Applequist, the notary public notarized this document in spite of his knowledge
    or without verifying that:

    1.1. Janet L. Jones may have authority to act on behalf of MERS but the person who signed
           the assignment as Janet L. Jones may not be the real Janet L. Jones.

    1.2. The Mortgage being assigned was not or may not have been in the possession of MERS
           at the time the notarial oath was administered in the State of Minnesota, and therefore
           MERS was executing a fictitious assignment.

2. The person who administered the notarial oath as Andrew M. Applequist may not be the real
    Andrew M. Applequist who was commissioned to act as notary public in the State of 
    Minnesota.


Arguments Against Self-Authenticating Assignments

1. In the absence of a corresponding endorsement of the note, none of the assignments could
    be considered self-authenticating, if “self-authenticating” means valid between the 
    assignor and the assignee if neither of these parties would raise questions on their validity.

2. Even if the originating lender will endorse the note so that the Mortgage will be re-united
    with it (probably undated, in order to hide the fact that it was late), it can only endorse the
    note in favor of one party, whilst the five assignments have two different parties as 
    assignees. An endorsement to one party would therefore be tantamount to an admission
    that the assignments in favor of the other party are fictitious.

3. The assignor and the assignees may, in collusion, not argue the authenticity of the 
    assignments in order that their flaws may be dismissed. To say, however, that an assignment
    is authentic is to acknowledge a valid financial transaction which, necessarily, must be 
    accounted for.

    On the other hand, to say that it is only the transfer of the note (endorsement) that may be
    considered a financial transaction for purposes of accounting is to admit that it was really
    the intention of the parties to separate the Mortgage from the note. In other words, 
    because the parties involved are financial institutions, the presumption of self-
    authenticating endorsements and/or assignments necessarily carries with it inescapable 
    consequences, which may include a violation of Section 302 of the Sarbanes-Oxley Act


MERS as Nominee & Mortgagee

MERS & the Adjustable Rate Note

MERS is not a party in the Adjustable Rate Note. Any authority that was granted to MERS pertains only to the Mortgage.


MERS & the Mortgage

The Mortgage names MERS as nominee for Accredited Home Lenders, Inc. and the mortgagee of record for purposes for recording this Mortgage. Any act of MERS pertaining to this Mortgage must comport with the intention of Accredited Home Lenders, Inc.


MERS & the Assignments

1. On February 25, 2011, MERS as Nominee for Accredited Home Lenders, Inc. assigned 
    the Mortgage to US Bank, NA as Trustee for Credit Suisse First Boston Home Equity Asset 
    Trust 2006-7.

2. On June 20, 2011, MERS as Nominee for Accredited Home Lenders, Inc. assigned the 
    Mortgage to US Bank, NA as Trustee for Credit Suisse First Boston Home Equity Asset Trust
    2006-7.

3. On December 24, 2013, MERS as Nominee for Accredited Home Lenders, Inc. assigned the
    Mortgage to Wells Fargo Bank, NA.

4. On April 2, 2014, MERS as Nominee for Accredited Home Lenders, Inc. assigned the 
    Mortgage to Wells Fargo Bank, NA. 

5. On September 9, 2014, MERS as Nominee for Accredited Home Lenders, Inc. assigned the
    Mortgage to US Bank, NA as Trustee for Credit Suisse First Boston Home Equity Asset Trust
    2006-7.


MERS Assignment Purported to Include the Note

1. The first assignment purported to include the note. MERS knew that a note, which is a 
    negotiable instrument, can only be transferred by endorsement and thus, any other means
    of transferring a note would not be legally tenable.

2. MERS is not a party in the Adjustable Rate Note and therefore does not have the authority
    to endorse it. Any authority that MERS has in this transaction only pertains to the Mortgage.
    As a consequence of the verbiage, MERS, as nominee for the lender, will also have acquired
    the authority to endorse the note.


Robo-Signing by MERS

The persons who signed the assignments were representing MERS. There is prima facie evidence that their signatures on the first and fifth assignments, as well as that of the notarizing official on the fifth assignment, have been forged or robo-signed or signed by surrogate signers.


Prima Facie Evidence of Fraud

1. As has been noted, the MERS assignments were not executed as consequences of 
    corresponding endorsements of the note. Any assignee, however, that is a financial 
    institution would not accept the assignment and/or the Mortgage alone without being the
    endorsee and the receiver of the note because it knows that this Mortgage secures a debt.
    Thus, all of the five assignments are fictitious, confusing and has the potential to cause 
    harm to the borrowers because:

    1.1. if the Mortgage was delivered to the assignee together with the execution of any the
           assignments, they will cause the Mortgage to be separated from the note and thus the
           holder of the security will be different from the holder of the debt.

    1.2. if the Mortgage was not delivered to the assignee together with the execution of any of
           the assignments, this would mean that the assignees had no knowledge of the 
           assignments. 

2. Any assignee that is a financial institution would not be willing to be named an assignee 
    without actually receiving the Mortgage being assigned. If an actual delivery did take place
    at the time of, or right after the execution of the any of the assignments, multiple 
    assignments, especially in favor of different entities, would not have been possible. Thus,
    any or all of the five assignments are fictitious and potentially fraudulent because they 
    indicate: 

    2.1. either that the assignees had no knowledge of the assignments;

    2.2. or that no actual deliveries of the Mortgage took place simultaneously with the 
           execution of the first four assignments and the assignees willingly allowed themselves
           to be named as assignees without actually receiving the Mortgage being assigned.

3. A wrongful assignment, with or without intent to cause injury, can lead an otherwise lawful
    act such an act to foreclose to be wrongful. Such a wrongful act can cause injury to the 
    borrower.


Failure of the MERS System®

The aforementioned multiple assignments, involving only one Mortgage, all executed by MERS, clearly illustrate the total failure or breakdown of the MERS System®. They indicate any or all of the following:

1. MERS does not have knowledge of the endorsements on the note which would have been the
    proper signal for MERS to execute assignments in order to ensure that the security 
    instrument always follows the note. 

2. MERS, as nominee for the lender, acts without authority of the lender. It executes 
    assignments at its own will and even purports to include the notes in the assignments or to
    endorse the notes.

3. Inspite of the fact that MERS was established by well-established financial institutions, the
    MERS System® still could not keep track of the assignments it was executing, resulting 
    thereof in multiple and/or repetitive assignments.

4. The MERS System® can be used as an instrument or a vehicle to commit false or fraudulent
    assignments or assignments that can lead an otherwise lawful act such as an act to 
    foreclose to being wrongful.

5. Even if MERS is initiating financial transactions, it does not share responsibility with its 
    members over the proper accounting for these transactions and the accuracy of their 
    financial statements. 


Securitization

Evidence of Securitization

Assignment of Mortgage

On February 25, 2011, an Assignment of Mortgage was executed by MERS as Nominee for Accredited Home Lenders, Inc. This document names the assignee as US Bank, NA as Trustee for Credit Suisse First Boston Home Equity Asset Trust 2006-7.


ABS Net® Search Result

A search of the securitization trusts using the facilities of ABSNet® indicates that the subject loan is securitized into Credit Suisse First Boston Home Equity Asset Trust 2006-7.


About the Securitization Trust

1. Credit Suisse First Boston Home Equity Asset Trust 2006-7 was established according to the
    Pooling and Servicing Agreement dated as of September 1, 2006 by and among Credit Suisse
    First Boston Mortgage Securities Corp. as depositor, DLJ Mortgage Capital, Inc. as seller, 
    Wells Fargo Bank, NA and Select Portfolio Servicing, Inc. as servicers, Clayton Fixed Income
    Services, Inc. as credit risk manager and US Bank, NA as trustee.

2. CSFB Home Equity Asset Trust 2006-7 is a common law trust that was established in 
    accordance of the laws of the state of New York. The Issuing Entity, Prospectus Supplement.

    The law governing New York common law trusts is the New York Estates, Powers and Trusts
    Law.

3. This trust is registered with the Securities and Exchange Commission under File Number 
    333-135481, -03. It filed its Prospectus Supplement and Prospectus on October 3, 2006.

4. The trust was established as a Real Estate Mortgage Investment Conduit. The 
    Preliminary Statement to the trust’s Pooling and Servicing Agreement states that: 

        “The Trustee shall elect that the Trust Fund be treated for federal income tax purposes
        as comprising three real estate mortgage investment conduits (each a “REMIC” or, in 
        the alternative, the Pooling REMIC, the Subsidiary REMIC, and the Master REMIC”). 
        Each Certificate, other than the Class A-IO-S, Class X and Class R Certificates, 
        represents ownership of a regular interest in the Master REMIC for purposes of the REMIC
        Provisions.”  

5. The trust exists and is supposed to operate according to the guidelines set forth in its 
    Prospectus and Prospectus Supplement and Pooling and Servicing Agreement. It issued 
    certificates bearing their assigned CUSIP numbers. It filed the following reports with the
    Securities and Exchange Commission:

    5.1. Annual Report Under Form 10-K for the year ended December 31, 2006, on March 30,
           2007. This document reports (or is supposed to report) that the servicers have 
           complied with the servicing criteria of the trust.

    5.2. Notice of Suspension of Duty to File Reports under Form 15-15D, on January 16, 2007.
           This document reports (or is supposed to report) that as of the date of the report, 
           there were less than 300 certificateholders on record.


The Required Transactions

As a loan that is securitized into Credit Suisse First Boston Home Equity Asset Trust 2006-7, the Adjustable Rate Note should have been endorsed by Accredited Home Lenders, Inc., the originating lender to DLJ Mortgage Capital, Inc., the seller, by the seller to Credit Suisse First Boston Mortgage Securities Corp., the depositor and by the depositor to US Bank, NA, the trustee.

Consequently, the Mortgage should have been assigned by the originating lender to the seller, by the seller to the depositor and by the depositor to the trustee.

The examiner found no documents showing full compliance of this series of endorsements and assignments:

1. that are required by the Pooling and Servicing Agreement and the New York Estates, Powers
    and Trusts Law;

2. each of which constitutes a true sale from the originating lender to the seller, from the 
    seller to the depositor, and from the depositor to the trustee in order to:

    2.1. qualify the trust as a REMIC, and

    2.2. give the trust the status of a holder in due course that would protect it against adverse
           claims from the loan’s originator.

The lack of compliance means that the subject loan was never really transferred to the trust.


Profit from the Securitization

The Gross Income

The average interest that was paid by the trust to its investors is equivalent to 5.490% p.a. of the total amount of outstanding certificates. 

On the other hand, the subject loan had interest fixed at 8.625% p.a. for the first two years of its 30-year term. There was thus a spread of 3.135% p.a. that was retained or earned by the trust from securitizing the subject loan.

This loan was granted for $332,000. Applying the spread stated above, the trust thus earned or stood to earn a gross income of $10,408 every year for every securitized loan that had a balance of $332,000.


Recovery of the Loaned Amount

The subject loan was granted on June 30, 2006 and was securitized into a trust the closing date of which was on October 3, 2006. The trust made its first monthly distributions to the investors on its certificates on October 25, 2006. These indicate that all of the certificates that were offered for sale by the trust were sold as of the trust’s closing date on October 3, 2006. 

The proceeds of the sale of the certificates were used by the trust to pay off the originators of the loans that it bought in order to guarantee the certificates that it issued. Thus, Accredited Home Lenders, Inc. had recovered the amount it loaned to the borrower as of or around October 3, 2006 or about three months after this loan was granted.

Thus, aside from the trust earning or potentially earning a gross income of $10,408 annually from the securitization of the subject loan, the originating lender, in about three months, had recovered the full amount it originally lent to the borrower, meaning that it had another $332,000 available for new lending.


The Profit Motive

The trust stood to make a profit from the securitization of the pooled loans of which the subject loan is one. The motive to make a profit was present at the onset, whether or not the trust was able to actually achieve it on a continuing basis. The originating lender also stood to recover or had already recovered the full amount it lent to the borrowers which, in this case, was within three months of loan granting instead of within the 30-year term of the loan. 

In effect, the trust could have been making a profit by using the subject loan as a guarantee to borrow money from the public at an interest rate which was lower than that which the borrowers were actually paying. On the other hand, the originating lender almost immediately had fresh funds for relending. 


The Tax Exempt Status

The income that was earned by the trust from securitizing the subject loan is exempt from taxation. In order to be tax-exempt, the trust must declare that it owns the loans and the underlying mortgages which would have been acquired by it through a series of “true sale” transactions. 

In brief, these transactions may be described as the A-B-C-D chain of proper transfers of the note and the security instrument, which in this case is originator-seller-depositor-trustee. This has not been fully complied.

Further, these transactions should have taken place within 90 days after the trust’s closing date. In this particular case, the Adjustable Rate Note has not been endorsed while the Mortgage was assigned to the trust only on February 25, 2011, or more than four years after the trust’s closing date on October 3, 2006. Even this assignment, however, can be rendered null and void on the various grounds mentioned elsewhere in this report.


The Chain of Title

The Sequence of Transactions





Explanation of the Sequence

1. Loan Granting and Execution of Deed

    The subject loan was granted on June 20, 2006. The parties in the Adjustable Rate are the
    borrowers and Accredited Home Lenders, Inc., the originating lender.

    The Mortgage was executed on the same date. The parties are the borrowers, the 
    originating lender and MERS which is named as nominee for the lender and the mortgagee of
    record for purposes of recording this Mortgage.

2. Endorsement and Assignment in Securitization from Originating Lender to Seller

    As a loan that is securitized into CSFB Home Equity Asset Trust 2006-7, the Adjustable Rate
    Note should have been endorsed by Accredited Home Lenders, Inc., the originating lender
    to DLJ Mortgage Capital, Inc., the seller. Consequently, the Mortgage should have been 
    assigned by the originating lender to the seller.

    2.1. This endorsement and assignment are required in the Pooling and Servicing 
           Agreement. Section 2.01, Conveyance of Mortgage Loans, Pooling and Servicing Agreement

    2.2. This endorsement and assignment should have been complied on or before January 3,
           2007, or three months after the trust’s closing date on October 3, 2007 in order for the
           loan to be classified as a qualified mortgage as it is defined in the Internal 
           Revenue Code, Section 860G, paragraph a-3 and thus qualifies it for inclusion into a
           REMIC. 

    2.3. This endorsement and assignment should have been complied on or before January 3,
           2007, or three months after the trust’s closing date on October 3, 2006, in order for
           the trust, which was established in accordance with the laws of the state of New York,
           to comply with the New York Estates, Powers, and Trusts Law.

3. Endorsement and Assignment in Securitization from Seller to Depositor

    The Adjustable Rate Note should have been endorsed by DLJ Mortgage Capital, Inc., the
    seller to Credit Suisse First Boston Mortgage Securities Corp., the depositor. Consequently,
    the Mortgage should have been assigned by the seller to the depositor.

    This endorsement and assignment are required in the Pooling and Servicing Agreement, the
    REMIC provisions and the New York Estates, Powers and Trusts Law for the same reasons 
    cited in Sequence No. 2 above.

4. Endorsement and Assignment in Securitization from Depositor to Trustee

    The Adjustable Rate Note should have been endorsed by Credit Suisse First Boston Mortgage
    Securities Corp., the depositor to US Bank, NA, the trustee. Consequently, the Mortgage
    should have been assigned by the depositor to the trustee.

    This endorsement and assignment are required in the Pooling and Servicing Agreement, the
    REMIC provisions and the New York Estates, Powers and Trusts Law for the same reasons 
    cited in Sequence No. 2 above

5. Assignment of Mortgage

    On February 25, 2011, an Assignment of Mortgage was executed by MERS as Nominee for
    Accredited Home Lenders, Inc. This document names the assignee as US Bank, NA as Trustee
    for Credit Suisse First Boston Home Equity Asset Trust 2006-7.

    This assignment purports to include the note which is not true and incorrect. As has been
    noted, the Adjustable Rate Note has not been actually endorsed as of the date of 
    examination.

    There is prima facie evidence that the signature of the notarizing official on this assignment
    has been forged or robo-signed or signed by a surrogate signer which is an indication that
    the notarial oath has not been properly administered.

6. Corporate Assignment of Mortgage

    On June 20, 2011, a Corporate Assignment of Mortgage was executed by MERS as Nominee
    for Accredited Home Lenders, Inc. This document names the assignee as US Bank, NA as 
    Trustee for Credit Suisse First Boston Home Equity Asset Trust 2006-7.

    As has been noted, the Adjustable Rate Note has not been actually endorsed as of the date
    of examination.

    This assignment purports to pertain to the subject Mortgage which has already been 
    assigned by MERS to US Bank, NA as Trustee for Credit Suisse First Boston Home Equity Asset
    Trust 2006-7 on February 25, 2011.

    If actual delivery of the Mortgage did occur at the time of or right after the first 
    assignment, it would have been impossible for this second assignment to be executed. The
    fact that this second assignment was executed is proof that the prior (first) assignment was
    fictitious.

    On the other hand, if the assigned Mortgage was not present at the time of this assignment,
    this means that it is this second assignment which is fictitious

7. Corporate Assignment of Mortgage

    On December 24, 2013, a Corporate Assignment of Mortgage was executed by MERS as 
    Nominee for Accredited Home Lenders, Inc. This document names Wells Fargo Bank, NA as
    the assignee.

    As has been noted, the Adjustable Rate Note has not been actually endorsed as of the date
    of examination.

    This assignment purports to pertain to the subject Mortgage which has already been 
    assigned by MERS to US Bank, NA as Trustee for Credit Suisse First Boston Home Equity Asset
    Trust 2006-7 on February 25, 2011 and again on June 20, 2011.

    If actual delivery of the Mortgage did occur at the time of or right after the first or the 
    second assignment, it would have impossible for this third assignment to be executed. The
    fact that this third assignment was executed is proof that the prior (first and second) 
    assignments were fictitious.

    On the other hand, if the assigned Mortgage was not present at the time of this assignment,
    this means that it is this third assignment which is fictitious

8. Corporate Assignment of Mortgage

    On April 2, 2014, a Corporate Assignment of Mortgage was executed by MERS as Nominee for
    Accredited Home Lenders, Inc. This document names Wells Fargo Bank, NA as the assignee.

    As has been noted, the Adjustable Rate Note has not been actually endorsed as of the date
    of examination.

    This assignment purports to pertain to the subject Mortgage which has already been 
    assigned by MERS to US Bank, NA as Trustee for Credit Suisse First Boston Home Equity Asset
    Trust 2006-7 on February 25, 2011 and again on June 20, 2011 and to Wells Fargo Bank, NA
    on December 24, 2013.

    If actual delivery of the Mortgage did occur at the time of or right after the first, second, or
    third assignment, it would have been impossible for this fourth assignment to be executed.
    The fact that this fourth assignment was executed is proof that the prior (first, second and
    third) assignments were fictitious.

    On the other hand, if the assigned Mortgage was not present at the time of this assignment,
    this means that it is this fourth assignment which is fictitious

9. Corporate Assignment of Mortgage

    On September 9, 2014, a Corporate Assignment of Mortgage was executed by MERS as 
    Nominee for Accredited Home Lenders, Inc. This document names the assignee as US Bank,
    NA as Trustee for Credit Suisse First Boston Home Equity Asset Trust 2006-7.

    As has been noted, the Adjustable Rate Note has not been actually endorsed as of the date
    of examination.

    There is prima facie evidence that the signatures of the MERS representative and notarizing
    official on this assignment have been forged or robo-signed or signed by surrogate signers.
    This is an indication that the notarial oath has not been properly administered.

    This assignment purports to pertain to the subject Mortgage which has already been 
    assigned by MERS to US Bank, NA as Trustee for Credit Suisse First Boston Home Equity Asset
    Trust 2006-7 on February 25, 2011 and again on June 20, 2011 and to Wells Fargo Bank, NA
    on December 24, 2013 and again on April 2, 2014.

    If actual delivery of the Mortgage did occur at the time of or right after the first, second,
    third or fourth assignment, it would have been impossible for this fifth assignment to be
    executed.

    On the other hand, if the assigned Mortgage was not present at the time of this assignment,
    this means that it is this fifth assignment which is fictitious


The Sequence of Transactions vis-a-vis the Requirements 

As a securitized loan, the required chains of endorsements for the Adjustable Rate Note are from the originating lender to the seller, from the seller to the depositor and from the depositor to the trustee.

The Mortgage should have been assigned in the same sequence.

These chains of endorsements and assignments may also be referred to as the A-B-C-D chain.

Based on the documents presented, however, the Adjustable Rate Note has not been endorsed. Thus, the debt instrument is still with the originating lender, A.

On the other hand, the Mortgage was assigned by MERS three times to the securitization trust trustee and twice to Wells Fargo Bank, NA. For purposes of comparison, the direct assignment to the trustee may be represented as A-D, while the assignment to Wells Fargo Bank, NA, which is not a party in the securitization chain, may be represented as A-X.

As has been noted, there are various grounds on which all five assignments could be rendered null and void from the beginning. In any case, the loan was never really transferred to the trust.


The Borrowers’ Position

The borrowers reserve the right to question the failure of the trust to comply with the transfer requirements on the following grounds:

1. The trust was unjustly enriched at the expense of the borrowers because it used the 
    borrowers’ loan to earn income from securitizing it, and then disguised itself as a REMIC in
    order to gain tax-free status without ever intending to follow the REMIC provisions or to 
    lighten the interest burden on the part of the borrowers.

2. The unlawfully tax-free annual income that was earned by the trust could have translated
    into a number of monthly instalments that the borrowers could otherwise have paid and
    thus avoid default and foreclosure now or in the future.

3. An honest and well-intended securitization into a tax-free REMIC trust would never 
    constrain any party in the trust to avoid compliance with or to violate or circumvent the
    transfer requirements. The avoidance or the violation was the direct result of the wilful and
    voluntary intent of the parties which resulted in injury to the borrowers.    


ʘ End of article

No comments:

Post a Comment