Park Place Securities, Inc.

IMPORTANT NEWS

The "Tax Increase Prevention Act of 2014," (TIPA, or "the Act"), extends a number of individual tax provisions, at least for 2014. The extender package, H.R. 5771, is contained in Division A of the Act. TIPA will expire after 2014 so that Congress may address the issue of tax reform in its entirety with a newly elected group of congress people.

* Discharge of indebtedness income from qualified principal residence debt, up to a $2 million limit ($1 million for married individuals filing separately) is excluded from gross income.


For a deeper understanding of REMIC trusts see WikiPedia.

A good article we have quoted from is "Foreclose: Time to Break Up the Too-Big-to-Fail Banks."

MBS For UberNerds II: REMICs, Dogs, Tails, and Class Warfare

Also see: Peaslee, James M. & David Z. Nirenberg. Federal Income Taxation of Securitization Transactions and Related Topics. Frank J. Fabozzi Associates (2011, with periodic supplements, www.securitizationtax.com): and Silverstein, Gary J. REMICs, Tax Management: FASITs and Other Mortgage-Backed Securities. Tax Management Inc.: Securities Law Series (2007): A-54.

Pro Se Help Tips

Some of the trusts still have credit ratings for various tranches, so it appears the investors are still being paid, but do they just get the interest money, or do they get the foreclosure money too? Some of the 5 trusts have credit ratings but we have not yet tracked down any credit information on others.

According to published information, foreclosure property is real property that REMICs obtain upon defaults. After obtaining foreclosure properties, REMICs have until the end of the third year to dispose of them, although the IRS sometimes grants extensions. Foreclosure property loses its status if a lease creates certain kinds of rent income, if construction activities that did not begin before the REMIC acquired the property are undertaken, or if the REMIC uses the property in a trade or business without the use of an independent contractor and over 90 days after acquiring it.

Thus it seems, the note/mortgage is not supposed to leave the Trust. Should the Trust itself be legally obligated to buy the property to resell it and put that interest income into the Trust? I guess the original note/mortgage is in effect cancelled by the court and ceases to exist that way. Still, the sales money should go into the Trust. Wonder if it does?

Based upon the published statement on foreclosures, it is the REMIC trust that owns the property, forecloses, and then sells that property, not the Trustee. So, the big question is, if the trust itself does not exist in a state, exactly how does it do that? How exactly does it appear in court, how does it own property, and does not it execute a sales contract and so forth in a state where it does not legally exist?

There are countless other smaller problems. We have seen transfers with the note not ever being endorsed, transfers long after the trust has closed, in some cases after the trust was liquidated, or at least some of the tranches were liquidated. In one case, the trust closed in 2005 and the transfer is dated 2008. (There is only a 3 month window for transfers after the closing date.) We have seen transfers by alleged officers of corporations that at the time had no power to do so. We have seen transfers by alleged officers of corporations that could not possibly have owned the note or mortage at the time of the transfer. Many of the signers are known robo-signers.

There are of course widely known problems with the paperwork. Many times the banks do not even have the paperwork or it is not properly endorsed.

YES! Magazine quoting Rep. Alan Grayson (D-FL) of the Financial Stability Oversight Council (FSOC) (U.S. Congress) wrote October 7, 2010:

The banks didnít keep good records, and there is good reason to believe in many if not virtually all cases during this period, failed to transfer the notes, which is the borrower IOUs in accordance with the requirements of their own pooling and servicing agreements. As a result, the notes may be put out of eligibility for the trust under New York law, which governs these securitizations. Potential cures for the note may, according to certain legal experts, be contrary to IRS rules governing REMICs. As a result, loan servicers and trusts simply lack standing to foreclose. The remedy has been foreclosure fraud, including the widespread fabrication of documents.

There are now trillions of dollars of securitizations of these loans in the hands of investors. The trusts holding these loans are in a legal gray area, as the mortgage titles were never officially transferred to the trusts. The result of this is foreclosure fraud on a massive scale, including foreclosures on people without mortgages or who are on time with their payments. [Emphasis added.]

In addition: That raises the question, why were the notes not assigned? Grayson says the banks were not interested in repayment; they were just churning loans as fast as they could in order to generate fees. Financial blogger Karl Denninger says, "I believe a big part of why it was not done is that if it had been done the original paperwork would have been available to the trustee and ultimately the MBS owners, who would have immediately discovered that the representations and warranties as to the quality of the conveyed paper were being wantonly violated." He says, "You can't audit what you don't have."

Real estate law dating back hundreds of years requires that to foreclose on real property, the foreclosing party must produce signed documentation establishing a chain of title to the property.

Now, some say that the REMIC's loans are owned by the investors, but the investors have no standing, as there is no connection between their certificates and specific mortgages, assuming the paperwork is adequate to put the mortgage into the trust in the first place. However, it is the trust corporation that is foreclosing and selling the property, etc. Thus, obviously the note has to be actually owned by the Trust corporation as a practical matter.

Pandora's box is even bigger.

All the authority for these Trusts run from the trust corporation itself (which doesn't exist in 49 states) and the PSA which was signed by all the party's officials. In the simplest terminology, it is a contract. All of these trust contracts are under NEW YORK Law. Oh, by the way, PPSI didn't ever exist in New York either. I wonder where it was actually signed. Doubt it was in Delaware. This contract appoints a bank as Trustee. In the case of PPSI trusts, it is Wells Fargo. It appoints the servicing agent. Usually there is a Master Servicing Agent and the Servicing Agent. Sometimes there is a servicing agent just for foreclosures. The Servicing Agent (SA) is the one who collects all the mortgage payments.

Typically the Trustee is not the one that forecloses. If the Park Place PSA's allow WF to foreclose is at the moment an unknown. I have to read the PSA a little closer for that. It is academic if WF has no standing to begin with.

The mortgage payments, after the SA gets their little cut, are sent to WF. WF is supposed to take their little cut and then pay all the Certificate Holders. The big question, is if WF is paying the investors/certificate holders? When WF forecloses and sells a property, does that money go to the certificate holders? Or, does WF just put it into its own pocket?

WCW1, for example, names CountryWide Home Loans as the Servicing Agent. They were bought by Bank of America which would have rights to be the SA. Bank of America however, has hired another company to act as SA, Associated Servicing. But if the trust is broken or liquidated, nobody has any authority to do any of this!

This is all very different than the cases where people are arguing improper transfers to the trust and the court says that the person doesn't have standing to argue breaches of the trust agreement. However, if the transfer is VOID on its face (never mind that it was made too late or something) then the transfer NEVER happened. This is different that it is merely voidable by a party for some reason and nobody else can argue that. Our argument is that this particular trust itself in void on its face simply because it does not exist in 49 states and thus has no power at all in those states. This is an argument I have not seen in any published case law or in the foreclosure blogs, etc.

Are they all collecting money for a trust that is liquidated and putting it into their pockets? If only the top tranches are liquidated, then all this money should go to the lower tranches. Those investors should be doing great! Are they? If you are an investor, let us hear from you: support@parkplacesecurities.com.

This is all a bit complicated, but I should mention that a good number of the loans over the course of the Trust are re-financed, and thus the note that the Trust had is paid off. That money is supposed to go to the investors. That note then is no longer part of the trust. It is entirely possible that the new note is itself sold to another REMIC trust.

If a trust is insured, assuring the top tranch investors that they will get a certain payout by a certain date, and the insurer then pays out on the insurance, the trust/investors don't get to keep the mortgages and notes. They don't get insurance and keep the assets and the interest income stream. At least not in my understanding of insurance. Would the insurance company not own the assets then? Those tranches would be liquidated. NOBODY other than the insurance company could foreclose on property in those tranches. But seeing as the property alleged can't leave the trust, do the investors get their cake and eat it too? Wish someone could explain that part of it.

Let's step back into pandora's very open box. PPSI does not legally exist, at the time of this writing, in 49 states. (Even if they fix that, it won't help them with thousands of previous illegal foreclosures.)

The trust is very broken. WF has broken the trust themselves. If it wants to claim late transfers of property into the trust, it breaks the trust. The ONLY authority for WF and the SA comes from the Trust agreement. Even if a property was legally transferred into it, how does anyone have any authority to do anything if the trust is broken in 49 states? What right does the SA have to collect payments? If the SA is incorporated in DEL, then it could collect payments there, but there is in effect no binding contract requiring anyone else to pay a dime. Wells Fargo has broken the trust agreement all by themselves. Nobody has ANY authority to collect mortgage payments or to foreclose.

In many cases, the transfer from the original mortgage company was void and the property is not even legally in the trust, assuming everything else is done legally.

Sure, some bank or company might have the right to demand payment, but it sure isn't Wells Fargo in the case of Park Place Securities, Inc. trusts. The same situation is likely to be true for many other private trusts as well.

To quote an old maxim very appropriate in this case: "You can't give what you don't have."

One side note. Canada has national corporations. The United States does not, other than national banks. Problem for the banks is that they do not own any of this trust paper, their trust corporations do. And they neglected to make their trust corporations legal in any of the U.S. states other than Delaware. Some trust corporations might well be totally out of existence which would totally and permanently kill the trust.

The Trusts can NOT sell the assets of the Trust. The assets have to be deposited permanently. That also kills the trust. Banks that claim they have purchased the assets back from the trust are either lying or they have totally killed the trust and all the investors are liable for a 100 percent income tax on their earnings. The investors would also have a massive cause of action against the banks.

Looked at another way, the bank would be saying, "Surprise, we didn't really sell the notes, we only loaned them to the Trust. We think you investors have gotten enough money so we are taking back the notes and cutting off the interest payments. Hey, we now get to sell them again." This would only stop when all the notes were paid off by the borrowers. Obviously this would be highly illegal on many levels, but banks are doing it. Even if a bank was the biggest investor in a Trust, it still can't kill the trust and take the assets. It can collect the interest payments paid by the Trustee until all the notes are paid off and the interest stream dries up. Then it is all over. It can't do anything else.

I propose, that if enough investors of a particular trust got together, the Trustee could be removed as could the servicing agents and new ones appointed. This gives real food for thought. Considering that many of the mortgages/notes are 20-30 years long and there will be foreclosures along the way with properties sold off for hundreds of thousands, there should be a significant income stream for many years to come. The certificates are like bonds and they should be collecting interest until the principal notes are paid off. Nobody can say we are going to stop paying interest to bond holders because we think they have gotten enough. Nobody can say, "Hey, you've held that stock for way too long and we are going to stop paying you dividends."

This doesn't begin to touch on many of the other issues of these Trusts which have been litigated around the country. One big one, is if mortgage notes are turned into securities, do they even exist anymore as mortgage notes to be foreclosed upon? Secondly, the mortgages are technically paid off. It really doesn't matter who paid them off. If a tranch was paid off by insurance, wouldn't those notes be satisfied.

We present a fundamental problem that apparently nobody else has discovered or understood, or at least made public, for the first time.

For a deeper understanding of REMIC trusts see WikiPedia.

A good article we have quoted from is "Foreclose: Time to Break Up the Too-Big-to-Fail Banks."

MBS For UberNerds II: REMICs, Dogs, Tails, and Class Warfare

Also see: Peaslee, James M. & David Z. Nirenberg. Federal Income Taxation of Securitization Transactions and Related Topics. Frank J. Fabozzi Associates (2011, with periodic supplements, www.securitizationtax.com): and Silverstein, Gary J. REMICs, Tax Management: FASITs and Other Mortgage-Backed Securities. Tax Management Inc.: Securities Law Series (2007): A-54.

Dan F. Schramm
President
Park Place Securities, Inc.
2011 Flagler Avenue Key West, FL 33040

Contact Us: support@parkplacesecurities.com

Telephone: 305-363-9357

Park Place Securities, Inc. is a Florida, USA Corporation.
ParkPlaceSecurities.com is (c) Copyright © 2016 by Park Place Securities, Inc., a Florida corporation and Dan F. Schramm. All Rights are Reserved.

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