LivingLies: “The most salient part of the bill, in my opinion, is the part about retaining risk. It is an official acknowledgment, in addition to other governmental findings that the investment banks and hedge funds who played the unregulated securitizations scheme simply retained no risk or so little risk of loss as to be just a cost of doing business.

This bill seeks to take that issue head-on and prevent “lenders” from (a) hiding their identities and (b) creating junk loan products for the purpose of selling and trading unregulated securities.

I don’t think there is anything more important than the recognition that all or most of the risk of loss has been parsed out into many attributes each of which was sold to different classes of investors using different classes of unregulated security instruments.

None of the buyers or traders in such securities ever purchased the debt of a borrower even they paid money equivalent to a purchase of the debt.

No legal title or right to enforce any debt, note or mortgage was ever conveyed to the holders of “REMIC” certificates nor any other class of investors. Without having technically sold the debt, the investment bank retains bare legal title to the debt, which is an outcome anticipated by the framers of the Uniform Commercial Code Article 9 §203, adopted in all 50 states as law of each state.

Bare legal title might be enough to enforce a note that qualifies as a negotiable instrument (article 3) but it is not sufficient to enforce a mortgage in foreclosure.”

Source: Stop Wall Street Looting Act of 2019 Introduced in Congress

LivingLies: “With debts, financial analysts and innovators discovered that a debt can be broken up into different attributes — interest, principal, monthly payments, fees etc. And they found that each of these attributes could be separately sold. But this created a monetary split which the law did not recognize.

Nevertheless, it occurred. The law requires the presence of a specific legal person who possesses a claim based upon actual loss from nonpayment. With the split, the potential claimants immediately broadened to everyone who had purchased any attribute of the debt. This makes it difficult if not impossible to present or even identify one legal person who actually has the legal standing to bring a claim for nonpayment.

Hence no creditor is alleged or identified and no ownership of the debt is alleged or proven.  [. . .]

Securitization, to be clear, is the process of distributing the risk of any investment to many people. There is nothing wrong with it. It has been done for centuries and it is the basis for capitalism which is our system and seems, by general agreement, to be the best economic system humans have yet to devise, despite its obvious shortcomings.

“Securitization” since 1983 has taken on a more particular meaning, i.e., the distribution of risk on consumer debt, and in particular residential loans because those are the biggest debts. All paper instruments that declare ownership of a particular asset derive their value from that asset.

So all such paper instruments are by definition derivatives whether the paper is a certificate of common stock, a bond, car title or anything else. “Derivatives” has taken on a more particular meaning, i.e., instruments that derive their value from debt.

In theory securitization of debt can be accomplished in one of two ways: either many people invest in one debt or many people invest in many debts. The obvious answer is that diversification of investment diminishes the risk of a total loss. So securitization became the investment by many people into many debts.”

Source: How to Understand Debt and Money in Foreclosures Today

Past Broadcasts can be found on the link below. Well worth the listen.

LivingLies: “The continued appearance of DiTech and or Aurora is actually a sparkling example of arrogance emanating from the investment banks that too often control the narrative. If either DiTech or Aurora ever owned a single debt, it was probably one in a million.

With the bankruptcy petitions involving several entities bearing the name of DiTech or Aurora and additional bankruptcies involving closely related entities like GMAC and Lehman Brothers, somehow we have been led to believe that the investment banks were so negligent that they actually left the loans in the entities that filed petitions for relief in bankruptcy with schedules that were devoid of virtually any loans.”

Source: Tonight! Why the Bankruptcies of DiTech and Aurora Matters! Neil Garfield Show 6PM EDT