They make you sign a second promissory note, with the mortgage deed attached, and this becomes a valuable asset to the bank. (Note: this process will differ somewhat from country to country, but the outcome is always the same -- you unwittingly fund your own loan and the bank makes a killing.)
The whole process is a swindle and if you had written the proper date when you signed the mortgage document the fraud would have been soon exposed. The bank's lawyers will fill in the date when all the paperwork has been completed and juxtaposed to conceal the deception. This reflects dismally on the integrity of the legal profession.
And when it comes to foreclosures, the legal profession is again required to come to the aid of the conniving banksters. In a foreclosure hearing, the bank is supposed to produce the original Promissory Note. They rarely do, because they have sold it on and are not Holders In Due Course. Therefore, they are not a party of interest and have no standing in a court of law -- but they will bluff the mortgagor and the court. Also, they don't want you to see how they have profited from the sale of your note. What they produce is a "certified copy", photocopied before they monetized the original.
Judges usually allow the banks to foreclose on this basis of fraud while at the same time ignoring the borrowers' demands that the bank pays them back for their misappropriated Promissory Notes. This is a blatant setting aside of preferences. Judges also refuse to compel the banks to present a sworn copy of the accounting which would clearly show where the money originally came from. There are statutes which require the bank to produce the accounting -- in the U.K., for example, the Banker's Books Evidence Act (1879). But it's entirely at the discretion of the judge. His decision in each individual case will show you who he's really working for.
The Huge Fraud of Securitization
Another reason the banks won't produce the original documents is that they've shredded them to cover up glaring deficiencies and fraud in their securitization of mortgages. Although the United States Supreme Court ruled over a hundred years ago that a mortgage without the original note is unenforceable in foreclosure, the banks are now presenting a plethora of "lost note affidavits" to con the courts into helping them kick millions of people out of their homes. This is in spite of the fact that the originating bank is now merely a servicer of the mortgage and is not a legitimate party of interest, having sold the mortgage to a securitization entity.
According to Wikipedia:
"Securitization is the financial practice of pooling various types of contractual debt such as residential mortgages, commercial mortgages, auto loans or credit card debt obligations and selling said debt as bonds, pass-through securities, or Collateralized Mortgage Obligation (CMOs), to various investors. The principal and interest on the debt, underlying the security, is paid back to the various investors regularly. Securities backed by mortgage receivables are called mortgage-backed securities, while those backed by other types of receivables are asset-backed securities."
Some years ago, the banksters set up MERS (Mortgage Electronic Registration System), to facilitate them in evading tax and to avoid paying recording fees to local counties. The sums saved by the banks are astronomical; billions and billions of dollars in unpaid taxes and fees desperately needed by cash-strapped county authorities. The banksters decided unilaterally that once they recorded the mortgage electronically with MERS, they no longer needed the original paperwork. Furthermore, the paper left a trail that could catch them up in their fraud. So they destroyed hundreds of thousands, perhaps millions, of original mortgage documents.
What typically happens in securitization is that the banks sell their mortgages to investors who pool a block of these mortgages in a trust. The trust is known as a REMIC (Real Estate Mortgage Investment Conduit) which allows the investment banks to take advantage of tax exemptions. But to avoid paying county recording fees, MERS claims that it is the holder of the mortgage loans and continues to trade them without paying fees or filing the appropriate paperwork whenever there is a change of investor.
How could MERS and the REMIC both be holders of the mortgages? According to the law and established property practices for the past 500 years, there must be a clear paper chain of title every time the mortgage changes hands. Without the original notes the securitization may not be legal and the properties cannot be foreclosed upon. MERS says it is the holder, but has no paperwork to prove it and therefore has no standing to foreclosure. But if MERS is the holder then the REMIC is a vehicle for tax fraud!
What a lot of people don't realize -- and some courts do not appear to realize (or pretend not to) -- is that once a mortgage is securitized it is no longer a mortgage. It becomes a stock and forever loses its security. It is illegal for a mortgage to be both a loan and a security. This is a securities fraud known as "double dipping". If a mortgage could be both a loan and a security the owner could sell the loan to any number of securitization investors and cheat shareholders out of their money.
When a mortgage is securitized the originator, or lending bank, no longer owns the asset and cannot foreclose on the property -- even though it may have a servicing agreement with the investors. The investors cannot foreclose because each individual investor only owns a tiny part of the mortgage -- according to the law, one has to own the complete mortgage in order to foreclose. Furthermore, when the mortgage passes on to other investment banks or fund owners (as is the norm) the changes of ownership are rarely, if ever, recorded. This breaks the lawful chain of title and makes foreclosure unenforceable.
If a bank buys back a mortgage in default from the investors, at pennies in the dollar, and tries to foreclose, it cannot prove standing when challenged by a knowledgeable 'borrower' in court. These 'borrowers' have found out that the debt was undoubtedly written off by the investors for tax credits and is now dead. It cannot be resurrected. You can't unboil an egg. That means that the bank has no standing unless it produces counterfeit documents and has them accepted by the court.
There is now much evidence of the banks and their lawyers paying young people (robo-signers) to forge signatures on counterfeit mortgage documents by the tens and hundreds of thousands to bluff the courts and push through foreclosures. This is massive fraud on the part of MERS and the big banks.
But lately, a handful of courageous judges have shown that they won't buy into this fraud and have found against the banks and for the mortgagors in a number of landmark decisions. Some of these judges are Judge Grossman, federal bankruptcy court system in New York, Judge Long in Massachusetts, Judges Schack and Spinner in New York, and a few others. The judges are demanding to see the original "wet-ink" signatures on the original Promissory Notes and Mortgage Deeds as well as a properly recorded chain of title. But the banks can't produce the necessary documents.
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