Mortgage-Backed Securities: “It Is The Rare Ordinary Human Being Who Understands Them”

Does 11 USC § 548(e) have any effect when loans were not timely assigned to the securitized trusts (by the closing dates), clouding the title for the homeowners, depriving investors of standing and/or in some states a loss of proprietary land record placement; and/or when loans were sold multiple times (FCIC, pg. 407)?


In re Lehman Bros. Holdings Inc., 513 B.R. 624 (Bankr. S.D.N.Y. 2014)

A purchaser of residential mortgage-backed securities filed proofs of claim based on alleged misrepresentations by the debtors in offering materials distributed in connection with sale of the securities. The debtors objected and sought to subordinate the claims as claims arising from securities “of” the debtors.

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2 thoughts on “Mortgage-Backed Securities: “It Is The Rare Ordinary Human Being Who Understands Them”

  1. There was never a contract between
    The investor and the home buyer!
    If that I the case than the home owner
    is a third party to the pooling and servicing agreement and has standing
    too use that as a defense in a foreclosure when the loan never made
    It too the trust in time.

    • Here’s another tidbit – if you can locate a Flow Mortgage and Sale Agreement – you may find the simultaneous loan procurement to securities exchange was coinciding with the mortgage loan transaction. The originator who calls itself a lender, was likely also a seller… Which, according to case law, can create a special agency relationship between the borrower and the originator – because the lender was a seller AT THE SAME TIME. That doesn’t mean that the assignment was ever made – but if the court is stubborn, ignores the assignment late dates, and refuses to read the FCIC report…then try those shoes on for size. Ask for the documents in discovery.

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