Discovery you can’t afford to miss: the SEC!

(OP-ED) — The opinions expressed herein reflect those of the author and should not necessarily be construed as legal advice; however, the material has been vetted by an attorney who loves the thought process behind what is expressed here.

While everyone is getting the “rope-a-dope” from the banks and their mortgage loan servicers, no one’s looking to the enforcement arm of Wall Street … the revolving door into the United States Securities and Exchange Commission (“USSEC”). The author will abbreviate this agency, who is supposed to enforce violations of securities laws; however, seemingly, apparently hasn’t been doing so to the extent that We the People need them to.

The author of this post held off posting this article for the sake of clarification, insomuch that jumping the gun and sending the readers of this post on a wild goose chase for nothing would have been totally discrediting and thus, non-productive. Now that clarification has been achieved, it’s no holds barred.

The author devised a set of discovery, which was then turned into more productive aspects of a means to an end. That discovery revolves around the USSEC, who has the goods you’re looking for if you happen to be facing a REMIC trust, which most of you are since most of your loans were securitized.

This concept and thought process involves a two-pronged attack on the USSEC. Here’s step one:

If you’ll visit sec.gov, you’ll notice the search box in the upper, right-hand corner of the website.

Type in ONLY the REMIC trust’s “Series Number” (for example 2004-NC3, which I will reference in this post as the example). Do NOT type in the entire trust’s name and gobbledygook as you’ll end up with non-descript stuff you can’t use. Once the actual REMIC’s name appears below the search box, make a note of the “CIK” number by whatever means possible because this information will become part of your discovery request.

Rule #1: You cannot serve discovery on a non-party to a lawsuit!

Don’t even try it. You will be wasting your time and money. Instead, the attorney the author spoke with zeroed in on the fact that if you make the USSEC a third-party defendant in your case, the courts will most likely throw them out (dismiss them from your suit) at the first opportunity, much to the objections of the mortgage loan servicer (who’s bring the foreclosure against you trying to reimburse its own coffers), who will then figure out what you’re trying to get at. Thus, the attorney suggests getting a subpoena issued straightaway against the USSEC, asking for certified copies of information directly related to the REMIC trust you’re dealing with. Here’s where the concept attempts to get results:

Submit a complete and true certified copy of the 424(b)(5) Prospectus for 2004-NC3, filed with the USSEC on April 12, 2004.

Submit a complete and true certified copy of the Form 8-K, also known as Current Report for 2004-NC3, filed with the USSEC on May 3, 2004, as shown on the Edgar Entity Landing Page with a Reporting Date of April 16, 2004.

Submit a complete and true certified copy of the Form 8-K, also known as Current Report for 2004-NC3, filed with the USSEC on June 2, 2004, as shown on the Edgar Entity Landing Page with a Reporting Date of May 25, 2004.

Submit a complete and true certified copy of the Form 8-K, also known as Current Report for 2004-NC3, filed with the USSEC on July 1, 2004, as shown on the Edgar Entity Landing Page with a Reporting Date of June 25, 2004.

Submit a complete and true certified copy of the Form 8-K, also known as Current Report for 2004-NC3, filed with the USSEC on August 3, 2004, as shown on the Edgar Entity Landing Page with a Reporting Date of July 26, 2004.

Submit a complete and true certified copy of the Form 8-K, also known as Current Report for 2004-NC3, filed with the USSEC on August 27, 2004, as shown on the Edgar Entity Landing Page with a Reporting Date of August 25, 2004.

Submit a complete and true certified copy of the Form 8-K, also known as Current Report for 2004-NC3, filed with the USSEC on September 28, 2004, as shown on the Edgar Entity Landing Page with a Reporting Date of September 27, 2004.

Submit a complete and true certified copy of the Form 8-K, also known as Current Report for 2004-NC3, filed with the USSEC on November 1, 2004, as shown on the Edgar Entity Landing Page with a Reporting Date of October 25, 2004.

Submit a complete and true certified copy of the Form 8-K, also known as Current Report for 2004-NC3, filed with the USSEC on November 29, 2004, as shown on the Edgar Entity Landing Page with a Reporting Date of November 26, 2004.

Submit a complete and true certified copy of the Form 8-K, also known as Current Report for 2004-NC3, filed with the USSEC on January 3, 2005, as shown on the Edgar Entity Landing Page with a Reporting Date of December 27, 2004.

Submit a complete and true certified copy of the Form 8-K/A, also known as Current Report – amendment, and all amendments thereto for 2004-NC3, filed with the USSEC on January 12, 2005, as shown on the Edgar Entity Landing Page with a Reporting Date of November 26, 2004.

Submit a complete and true certified copy of the Form 8-K/A, also known as Current Report – amendment, and all amendments thereto for 2004-NC3, filed with the USSEC on January 12, 2005, as shown on the Edgar Entity Landing Page with a Reporting Date of October 25, 2004.

Submit a complete and true certified copy of the Form 8-K/A, also known as Current Report – amendment, and all amendments thereto for 2004-NC3, filed with the USSEC on January 12, 2005, as shown on the Edgar Entity Landing Page with a Reporting Date of August 25, 2004.

Submit a complete and true certified copy of the Form 8-K/A, also known as Current Report – amendment, and all amendments thereto for 2004-NC3, filed with the USSEC on January 12, 2005, as shown on the Edgar Entity Landing Page with a Reporting Date of September 27, 2004.

Submit a complete and true certified copy of the Form 8-K/A, also known as Current Report – amendment, and all amendments thereto for 2004-NC3, filed with the USSEC on January 12, 2005, as shown on the Edgar Entity Landing Page with a Reporting Date of July 26, 2004.

Submit a complete and true certified copy of the Form 8-K/A, also known as Current Report – amendment, and all amendments thereto for 2004-NC3, filed with the USSEC on January 12, 2005, as shown on the Edgar Entity Landing Page with a Reporting Date of June 25, 2004.

Submit a complete and true certified copy of the Form 8-K/A, also known as Current Report – amendment, and all amendments thereto for 2004-NC3, filed with the USSEC on January 12, 2005, as shown on the Edgar Entity Landing Page with a Reporting Date of May 25, 2004.

Submit a complete and true certified copy of the SEC Form 15-15D, known as Suspension of Duty to Report [Section 13 and 15(d)] of 2004-NC3, filed with the USSEC on January 26, 2005.  

Submit a complete and true certified copy of the 10-K, known as Annual Report [Section 13 and 15(d), not S-K Item 405] of 2004-NC3, filed with the USSEC on March 31, 2005, as shown on the Edgar Entity Landing Page with a Reporting Date of March 7, 2005.

EXPLANATION OF WHAT’S BEEN REQUESTED THUS FAR …

From the pull-down menu at sec.gov (when you’ve retrieved the REMIC’s files), print and save the list of all of the documents that have been filed with the USSEC on that particular REMIC. This should not be considered as over broad and burdensome to the USSEC since all of these files are contained within the USSEC’s database. They can easily be retrieved and the fee for sending it all to you is $4.00 in postage.

In this particular example, the pull-down menu, which was printed out in full, contained 19 documents, all of which became part of the request for production under subpoena.

You can either ask for all of these documents (that are contained within the USSEC’s files on the REMIC, which in this case was 19) outside of a lawsuit if you wish to get an advance look-see at everything. That’s an option if you don’t want to subpoena the records from the USSEC. However, there’s more to the story than what we’ve covered so far. This is where the subpoena comes in with the double whammy. A lot depends on the timing of the request and whether you’re attacking the servicer ahead of the foreclosure. You’ll want to depose someone with direct, first-hand knowledge of the REMIC you’re going after.

And here’s step two:

Get the court clerk to issue a subpoena to the USSEC to get them to produce someone with relevant knowledge of the documents that can verify and validate any violations of the governing regulations of the REMIC trust. (Again, this is framed as a suggestion and not given as legal advice!)

Inside of the subpoena, you can demand the USSEC check ALL of its records and produce whatever it has, in certified form, for the following (and this is just a sample):

Submit complete and true certified copies, if any you have in your possession or control, of all notes, memoranda and agreements for any certificateholder settlements known to the USSEC for  2004-NC3. 

Submit complete and true certified copies, if any you have in your possession or control, of all known litigation filed by any certificateholder, known to the USSEC for  2004-NC3. 

Submit complete and true certified copies, if any you have in your possession or control, of all known USSEC-related prosecutorial actions taken against 2004-NC3. 

Submit complete and true certified copies, if any you have in your possession or control, of the mortgage loan documents which name the Plaintiffs as the Borrowers that demonstrated that the trustee of 2004-NC3 received the documents described on Page S-75 of the 2004-NC3’s 424(b)(5) Prospectus according to the stated governing regulations. 

Submit a complete and true certified copy, if any you have in your possession or control, of any document that demonstrates the negotiation or transfer of the Plaintiff’s mortgage loan and all related documents therein, which specifically identify the date these mortgage loan documents, including all assignments of mortgage (or deed of trust) thereto, that were documented as part of the transfer from the Depositor to the REMIC trust by the trust’s Cut-Off Date.

You’ll want to review all of the trust’s “FILED” documents first, because the Amendments inside of those REMICs may reveal changes in the number of certificate holders receiving the 8-K’s and 10-K’s and may further reveal the actual “condition” of the REMIC before and after it closed. You’ll need this information for the next step.

Rule #2: You cannot depose a non-party to the suit without relevant cause!

This is a great way to get the mortgage loan servicer’s attention because if the REMIC trust settled out with all of the certificate holders, then the mortgage loan servicer, the real party bringing the foreclosure, has no standing because it can’t prove concrete injury-in-fact required under Spokeo v. Robins. Thus, it has no standing to pursue a foreclosure. And it’s going to fight you tooth and nail to keep its position in the suit because it wants to steal your property.

Don’t expect the mortgage loan servicer and its attorneys to sit idly by while you depose someone with knowledge of the particular REMIC trust. They’ll have their attorneys in the deposition, so you’ll have to craft your questions in such a way so as to expose the bad behavior on the part of the servicer’s employees when it comes to having the USSEC deponent examine the recorded assignment(s), specifically for:

  1. Who prepared the assignment? (Was it the law firm or the servicer’s employees?)
  2. Who executed the assignment? (Was it someone who wasn’t really who they said they were?)
  3. When was the assignment executed? (Well after the Cut-Off Date of the REMIC trust?)
  4. When was the assignment recorded? (Well after the Closing Date of the REMIC trust?)
  5. What do the governing regulations for this particular REMIC state about Assignment of the Mortgage Loans? (Is it obvious to the USSEC deponent that the regulations were violated?)
  6. Has the USSEC ever been notified by anyone to investigate this particular REMIC trust?
  7. Does the USSEC have any records of whether or not a credit default swap counterparty paid the certificate holders in full?
  8. Does the USSEC have any records of whether or not any default insurance policies paid the certificate holders in full?
  9. Does the USSEC have any records of whether or not there were any settlements wherein the certificate holders were paid in full or in part; thus settling any future payments due to them?
  10. Has the USSEC ever investigated this REMIC for any securities violations or irregularities?

In other words (and this is just a smattering of all of the questions to be asked of your USSEC deponent) … you’re trying to get the USSEC deponent’s attention to the fact that he/she can testify as to the fact that none of the governing regulations for the REMIC were complied with and that under New York Trust Law, they are void. Any question relevant to violations of the REMIC’s governing regulations would require a statement from the USSEC deponent that could be inferred to be a conclusion of law and the other side will object, but the comment will still go on the record, where the judge can see it.

This is a direct way to get someone in authority to see the assignments as fraudulent and to initiate a potential investigation, both civil and criminal, which may force the mortgage loan servicer to back off rather than run the risk of an exposed criminal prosecution.

You want the judge to see the REMIC for what it is and what the servicer is actually trying to do. Because most judges think they’re pensions are tied to these REMICs, to discover that the REMIC has been closed and the certificate holders paid would mean that the servicer (who has no contract with you) can triple-dip by stealing your home and that the judge doesn’t have to worry about his pension is going to be affected by making the proper ruling and kicking the mortgage loan servicer out of court.

If the investors (certificate holders) settled the case with the REMIC and accepted payment in full, how then can they come into court and claim they were financially harmed? They can’t … that’s the point. They’d have to prove they were damaged and if they got an insurance settlement and were paid in full, they weren’t damaged; thus, the mortgage loan servicer would be potentially committing fraud on the court to attempt to introduce evidence to the contrary.

Remember, in order to issue a subpoena, you have to file suit. You can use the SEC’s own forms to request all of the documents contained in the REMIC’s file for the shipping fee and they will send them certified (outside of the litigation); however, that takes time and doing it outside of litigation means the court has no control over the outcome of the request for anything from the USSEC. The fees for deposing a single party or entity these days is $3,000 – $5,000 depending on where the deposition takes place. However, if you’re trying to protect a million dollar property, no stone should be left unturned.

Again, this isn’t legal advice. It’s just plain common sense.

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