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“Phantom Lenders” – Don’t Be Afraid. They Don’t Exist Anymore!

Folks, it’s time to wake up from this foreclosure nightmare by realizing and understanding that the big bad “Lender” trying to foreclose on your home no longer exists. Rather, it’s just a figment of your imagination put there by the servicers. If you don’t believe me, then here’s what Wells Fargo has to say regarding securitized loans:

(The entire document is attached below)

Funny how it becomes the “Borrower’s” failure to recognize that “they are not working with a ‘lender’ anymore” when after all, the foreclosure notices always contain words such as, “Lender has declared a default.” Or, “creditor to whom the debt is owed,” and, “lender’s successor and assigns.”

Many states now have mediation requirements mandating that the “lender” must be present at the negotiating table. Well how can this be if the “lender” no longer exists? Or better yet, how can one negotiate a loan modification with the servicer that claims to be the agent for the “lender?”

As I have testified in dozens upon dozens of cases, the certificateholders / investors in the REMIC trusts get paid each and every month on all loans / debts allegedly securitized, regardless of whether or not the borrower(s) have stopped making payments. This means that the investors who allegedly purchased the loans have not been harmed and have no reason to “cry foul” by declaring a default. BUT, even if the investors weren’t receiving their payments, and did wish to cry foul by instructing the MBS Trustee to declare a default and seek foreclosure on the borrower’s property, the Washington State Supreme Court says in Cashmere Valley Bank v. WA Dept of Revenue (attached below):

 Wait a minute! The investors in REMIC trusts have no secured interest in the assets / properties allegedly backing the certificates? So let’s recap for a second. The loan was allegedly securitized, which means by Wells Fargo’s own admission, that “lenders no longer exist.” The investors who supposedly put up the money to purchase John & Jane Doe’s Note and Mortgage, only invested in the right to receive regular cash-flows, and have no secured interest in the properties. So now what about the Trustee (fiduciaries) acting on behalf of the investors? Well it seems pretty clear that if the investors have no secured interests, then the Trustee’s could not enforce any foreclosures on their behalf either.

Let’s look at what U.S. Bank’s Trustee unit has to say about the role of the Trustee in your mortgage-backed REMIC trust:

The language looks very clear to me. The Trustee – “Does not initiate, nor has any discretion or authority in the foreclosure process,” “Does not have responsibility for overseeing mortgage servicers,” and, “Is not responsible for the approval of any loan modifications.”

And of course, the Trustee has no advance knowledge of when a loan has defaulted. Why would they if they’ve been getting paid timely each and every month?

You see, the bottom line here is that the servicers, as alleged agents of the “Phantom Lenders” are calling all the shots. The parties seeking to foreclose by declaring a default is actually the servicers and master servicers who are attempting to use the remedy of foreclosure to recoup the payments they’ve been making at yesterday’s subprime rates on behalf of John & Jane Doe (highly profitable!) They hide behind “Phantom Lenders” claiming to be acting as agents on their behalf, when in reality, the servicers are acting in their own best interests. There is no incentive to modify loans, as all the financial incentive lies in foreclosure.

The logic here is obvious. If the servicer can only act as agent for the “lender,” to which the “lender” no longer exists, and the investors in the trust (“Phantom Lenders”) have no secured interest in the REMIC assets, who is left that is entitled to foreclose? Let me see here,…. borrower, lender, servicer, investors, & mbs trustee. Lenders no longer exist. Investors and their fiduciary have no secured interests in the assets. And the servicers are only agents hired to collect the payments from the borrower to pass on to the investors. I think we’re out of bodies.

The bottom line is what the foreclosure defense community has been yelling for years. The notes and mortgages were separated in the securitization scheme, and thus the debts (at best) are unsecured. This is why the trusts, and the trustee’s for the trusts, NEVER submit declarations of default, or testify that THEY are owed money and are entitled to foreclose due to default. THEY CAN’T!

The facts are gruesome, folks. The servicers have been harvesting houses as agents for principals who have no secured interests or rights to the houses. “Wake up!! It’s just a bad nightmare. There’s no such thing as ‘the big bad lender’ anymore.”

Wells Fargo Document – No Lender in Remics

US Bank Role-of-Trustee-Sept2013

Cashmere Valley Bank v WA Dept of Revenue_Unsecured Mortgages (WA Sup Ct 2014)


William Paatalo

Private Investigator – OR PSID #49411


4 Responsesto ““Phantom Lenders” – Don’t Be Afraid. They Don’t Exist Anymore!”

  1. Joe says:

    Great article! I’ve been practicing law in this area for years and it’s refreshing to see a non-lawyer who actually gets it. Kudos Bill!

  2. marina says:

    William, Do you have any federal cases (or CA cases)that provide these findings? …Published?
    The purported Trustee in my scenario is Deutsche Bank National Trust Company as Trustee (and Master Servicer)for the Indymac INDX 2006-AR4….etc.; OneWest Bank / purported servicer.
    Naturally a published case with Deutsche party (or OneWest)would be ideal but if not you know the hierarchy:
    1) Federal
    2) ” a) published; b) unpublished
    3) CA ” ; ”


  3. Michael B Alexander says:

    My story of fighting bank of America has been on going for 5 years. They are now offering a loan modification. After reading their loan modification agreement, it states that the 3 month modification does not stop the foreclosure.
    My wife has been emotionally distraught over holding foreclosure over our heads for 5 years. This foreclosure was schemed by b.o.a. from the start. I can give the details if you want. Thank you 812.374.8072

  4. says:

    great great information love it any more info please send to

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