Does Challenging Securitization Harm Consumers? A Conversation With an Attorney That Reveals the Real Story

Every so often, I end up in conversations with attorneys who are sharp, experienced, and well-intentioned, but who have spent their entire careers swimming in the industry’s preferred narrative. Not long ago, one of those attorneys pushed back on my work—not out of disagreement, but to play devil’s advocate and prepare for how a judge might react.

He said something like this:

“Bill, you know how this will look to a judge. They’re going to think you’re attacking securitization itself. They’re going to say you’re trying to undermine the very liquidity that makes homeownership possible.”

It’s a fair point. It’s also exactly the lens through which courts have been conditioned to view these cases for nearly two decades.

What follows is the same explanation I gave him—because it goes to the heart of how the other side has been gaming the system, and why the “you’re attacking securitization” narrative has been used to deflect scrutiny from the real misconduct.

The First Myth: Challenging foreclosure practices = attacking securitization

This is the narrative Wall Street wants everyone to believe.

The story goes like this:

• Securitization creates liquidity.
  • Liquidity lets banks “free up capital.”
  • Free capital means more mortgages.
  • Therefore, securitization is good.
  • And anyone challenging foreclosure practices must hate liquidity and want to destroy the mortgage market.

This is clever messaging. It’s also completely false. Because here’s what I told the attorney:

“We’re not attacking securitization at all. We’re attacking the unlawful enforcement of assets that were derecognized the moment they were created.”

Let me break that down.

Liquidity is created because the loan is removed from the books — not because a creditor exists

This is the part consumers, attorneys, and even judges have never been shown.

Modern mortgage lending is not “lending” in the traditional sense.
The originator:

• never uses its own capital,
  • never carries the loan as an asset,
  • never takes credit risk, and
  • is repaid immediately through the sale of the note.

Under federal accounting law (ASC 860), the “loan” is derecognized immediately.

That derecognition is what creates liquidity. And nothing in our analysis or our administrative process challenges securitization’s ability to create liquidity. In fact, derecognition is consistent with securitization functioning exactly the way it was designed.

But here’s the problem:

Liquidity only justifies what happens at origination — not what happens in foreclosure.

The Real Abuse: Enforcing a debt that no one owns

The whole consumer-harming deception begins when these entities—originators, servicers, trustees—show up in court years later claiming to enforce a debt that:

• they didn’t fund,
  • they never carried as an asset,
  • they don’t recognize on their balance sheets,
  • they didn’t purchase for value,
  • and legally cannot enforce under the UCC.

Securitization did its job:
It created liquidity.

The fraud comes later, when the same industry tries to re-characterize a derecognized financial instrument as a “mortgage loan” so it can foreclose.

That’s the part no one is supposed to look at too closely.

The attorney pushed back again: “But doesn’t stopping enforcement hurt consumers long-term?”

This is where I had to be blunt.

“What hurts consumers is wrongful foreclosure, not transparency.”

Let’s look at the scoreboard:

Wrongful enforcement results in:

• Families losing homes they never should have lost
  • Clouded titles that persist for decades
  • Neighborhood property values collapsing
  • Local tax bases disintegrating
  • Fraudulent assignments infecting chains of title nationwide
  • Investors pricing corruption risk into mortgage-backed securities

Nothing about that helps consumers. Nothing about that promotes liquidity. If anything, it destroys market stability from the inside out.

What our work actually accomplishes

We are not dismantling the mortgage finance system. We’re doing the opposite.

We’re forcing the system to align with the laws and accounting standards it already claims to follow:

• If an entity wants to enforce the debt, it must prove it owns it.
  • If it never gave value, it cannot be a creditor.
  • If the loan was derecognized, it cannot magically reappear for foreclosure.
  • If no claimant exists, the lien cannot survive.
  • And if someone truly does have a legitimate claim, we will tender to them.

That is transparency.
That is legality.
That is consumer protection at its most fundamental.

And none of that interferes with securitization’s ability to create liquidity.

So the real question is: who benefits from the myth that we’re “attacking liquidity”?

You already know the answer.

The only parties threatened by our approach are:

• servicers enforcing assets they don’t own,
  • trustees standing in for empty trusts,
  • investment banks who derecognized the asset but still harvest payment streams,
  • and foreclosure mills who manufacture assignments years after the fact.

Liquidity is not threatened by the truth. Fraud is.

Securitization isn’t the problem. Illegal enforcement is.

So here is the final point I made to the attorney:

“Securitization is not the enemy. Securitization is simply the architecture.
The crime is pretending that derecognized assets can still be enforced as mortgage loans.”

If the system wants securitization, fine.
If the system wants liquidity, fine.
If the system wants risk transfer, fine.

But they cannot have:

• liquidity without transparency,
  • risk transfer without accounting integrity, or
  • foreclosure without a creditor.

That is where our work begins. And that is why the “liquidity” argument is nothing more than a shield used to distract from the unlawful enforcement that securitization was never meant to justify.