PART ONE RELEASED: How Derecognition, Securitization, and the Deliberate Destruction of Original Notes Rendered Mortgage Enforcement Structurally Impossible

How Derecognition, Securitization, and the Deliberate Destruction of Original Notes Rendered Mortgage Enforcement Structurally Impossible

• They told us they destroyed the notes. In 2008, the Florida Bankers Association informed the Florida Supreme Court — in a certified filing — that promissory notes were “converted to electronic files” and that “the actual physical note” was routinely eliminated after imaging. Originals, gone. By admission.
• The note itself closes the door. The promise in every note runs to a closed class — the “Note Holder” — defined as the named lender or a transferee by proper endorsement and delivery. The named lender sold and derecognized the loan within weeks. The transfers never happened. The class is empty.
• They told investors the truth and courts a different story. WaMu’s own prospectus disclosed that notes would not be endorsed to the trusts, that “no assignment of the mortgages to the Trust will be prepared,” and — in a risk factor that reads like a confession — that “the trust may not have a perfected interest” in collections commingled by the servicer with its own funds. Then the industry walked into foreclosure courts and swore the opposite.
• Sworn testimony confirms it. In In re Kemp, a WaMu custodian’s officer admitted the notes were never endorsed or delivered to the trusts. The “lost note” count in your foreclosure complaint is not an accident. It is the design.
• MERS assignments are nullities. MERS assigns the mortgage without the note — and Carpenter v. Longan settled in 1872 that the mortgage without the note is a nullity. You cannot assign a destroyed note, and there is no beneficiary left to declare a default.
• They knew before the crash. In November 2007, the Texas Foreclosure Task Force heard it on the record: when documents are missing, “they just create one… the servicer signs it themselves” — and the industry’s fix was to change a rule of procedure to manufacture standing. Insane. Documented.
• The tax record is the tell. The industry derecognized the loans and booked the gain — but never filed the Forms 1099-C the law requires when debt is discharged. Filing them would confess everything.