Mortgage Servicing Fraud
occurs post loan origination when mortgage servicers use false statements and book-keeping entries, fabricated assignments, forged signatures and utter counterfeit intangible Notes to take a homeowner's property and equity.
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I have questions about a/my Pooling and Servicing Agreement.

Is it a document (along with others) that is required to be filed with SEC?

I know it is a legally binding conractual agreement between those that are party to it.

If the parties derivate from the terms of the contract it is a form of Securities Fraud?


Thanks to one and all (except the bad guys)
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O -

The Equitable One wrote:
I have questions about a/my Pooling and Servicing Agreement.

Is it a document (along with others) that is required to be filed with SEC?

I know it is a legally binding conractual agreement between those that are party to it.

If the parties derivate from the terms of the contract it is a form of Securities Fraud?


Thanks to one and all (except the bad guys)


(except the bad guys)[/ LOL! I hear ye there!
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Moose
The Equitable One wrote:
I have questions about a/my Pooling and Servicing Agreement.

Is it a document (along with others) that is required to be filed with SEC?

It is an agreement that an investor must be made fully aware of, therefore it will be included in the offering.

The Equitable One wrote:
I know it is a legally binding conractual agreement between those that are party to it.

If the parties derivate from the terms of the contract it is a form of Securities Fraud?


Thanks to one and all (except the bad guys)


This isn't legal advice of course, but that deviating from the terms of the PSA is one of the fundamental roadblocks in modifying abusive loans, and yes, I believe an investor who is counting on the PSA to be enforced could, and will consider some modifications a servicer makes that aren't allowed under the PSA to rise to the level of securities fraud.  Whether that gets the attention of the SEC is anyone's guess. It's too early to predict just how far this kind of thing will go.

The lawsuit story is only beginning.

Moose

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Knows About SEC
Quote:

Originally posted by The Equitable One
Is it a document (along with others) that is required to be filed with SEC?



Usually, the SEC does NOT specify WHICH contractual documents must be filed together with the registration statement of a securities issuer.  But a PSA would be the type of document which an investor would typicially want to have readily available for inspection and consideration in considering whether or not to purchase originally issued securities.

It would also typically be something that a rating agency -- such as Moody's, Standard & Poors and/or Fitch -- would demand to see before rating a securities issue.

To the extent that these ARE furnished and relied upon by investors, the investors arguably can argue that their purchase was in reliance thereon.  Misrepresentations as to the PSA would seem lkely to constitute some form of securities fraud.  Omission of the PSA would probably not -- caveat emptor. 

There is likely to be some mechanism in the trust for alteration of the PSA where necessary.  Deviation from the PSA as set forth in registration statement to the benefit of some securities holders and the detriment of others may give rise to possibly valid causes of action.  As Moose points out, this is a sticking point in mortgage modifications.  Agreement to modify even a single mortgage may alter the rights of the security purchasers, so trustees are validly cautious to do this.  This is a fundamental challenge of the mortgage securitization business model.

This is an area which is not well defined in the law, as litigation in this area remains in its infancy.

I would suspect that ultimately the courts will find that some deviation and alteration of the PSA which is purposeful and enhances and preserves value of the whole trust, while impairing the rights of some of the certificateholders is probably both permissible and not actionable fraud.  By contrast, where changes are arbitrary and capricious or benefit some investors to the detriment of others without a solid business justification, those injured may have a vaid cause of action, particularly where the investor's rights are eviscerated.  This is a lay PREDICTION, NOT an articulation of well litigated and established law.

This is NOT a disagreement with Moose's answer, but rather just a nuanced elaboration.
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