Mortgage -- Struggling to pay mortgage -- Complaint #7266433

Complaint Overview

Complaint ID: 7266433

Company: Specialized Loan Servicing Holdings LLC

Product: Mortgage

Sub-Product: Conventional home mortgage

Issue: Struggling to pay mortgage

State: New York

ZIP Code: XXXXX

Date Received: 2023-07-17T12:00:00-05:00

Date Sent to Company: 2023-07-17T12:00:00-05:00

Company Response: Closed with explanation

Timely Response: Yes

Consumer Disputed: N/A

Submitted Via: Web

Consumer Narrative

Mortgage-backed securities are created through a complex process known as securitization. ( See XXXXXXXX XXXX XXXXXXXX, Mortgage Servicing ( XXXX ) XXXX XXXX XXXX on Reg. 1, 13 [ a mortgage securitization transaction is extremely complex ]. ) In simplified terms, securitization is the process where ( 1 ) many loans are bundled together and transferred to a passive entity, such as a trust, and ( 2 ) the trust holds the loans and issues investment securities that are repaid from the mortgage payments made on the loans. Hence, the securities issued by the trust are mortgage-backed. Once the bundled mortgages are given to a depositor, the [ pooling and servicing agreement ] and IRS tax code provisions require that the mortgages be transferred to the trust within a certain time frame, usually XXXX dates from the date the trust is created. After such time, the trust closes, and any subsequent transfers are invalid. The reason for this is purely economic for the trust. If the mortgages are properly transferred within the ninety-day open period, and then the trust properly closes, the trust is allowed to maintain REMIC tax status. ( Deconstructing XXXX XXXX, XXXX, XXXX XXXXXXXX XXXX XXXX XXXX XXXX XXXXXXXX. ) XXXX XXXX XXXX XXXX XXXX XXXX XXXX section XXXX, provides : If the trust is expressed in an instrument creating the estate of the trustee, every sale, conveyance or other act of the trustee in contravention of the trust, except as authorized by this article and by any other provision of law, is void. The statutory purpose is to protect trust beneficiaries from unauthorized actions by the trustee. ( XXXX, XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX, XXXX XXXX. ) Trust documents are explicit in setting forth a method and date for the transfer of the mortgage loans to the trust and in insisting that no party involved in the trust take steps that would endanger the trusts REMIC status if the original transfers did not comply with the method and timing for transfer required by the trust documents, then such belated transfers to the trust would be void. The Trust itself can not hold ownership of the note because of its tax-preferred REMIC status . There is no language in the Pooling & Servicing Agreement ( PSA ) that authorizes the late transfer of a note or mortgage to the trust. More importantly, the PSA mandates that notes and mortgages must be transferred to the trust no later than the trust 's closing date. And EPTL 7-2.4 specifically prohibits such as transfer as being an ultra vires act that is void ab initio. MORTGAGES CAN NOT BE TRANSFERRED IN AND OUT OF THE TRUST ONCE THAT CLOSING DATE HAS OCCURRED. POOLING & SERVICING AGREEMENT ( PSA 'S ) STATE THAT ANY TRANSFER AFTER THE CLOSING DATE OF THE TRUST ( 90 DAYS ) IS INVALID. There are no other provisions of EPTL Article 7 that would authorize a trustee to act in contravention of a trust. Nor are there any other provisions of New York law that would authorize an ultra vires act by a trustee. Moreover, the enclosed Assignment of Mortgage shows a XXXX Trust and the fraudulent assignment was filed and recorded in XXXX 7 years AFTER the Trust had CLOSED! XXXX, XXXX, as successor XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX for XXXX XXXX XXXX XXXX XXXX, Mortgage Pass-Through Certificates, Series XXXX was formed in XXXX under New York law and ( 2 ) was subject to the requirements imposed on XXXX trusts ( entities that do not pay federal income tax ) by the Internal Revenue Code. XXXX, XXXX, as successor XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX for XXXX XXXX XXXX XXXX XXXX, Mortgage Pass-Through Certificates, Series XXXX was created by the pooling and servicing agreement, and that agreement establishes a closing date after which the trust may no longer accept loans, this statutory provision provides a legal basis for concluding that the trustee 's attempt to accept a loan after the closing date would be void as an act in contravention of the trust document causing adverse tax consequence of the trust losing its status as a REMIC trust under the Internal Revenue Code. There is no language in the Pooling & Servicing Agreement ( PSA ) that authorizes the late transfer of a note or mortgage to the trust. More importantly, the PSA mandates that notes and mortgages must be transferred to the trust no later than the trust 's closing date. And, EPTL 7-2.4 specifically prohibits such transfer as being an ultra vires act that is void ab initio. Under New York Trust Law, every sale, conveyance, or other act of the trustee in contravention of the trust is void. EPTL 7-2.4. Therefore, the acceptance of the note and mortgage by the trustee after the date the trust closed, would be void. ( Wells Fargo Bank, N.A. v. Erobobo ( Apr. 29, 2013 ) 39 Misc. 3d 1220 ( A ), 2013 WL 1831799, slip opn. p. 8 ; see XXXX XXXX XXXX, Mortgage Servicing, supra, 28 Yale J. on Reg. at p. 14, fn. 35 [ under New York law, any transfer to the trust in contravention of the trust documents is void ]. ) The invalid assignment of mortgage dated XX/XX/XXXX, which was recorded/filed on XX/XX/XXXX, in the XXXX Clerks XXXX XXXX XXXX XXXX XXXX XXXX showing XXXX, as nominee for XXXX XXXX XXXX, which allegedly assigned the mortgage, but without the underlying note, to XXXX XXXX XXXX XXXX as XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX for XXXX XXXX XXXX XXXX XXXX XXXX Mortgage Pass-Through Certificates. Series XXXX. The assignment is invalid because XXXX XXXX XXXX did not exist on XX/XX/XXXX, and, therefore, could not appoint XXXX as its nominee, and therefore XXXX had nothing to assign. Moreover, the Trust to which the mortgage was allegedly transferred had " closed '' in XXXX and could not have accepted the assignment in XXXX 7 years AFTER the Trust had CLOSED. Transferring non-performing loans into a Trust or making an out-of-time assignment is a void act under New York Trust law ( and mortgage securitization Trusts are organized as New York Trusts ) XXXX New York 's EPTL 7-2.4 has erected an impenetrable legal barrier that prevents the Bank 's trust from acquiring a purported note and mortgage after the Trust 's closing date. XXXX concealed from XXXX, XXXX that XXXX XXXX XXXX was not an incorporated entity or licensed to do business in any state in the United States of America on XX/XX/XXXX and XX/XX/XXXX. XXXX realized it could not demonstrate an agency relationship between itself and the note holder that gives XXXX the authority to transfer assignments from one entity to another. Furthermore, making an assignment would be against XXXX operation procedure. Yet, XXXX acknowledges in its very own Procedures Manual that it can not make any transfer of assignments to another. XXXX own admission : XXXX can not transfer the beneficial rights to the debt. The debt can only be transferred by properly endorsing the promissory Note to the transferee. ( page XXXX ).

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