JohnQPublic
24th October 2010, 06:34 PM
DEFINITIVE ILLEGALITY OF SECURITISATION IS RECONFIRMED (http://www.worldreports.org/news/284_definitive_illegality_of_securitisation_is_rec onfirmed)
IT IS ILLEGAL TO ASSIGN AN ASSET WITHOUT THE ASSET-OWNERS'S PRIOR WRITTEN PERMISSION. ALL ENGAGED IN THIS RACKETEERING KNOW IT.
Sunday 18 April 2010 00:01
• ANY CONTRACT ENTERED INTO FOR AN ILLEGAL PURPOSE IS NULL AND VOID
• THE TEXT OF THE S.E.C.'S COMPLAINT AGAINST GOLDMAN SACHS & CO. FILED ON 16TH APRIL 2010 IS AVAILABLE IN THE REPORT ALSO DATED 18TH APRIL. TO ACCESS THE S.E.C. COMPLAINT, PLEASE PRESS 'BACK TO ARCHIVE' OR THE ARCHIVE BUTTON [HOME PAGE]. THE REPORT CONTAINS A BRIEF COMMENTARY IN NOTE FORM, THE S.E.C.'S RELATED PRESS RELEASE, AND THE COMPLAINT TEXT. THIS CASE SPECIFICALLY ILLUSTRATES MANY OF THE ISSUES EXPOSED IN THE PRESENT REPORT, WITH DEVASTATING EFFECT AND IMPACT.
• Securitisation is ABSOLUTELY ILLEGAL, and all those talking heads from the City of London and Wall Street who have been treating, for example, the Goldman Sachs scandal (that we warned you about years ago) as just 'the inevitable fall-out after a period of financial crisis', rather than the corrupt cause of the crisis, are KNOWINGLY MISLEADING THE GENERAL PUBLIC EXACTLY LIKE GOLDMAN SACHS, CITIBANK, BANK OF AMERICA, WACHOVIA, WELLS FARGO and the other US and foreign financial enterprises engaged in this racketeering. Which the IMF CONDONES.
And before you start shouting at the screen, if you're reading this from Wall Street or the City of London, or from within the IMF and the World Bank, why don't you pay attention to the fact that the Notes and References, as originally published in our journal Economic Intelligence Review, run to FIVE AND A HALF PAGES. SECURITISATION IS ABSOLUTELY ILLEGAL: AND THEY KNOW IT.
MISPRISION OF FELONY: U.S. CODE, TITLE 18, PART 1, CHAPTER 1, SECTION 4:
‘Whoever, having knowledge of the actual commission of a felony cognizable by a court of the United States, conceals and does not as soon as possible make known the same to some Judge or other person in civil or military authority under the United States, shall be fined under this title or imprisoned not more than three years, or both’.
'Seeing what's at the end of one's nose requires constant effort'. George Orwell.
• Please be advised that the Editor of International Currency Review and associated intelligence services cannot enter into email correspondence related to this or to any of the earlier reports.
• BOOKS: Edward Harle Limited has so far published FIVE intelligence titles: The Perestroika Deception, by Anatoliy Golitsyn; Red Cocaine, by Dr Joseph D. Douglass, Jr.; The European Union Collective, by Christopher Story; The New Underworld Order, by Christopher Story; and The Red Terror in Russia, by Sergei Melgounov. All titles are permanently in stock. We sell books DIRECT.
• ADVERTISEMENT: Details of the INTERNET SECURITY SOLUTION software offered by this service in conjunction with a donation can be accessed immediately: See the Home Page World Reports Limited serials catalogue by clicking World Reports Limited and scrolling to foot of page. Scroll to the foot of THIS page to read our extended Ad. for the INTERNET SECURITY SOLUTION.
• Christopher Story FRSA, Editor and Publisher, International Currency Review, World Reports Limited, London and New York. For earlier reports, press the ARCHIVE. Order your intelligence subscriptions and 'politically incorrect' [i.e., correct] intelligence books online from this website.
• CMKM/CMKX CASE DOCUMENTS:
Press Archive for this report [29th January 2010]
Case Number CV10-00031 JVS (MLGx):
SERVICE OF CMKM.CMKX $3.87 TRILLION SUIT VS. S.E.C.
You can also access the CMKM/CMKX text at: http://viewer.zoho.com/docs/paKdda
The biggest lawsuit in world legal history: The phantom share giga-scandal.
• AS PREVIOUSLY ANNOUNCED, OUR LANDLINES REMAIN CLOSED BECAUSE OF UNLAWFUL HARASSMENT. WE CAN BE CONTACTED VIA EMAIL OR THE WEBSITE 'CONTACT US' FACILITY.
NEW REPORT STARTS HERE:
EDITOR'S INTRODUCTION:
That Asset-Backed Securitisation [ABS] is fraudulent has been amply demonstrated by our website reports, in this service and in successive issues of International Currency Review. In the following uncompromising analysis, Mr Michael Nwogugu CPA, who is based in Maryland, demonstrates with pinpoint technical proficiency how accurate this assessment has been – inspired for our part inter alia by the US securities and technical expertise of Michael C. Cottrell, B.A., M.S.
The author has looked at securitisation from every legal angle, and finds securitisation under US law to be absolutely illegal, with no redeeming features whatsoever.
Given this state of affairs, it would damage the integrity of the English language to observe that it is astonishing that, far from paying attention to this glaring state of affairs, US investment banks, intermediaries, organised criminal syndicates, Intelligence Power cadres, officials in high places, and their counterparties abroad, further encouraged inter alia by the railroading behaviour of the Depository Trust and Clearing Corporation (DTCC), have been proceeding to gear up for ‘business as usual’ securitisation operations as though there had been no discontinuity.
In addition to being ILLEGAL UNDER U.S. LAW, securitisation is ILLEGAL UNDER COMMON LAW. If the prior written permission of the mortgagor (or other type of asset-holder) has not been obtained in writing, and in such a manner that the party IS FULLY AWARE THAT THEY HAVE GRANTED SUCH PERMISSION, the transfer and all subsequent transactions are ILLEGAL.
• Moreover, the legal axiom that 'the money you make from exploitaing and abusing my money is my money' likewise applies. PLUS:
• ANY CONTRACT ENTERED INTO FOR AN ILLEGAL PURPOSE IS NULL AND VOID.
Self-evidently, this study focuses on the US legal position. But the same basic principles apply in all Common Law Countries. So far, the talking heads in the so-called 'Mainstream' Media' have chosen to ignore the fact that securitisation is ILLEGAL. Reality will soon be catching up with them, just as it is at last catching up with the likes of Goldman Sachs and other 'protected' enterprises.
REPRODUCED FROM:
ECONOMIC INTELLIGENCE REVIEW, VOLUME 12, NUMBERS 7 & 8, FIRST QUARTER 2010: pages 4-21. World Reports Limited, 108 Horseferry Road, Westminster, London SW1P 2EF, UK.
EXECUTIVE SUMMARY [REPRODUCED FROM OUR REPORT DATED 10TH MARCH 2010]:
WHY SECURITISATION IS ILLEGAL UNDER U.S. AND COMMON LAW
Securitisation is illegal under US legislation – primarily because it is fraudulent and causes specific violations of R.I.C.O., usury, Antitrust and bankruptcy laws. And it flies in the face of public policy in numerous ways, as was expounded in extensive detail in this analysis published in our journal Economic Intelligence Review 2009Q1 with several pages of book, article and case references.
To begin with, securitisation violates US State usury legislation. Secondly, all ‘true-sale’, ‘disguised loan’ as well as ‘assignment’ securitisations are essentially tax evasion schemes, and the penalties for tax evasion in the United States are excessively severe.
Thirdly, in all ‘true-sale’, ‘disguised loan’ and ‘assignment’ securitisations, the conflict of interest inherent in the sponsor also serving as the servicer constitutes fraud and conversion. In the fourth place, in all ‘true-sale’, ‘disguised loan’ and ‘assignment’ securitisations where the Special Purpose Vehicle [SPV] is a trust, the declaration of trust is void, as it exists for an illegal purpose.
In the fifth place, off-balance sheet treatment of asset-backed securities (both for ‘true-sale’ and for assignment transactions) constitutes fraud.
Sixth, all ‘true-sale’, ‘disguised loan’ and ‘assignment’ securitisations involve blatant fraudulent conveyances. In the seventh place, securitisation usurps United States bankruptcy laws and is accordingly illegal, as well as being also demonstrably contrary to public policy.
SECURITISATION ENTAILS GROSS VIOLATIONS OF R.I.C.O. STATUTES
In ‘true-sale’, ‘disguised loan’ and ‘assignment’ securitisations, there are fraudulent transactions which serve as ‘predicate acts’ under US Federal R.I.C.O. statutes.
The specific R.I.C.O. sections are: Section 1341 (mail fraud); Section 1343 (wire fraud); Section 1344 (financial institution fraud); Section 1957 (engaging in monetary transactions improperly derived from specified unlawful activity) [‘the money you make from the illegal exploitation of my money, is my money’]; and Section 1952 (racketeering).
Furthermore, securitisation constitutes violations of American antitrust statutes through market integration, syndicate collusion, price formation, vertical foreclosure, tying, price-fixing, predatory pricing, and the rigging of allocations.
Securitisation also involves void contracts, given the lack of consideration, illusory promises, the absence of any actual bargain, the absence of mutuality – and finally illegal subject matter and the contravention of public policy.
Securitisation is riddled with Fraudulent Transfer, Fraud in the Inducement, Fraud in Fact by Deceit, Theft by Deception (Fraudulent Concealment) and Fraudulent Conveyance: see the US securities regulations routinely breached in such activity, listed at the foot of this report and of most of these reports for THE PAST THREE++ YEARS, and other laws also routinely flouted in this context.
NOTWITHSTANDING THAT IT’S ILLEGAL, U.S. AUTHORITIES
CONTINUE TO PROMOTE AND ENCOURAGE SECURITISATION
Yet notwithstanding such crystal-clear indications that securitisation is 100% ILLEGAL under US Law, as well as under Common Law generally (so that these findings are largely applicable in all Common Law countries), US authorities from the highest level downwards, financial institutions, intermediaries, Intelligence Power operatives and others are gearing up for what they doubtless hope will be intensified racketeering and trading activity with (corrupt) foreign counterparties.
This behaviour is being fine-tuned ‘as we speak’, despite the reality that the securitisation activity being planned and implemented violates innumerable US statutes in the manner we summarise above, and notwithstanding that such activity is contrary to public policy. TAnd the International Monetary Fund knows all this perfectly well, yet sits idly by, accommodating this racketeering.
Indeed, it’s as though the Rule of Law did not exist. From the highest level of the US Treasury, the White House, the US State Department and the Central Intelligence Agency and its subsidiaries such as the lethal Office of Naval Intelligence (ONI), the mindset, intention and perverse primary objective has all along been to resume Fraudulent Finance based on securitisation, as quickly and as seamlessly as possible. The IMF and World Bank are parties to thus aberrant behaviour.
SUMMARY FORENSIC ANALYSIS PROVING THE ILLEGALITY OF SECURITISATION
From whichever angle securitisation is considered, it is ILLEGAL. For example, the contracts are themselves VOID. This is because the process of securitisation involves several contracts that are either signed simultaneously, or within a short timeframe – many of which are rendered void inter alia because there is no consideration in contracts used in effecting the securitisations.
Many such contracts involve unilateral executory undertakings containing illusory promises. A unilateral executory promise is not a consideration. Such promises typically include a promise made by the Special Purpose Vehicle to pay out periodic interest, whether contingent or non-contingent on whether the collateral pays cash interest.
Collateral-substitution agreements contain a promise whereby the sponsor agrees to substitute impaired collateral. An assignment agreement of future (not yet existing) collateral may well be deemed a unilateral executory promise by the sponsor.
Illusory promises are not valid consideration for a contract. Such promises may be found in the Subscription/Purchase Agreement, whereby an existing asset is being exchanged for a future asset that does not exist as of the date of the subscription/purchase agreement. To make matters worse, none of the agreements typically signed by the investor as part of his/her purchase of the Special Purpose Vehicle’s Asset-Backed Securities expressly incorporates the (typically illusory) promises embodied in the offering prospectus.
OR: The Special Purpose Vehicle’s promise to pay interest and/or dividends on Asset-Backed Securities ‘Interest-Onlys’, Preferreds and ‘Pincipal-Onlys’ are essentially illusory promises because the underlying collateral may not produce any cash flows at all: so there won’t be any interest/dividend payments.
Moreover the lack of mutuality characterising such contracts renders them null and void, by definition. In any such contract, each party must have firm control of the subject matter of the contract and the underlying assets (consideration), and there MUST be a direct contractual relationship between the parties concerned.
But this is not the case, especially as the Special Purpose Vehicle’s corporate documents (trust indentures or bylaws or articles of incorporation) may typically limit the right of each Asset-Backed Security investor; while there is typically no mutuality at all between the Special Purpose Vehicle and the sponsor/originator, because both entities are essentially the same, and are controlled by the sponsor before and after the securitisation takes place.
[SEE LINK. REPORT MUCH TOO BIG TO POST- JQP]
IT IS ILLEGAL TO ASSIGN AN ASSET WITHOUT THE ASSET-OWNERS'S PRIOR WRITTEN PERMISSION. ALL ENGAGED IN THIS RACKETEERING KNOW IT.
Sunday 18 April 2010 00:01
• ANY CONTRACT ENTERED INTO FOR AN ILLEGAL PURPOSE IS NULL AND VOID
• THE TEXT OF THE S.E.C.'S COMPLAINT AGAINST GOLDMAN SACHS & CO. FILED ON 16TH APRIL 2010 IS AVAILABLE IN THE REPORT ALSO DATED 18TH APRIL. TO ACCESS THE S.E.C. COMPLAINT, PLEASE PRESS 'BACK TO ARCHIVE' OR THE ARCHIVE BUTTON [HOME PAGE]. THE REPORT CONTAINS A BRIEF COMMENTARY IN NOTE FORM, THE S.E.C.'S RELATED PRESS RELEASE, AND THE COMPLAINT TEXT. THIS CASE SPECIFICALLY ILLUSTRATES MANY OF THE ISSUES EXPOSED IN THE PRESENT REPORT, WITH DEVASTATING EFFECT AND IMPACT.
• Securitisation is ABSOLUTELY ILLEGAL, and all those talking heads from the City of London and Wall Street who have been treating, for example, the Goldman Sachs scandal (that we warned you about years ago) as just 'the inevitable fall-out after a period of financial crisis', rather than the corrupt cause of the crisis, are KNOWINGLY MISLEADING THE GENERAL PUBLIC EXACTLY LIKE GOLDMAN SACHS, CITIBANK, BANK OF AMERICA, WACHOVIA, WELLS FARGO and the other US and foreign financial enterprises engaged in this racketeering. Which the IMF CONDONES.
And before you start shouting at the screen, if you're reading this from Wall Street or the City of London, or from within the IMF and the World Bank, why don't you pay attention to the fact that the Notes and References, as originally published in our journal Economic Intelligence Review, run to FIVE AND A HALF PAGES. SECURITISATION IS ABSOLUTELY ILLEGAL: AND THEY KNOW IT.
MISPRISION OF FELONY: U.S. CODE, TITLE 18, PART 1, CHAPTER 1, SECTION 4:
‘Whoever, having knowledge of the actual commission of a felony cognizable by a court of the United States, conceals and does not as soon as possible make known the same to some Judge or other person in civil or military authority under the United States, shall be fined under this title or imprisoned not more than three years, or both’.
'Seeing what's at the end of one's nose requires constant effort'. George Orwell.
• Please be advised that the Editor of International Currency Review and associated intelligence services cannot enter into email correspondence related to this or to any of the earlier reports.
• BOOKS: Edward Harle Limited has so far published FIVE intelligence titles: The Perestroika Deception, by Anatoliy Golitsyn; Red Cocaine, by Dr Joseph D. Douglass, Jr.; The European Union Collective, by Christopher Story; The New Underworld Order, by Christopher Story; and The Red Terror in Russia, by Sergei Melgounov. All titles are permanently in stock. We sell books DIRECT.
• ADVERTISEMENT: Details of the INTERNET SECURITY SOLUTION software offered by this service in conjunction with a donation can be accessed immediately: See the Home Page World Reports Limited serials catalogue by clicking World Reports Limited and scrolling to foot of page. Scroll to the foot of THIS page to read our extended Ad. for the INTERNET SECURITY SOLUTION.
• Christopher Story FRSA, Editor and Publisher, International Currency Review, World Reports Limited, London and New York. For earlier reports, press the ARCHIVE. Order your intelligence subscriptions and 'politically incorrect' [i.e., correct] intelligence books online from this website.
• CMKM/CMKX CASE DOCUMENTS:
Press Archive for this report [29th January 2010]
Case Number CV10-00031 JVS (MLGx):
SERVICE OF CMKM.CMKX $3.87 TRILLION SUIT VS. S.E.C.
You can also access the CMKM/CMKX text at: http://viewer.zoho.com/docs/paKdda
The biggest lawsuit in world legal history: The phantom share giga-scandal.
• AS PREVIOUSLY ANNOUNCED, OUR LANDLINES REMAIN CLOSED BECAUSE OF UNLAWFUL HARASSMENT. WE CAN BE CONTACTED VIA EMAIL OR THE WEBSITE 'CONTACT US' FACILITY.
NEW REPORT STARTS HERE:
EDITOR'S INTRODUCTION:
That Asset-Backed Securitisation [ABS] is fraudulent has been amply demonstrated by our website reports, in this service and in successive issues of International Currency Review. In the following uncompromising analysis, Mr Michael Nwogugu CPA, who is based in Maryland, demonstrates with pinpoint technical proficiency how accurate this assessment has been – inspired for our part inter alia by the US securities and technical expertise of Michael C. Cottrell, B.A., M.S.
The author has looked at securitisation from every legal angle, and finds securitisation under US law to be absolutely illegal, with no redeeming features whatsoever.
Given this state of affairs, it would damage the integrity of the English language to observe that it is astonishing that, far from paying attention to this glaring state of affairs, US investment banks, intermediaries, organised criminal syndicates, Intelligence Power cadres, officials in high places, and their counterparties abroad, further encouraged inter alia by the railroading behaviour of the Depository Trust and Clearing Corporation (DTCC), have been proceeding to gear up for ‘business as usual’ securitisation operations as though there had been no discontinuity.
In addition to being ILLEGAL UNDER U.S. LAW, securitisation is ILLEGAL UNDER COMMON LAW. If the prior written permission of the mortgagor (or other type of asset-holder) has not been obtained in writing, and in such a manner that the party IS FULLY AWARE THAT THEY HAVE GRANTED SUCH PERMISSION, the transfer and all subsequent transactions are ILLEGAL.
• Moreover, the legal axiom that 'the money you make from exploitaing and abusing my money is my money' likewise applies. PLUS:
• ANY CONTRACT ENTERED INTO FOR AN ILLEGAL PURPOSE IS NULL AND VOID.
Self-evidently, this study focuses on the US legal position. But the same basic principles apply in all Common Law Countries. So far, the talking heads in the so-called 'Mainstream' Media' have chosen to ignore the fact that securitisation is ILLEGAL. Reality will soon be catching up with them, just as it is at last catching up with the likes of Goldman Sachs and other 'protected' enterprises.
REPRODUCED FROM:
ECONOMIC INTELLIGENCE REVIEW, VOLUME 12, NUMBERS 7 & 8, FIRST QUARTER 2010: pages 4-21. World Reports Limited, 108 Horseferry Road, Westminster, London SW1P 2EF, UK.
EXECUTIVE SUMMARY [REPRODUCED FROM OUR REPORT DATED 10TH MARCH 2010]:
WHY SECURITISATION IS ILLEGAL UNDER U.S. AND COMMON LAW
Securitisation is illegal under US legislation – primarily because it is fraudulent and causes specific violations of R.I.C.O., usury, Antitrust and bankruptcy laws. And it flies in the face of public policy in numerous ways, as was expounded in extensive detail in this analysis published in our journal Economic Intelligence Review 2009Q1 with several pages of book, article and case references.
To begin with, securitisation violates US State usury legislation. Secondly, all ‘true-sale’, ‘disguised loan’ as well as ‘assignment’ securitisations are essentially tax evasion schemes, and the penalties for tax evasion in the United States are excessively severe.
Thirdly, in all ‘true-sale’, ‘disguised loan’ and ‘assignment’ securitisations, the conflict of interest inherent in the sponsor also serving as the servicer constitutes fraud and conversion. In the fourth place, in all ‘true-sale’, ‘disguised loan’ and ‘assignment’ securitisations where the Special Purpose Vehicle [SPV] is a trust, the declaration of trust is void, as it exists for an illegal purpose.
In the fifth place, off-balance sheet treatment of asset-backed securities (both for ‘true-sale’ and for assignment transactions) constitutes fraud.
Sixth, all ‘true-sale’, ‘disguised loan’ and ‘assignment’ securitisations involve blatant fraudulent conveyances. In the seventh place, securitisation usurps United States bankruptcy laws and is accordingly illegal, as well as being also demonstrably contrary to public policy.
SECURITISATION ENTAILS GROSS VIOLATIONS OF R.I.C.O. STATUTES
In ‘true-sale’, ‘disguised loan’ and ‘assignment’ securitisations, there are fraudulent transactions which serve as ‘predicate acts’ under US Federal R.I.C.O. statutes.
The specific R.I.C.O. sections are: Section 1341 (mail fraud); Section 1343 (wire fraud); Section 1344 (financial institution fraud); Section 1957 (engaging in monetary transactions improperly derived from specified unlawful activity) [‘the money you make from the illegal exploitation of my money, is my money’]; and Section 1952 (racketeering).
Furthermore, securitisation constitutes violations of American antitrust statutes through market integration, syndicate collusion, price formation, vertical foreclosure, tying, price-fixing, predatory pricing, and the rigging of allocations.
Securitisation also involves void contracts, given the lack of consideration, illusory promises, the absence of any actual bargain, the absence of mutuality – and finally illegal subject matter and the contravention of public policy.
Securitisation is riddled with Fraudulent Transfer, Fraud in the Inducement, Fraud in Fact by Deceit, Theft by Deception (Fraudulent Concealment) and Fraudulent Conveyance: see the US securities regulations routinely breached in such activity, listed at the foot of this report and of most of these reports for THE PAST THREE++ YEARS, and other laws also routinely flouted in this context.
NOTWITHSTANDING THAT IT’S ILLEGAL, U.S. AUTHORITIES
CONTINUE TO PROMOTE AND ENCOURAGE SECURITISATION
Yet notwithstanding such crystal-clear indications that securitisation is 100% ILLEGAL under US Law, as well as under Common Law generally (so that these findings are largely applicable in all Common Law countries), US authorities from the highest level downwards, financial institutions, intermediaries, Intelligence Power operatives and others are gearing up for what they doubtless hope will be intensified racketeering and trading activity with (corrupt) foreign counterparties.
This behaviour is being fine-tuned ‘as we speak’, despite the reality that the securitisation activity being planned and implemented violates innumerable US statutes in the manner we summarise above, and notwithstanding that such activity is contrary to public policy. TAnd the International Monetary Fund knows all this perfectly well, yet sits idly by, accommodating this racketeering.
Indeed, it’s as though the Rule of Law did not exist. From the highest level of the US Treasury, the White House, the US State Department and the Central Intelligence Agency and its subsidiaries such as the lethal Office of Naval Intelligence (ONI), the mindset, intention and perverse primary objective has all along been to resume Fraudulent Finance based on securitisation, as quickly and as seamlessly as possible. The IMF and World Bank are parties to thus aberrant behaviour.
SUMMARY FORENSIC ANALYSIS PROVING THE ILLEGALITY OF SECURITISATION
From whichever angle securitisation is considered, it is ILLEGAL. For example, the contracts are themselves VOID. This is because the process of securitisation involves several contracts that are either signed simultaneously, or within a short timeframe – many of which are rendered void inter alia because there is no consideration in contracts used in effecting the securitisations.
Many such contracts involve unilateral executory undertakings containing illusory promises. A unilateral executory promise is not a consideration. Such promises typically include a promise made by the Special Purpose Vehicle to pay out periodic interest, whether contingent or non-contingent on whether the collateral pays cash interest.
Collateral-substitution agreements contain a promise whereby the sponsor agrees to substitute impaired collateral. An assignment agreement of future (not yet existing) collateral may well be deemed a unilateral executory promise by the sponsor.
Illusory promises are not valid consideration for a contract. Such promises may be found in the Subscription/Purchase Agreement, whereby an existing asset is being exchanged for a future asset that does not exist as of the date of the subscription/purchase agreement. To make matters worse, none of the agreements typically signed by the investor as part of his/her purchase of the Special Purpose Vehicle’s Asset-Backed Securities expressly incorporates the (typically illusory) promises embodied in the offering prospectus.
OR: The Special Purpose Vehicle’s promise to pay interest and/or dividends on Asset-Backed Securities ‘Interest-Onlys’, Preferreds and ‘Pincipal-Onlys’ are essentially illusory promises because the underlying collateral may not produce any cash flows at all: so there won’t be any interest/dividend payments.
Moreover the lack of mutuality characterising such contracts renders them null and void, by definition. In any such contract, each party must have firm control of the subject matter of the contract and the underlying assets (consideration), and there MUST be a direct contractual relationship between the parties concerned.
But this is not the case, especially as the Special Purpose Vehicle’s corporate documents (trust indentures or bylaws or articles of incorporation) may typically limit the right of each Asset-Backed Security investor; while there is typically no mutuality at all between the Special Purpose Vehicle and the sponsor/originator, because both entities are essentially the same, and are controlled by the sponsor before and after the securitisation takes place.
[SEE LINK. REPORT MUCH TOO BIG TO POST- JQP]