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The True Lender Issue May Be An Open Door Now

Livinglies's Weblog

THE FOLLOWING ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.

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In an article published by Morgan, Lewis & Bockius LLP, it appears that the evasive true lender argument received new life in an ancillary proceeding before a Federal District Judge in California. By holding that a tribal bank originating loans for a non-bank lender was not a “true lender.” The effects on foreclosure litigation are obvious. Most loans were originated by parties acting not as banks but as sales organizations or mortgage brokers. The money came from an entity created to mask the fact that the funding for the loan came from a dark pool of investor money instead of either a bank lender or a non bank lender. Hence the “table-funded” lender was not a lender any more than the originator.

In this case the finding of the…

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