Author Archive
The Securitization Fraud
Posted on November 1, 2012 byA fraud has been perpetrated upon the American people all in the name of greed. Fraud is defined as deception in the execution of an agreement where some parties to the transaction are deceived as to the real nature of what is being agreed to. When some parties to an agreement are not clear, or some parties enter into the contract deceptively, then the agreement is null and void. A securitized loan is just such a fraudulent agreement.
A securitized loan is one where private investors, pension funds, insurance companies and others have purchased the cashflows from a group of mortgages that have been gathered into a trust in the form of a security assigned a particular risk value. Each mortgage-backed cashflow grouping is called a “tranche” and there are generally several tranches within a mortgage-backed trust. The cashflows are often sold multiple times to multiple investors. Securitization is a way that institutional lenders are able to leverage capital to support additional lending. When the economy is expanding securitization helps to grow the housing industry. When the economy is shrinking the flaw in the system reveals itself as investors begin to lose cashflow as a result of defaulted loans. Read More→
Why Are Foreclosures Falling Off Sharply?
Posted on September 25, 2012 byOn an annual basis foreclosures have dropped 24% according to CoreLogic. Anyone who has been to a foreclosure auction lately knows that there are fewer sales of foreclosed homes coming through to market. Instead, lenders refinanced over 425,000 underwater loans under HARP in the first 6 months of 2012, the same number as were done all last year. Short sales are up also. According to RealtyTrac Q1 2012 short sale activity was up 25% over the year. Does this mean we’ve got the lenders on the run?
It appears as if lenders have finally gotten the message that it is better to resolve a distressed homeowner’s problems short of a foreclosure sale. The five largest lenders were brought kicking and screaming into the reality of settling with homeowners with the $25 billion mortgage settlement with the state AGs. Mid-level lenders, such as US Bank and MetLife, are also now negotiating for settlements on foreclosure irregularities. The settlement with the big banks provides incentives for lenders to push loan modifications and short sales ahead of foreclosure, particularly over this next year. Lenders are resorting to options short of foreclosure not because they have had a genuine change of heart, but because they are being forced to reveal their dirty linen through state investigations and a barrage of lawsuits. Read More→
Short Sale & Foreclosure Group Meets Sept 10, 2012 at 3PM
Posted on September 7, 2012 by
Bob Massey here, and I hope to see you this Monday, September 10th at 3pm for the Atlanta REIA Foreclosure Subgroup meeting. At this meeting I am going to be covering some critical information you need to be a successful investor in this crazy market.
We’re going to be talking about the foreclosure process, short sales, and beyond. We’ll explain both the foreclosure and short sale processes from top to bottom, including what strategies are working best today, and the key mistakes that will absolutely kill your deals.
We’re also going to be explaining the securitization racket that has defrauded our entire country. Not only will you learn more about the banking system than most attorneys and judges in the U.S., but you will learn how to use this information to do some incredible deals. Chances are you’re going to learn how the banks defrauded you on your mortgage!
I’m really looking forward to seeing you at the meeting Monday, September 10, at 3pm!
The Short Sale & Foreclosure Group (SSF), hosted by Bob Massey, will have it’s quarterly meeting on Monday, September 10th at 3 PM in a private meeting room at Total Wine & More located at 124 Perimeter Center W (see map).
The Truth About Securitized Mortgages
Posted on September 5, 2012 byThe majority of mortgages in the United States are sold into securitized trusts called REMICS and are not held as in-house or “portfolio” loans. All sub-prime loans are sold off in this way and have been since the late 1960s. The practice became especially common in the 1990s when the writing of sub-prime loans became more prevalent. Many prime loans also wind up sold as mortgage-backed securities.
REMIC is short for Real Estate Mortgage Investment Conduit. They are investment vehicles which hold commercial and residential mortgages in trusts and then issue securities representing an undivided interest in these mortgages. Investors, such as insurance companies, pension funds, and wealthy private investors, buy these mortgage-backed securities. The securities are assembled into pools called tranches according to their level of risk. Higher risk mortgage-backed securities command higher rates of return. REMICs are managed by a trustee, often a large investment bank, and are governed by pooling and servicing agreements (PSAs). Read More→
Did Your Lender Discriminate?
Posted on July 30, 2012 byThe robo-signing fiasco has revealed the seedier side of the mortgage business to the general public. These issues are coming back to haunt many lenders in the form of law suits and settlements with state and federal governments.
Over the last several years, homeowners and the public in general have become increasingly familiar with some of the issues that could lead to a case of fraud against a lender stemming from the way documents were signed, notarized, or dated incorrectly for mortgages or foreclosure filings. The issues that were included in the foreclosure settlement against Bank of America, Wells Fargo, JP Morgan Chase, Citigroup, and Ally are just the tip of the ice berg when it comes to proving fraudulent and inappropriate actions on the part of lenders. The more we find out about what the banks were doing, the more impossible it seems that they have been getting away with it for so long!
Sometimes the fraudulent and inappropriate behaviors that could become the basis of a lawsuit against a lender occurred when the homeowner first got the loan. Many homeowners experienced irregularities and in some cases out-and-out discrimination at the time the loan was first offered. Read More→
How is the Small Investor to Compete?
Posted on June 25, 2012 byOur government seems to be placing its bet on large-scale investment groups to help get the country out of the foreclosure mess. In May the Federal Housing Finance Agency will announce who from among 3- or 400 investor groups will be allowed to compete for a stock of 2500 Fannie Mae/Freddie Mac properties in several major foreclosure markets. A group of these properties are in the Atlanta area and will be sold in bulk to qualified investors.
The bigger investment groups will be able to put up millions of dollars in cash and will, more than likely, be able to drive the prices down below 70% LTV for these properties to be used as rentals. Analysts speculate that these larger investors purchasing bulk REO deals from the GSEs or banks will be able to command 10-12% return on investment for holding these properties as rentals, well above the market return rates.
In major markets across the country large investment syndicates and hedge funds have entered into a feeding frenzy for bank-owned property sometimes driving the bidding up at auctions or in negotiations with lenders past a point where a small investor can compete. Read More→
Why MERS Cannot Be Legal Owner of a Note
Posted on June 6, 2012 byThe Mortgage Electronic Registration System is just that—an electronic registration system. MERS came into being after the GSEs produced a white paper in 1993 stating the case for an electronic registration system to track mortgage assignments. It was officially launched in 1997.
From the point of view of the mortgage industry MERS made it possible to transfer mortgages or merge lender acquisitions efficiently without triggering local transfer taxes and other recording fees. It changes what has always been a public documentation process to a private one. The industry claims the MERS system allows the industry to have a central repository for mortgage assignment information in order to keep a more accurate picture of ownership.
Courts have not been unanimous about the legitimacy of MERS and many courts have ruled that MERS muddies the waters in the recorded chain of title and cheats counties out of much needed revenue. In fact, county recorders in several states have sued the MERS system for loss of documentation fees. On the other hand, the MERS website lists cases it has won in at least 22 states since the beginning of 2011. There is clearly a window of opportunity to fight MERS’ legitimacy as an owner of record in many foreclosure cases. Read More→
