Posted on 07/17/2014 3:59:19 AM PDT by Neidermeyer
I don’t know why the link isn’t working when embedded in the post ,,, here it is ==>
How does a bank sell a loan “repeatedly to multiple buyers?”
we do realize that banks and institutions were forced at the point of a gun to write bad loans, right? We also understand that they devised a process to package the bad loans with good loans and sell them for a minimal profit in a market controlled by the fed gov, right? In that market, the fed gov made money as well as the banks and that market was controlled by Clintonites like Rahm, Mcauliffe, Gorelick and Barney Frank’s gay lover. People with no experience at all in financial dealing were making decisions on how to best manage and facilitate a trillion dollar shell game and people blame the banks while these people live large on their bonuses. Anyone who questioned it was called racist.
This is nothing but a shakedown.
Since the middle 1990’s the banks have been playing games with your most prized possession , your home , by selling the loan repeatedly to multiple buyers and in ways that are “not possible” when viewed through a lense called “the rule of law”, they have destroyed your titled interest
Wrong on many levels.No ones title interest has been destroyed for starters.
For later.
He he not exactly what happens... a bit biased.
Different _parts_ of a mortgage can be sold to different people.
The rights to “service” a loan [collect mortgage payments and administer ancillary customer services] is valuable. The future interest payments can be purchased. The future principal payments can be purchased.
The value of these is obviously a topic of great disagreement. Entire departments of dozens do nothing but analyze data and current environmental factors that affect such prices - so it really is a casino.
But loans aren’t ‘sold repeatedly to multiple buyers”. i’m sure there have been cases where a mortgage broker tried to sell loans to more than one entity to get paid more than once before absconding to Lithuania or Papa New Guinea... but that’s it.
But different _parts_ of loans are sold individually to different entities.
If they want to sue someone, they should start with Bill Clinton and the democrats who repealed Glass - Steagal.
for later
Banks are painted as villains while the real culprit is the government. Who forced banks to make bad loans under the premiss of fair credit? Who set the down payment requirements and other guidelines? Who accepted fraudulent documents (Fannie and Freddie)? Banks don’t have sufficient funds to make and hold mortgages so they pass them upstream to government agencies. The bank holds servicing rights, which means they basically get some deposits and a small fee for administrative duties. Settlements to date have been a sham and ignored the real cause of the collapse-easy credit without proper due diligence. I think this suit is more about getting a settlement to avoid ongoing and expensive legal fees.
if it’s the govs fault, and we all know it is, then why sue banks? What will be uncovered when we all know that the banks were forced to give money to people they knew couldn’t pay it back. Then they had to make loans more attractive for people (HELOCs for one) so as to make the portfolio more marketable. The only thing the banks were doing was trying to make something out of a pile of crap fed to them by democrats and the government.
I don’t get the rush to sue anyone but the government..
It was the Community Reinvestment Act.
Even small town banks were blackmailed by the government.
Let me tell you a story.
My friend was current on his mortgage. Always paid it, often over paid.
One day his Mom called and said that his house was up for auction on the courthouse steps for “non payment of loan”. My friend had the check stubs.
Seems that the title was sold to three (3) different firms. All thought they had bought the loan, two of which were not getting paid and tried to foreclose.
Oh, and the company my friend was paying the loan to? Didn’t
Have the loan. Hadn’t for three years by that point.
It took him 18 months and thousands of dollars to get sorted out, and he is still worried that the title is clouded. During the court case, no one was able to actual figure out who had the actual loan.
” We also understand that they devised a process to package the bad loans with good loans and sell them for a minimal profit in a market controlled by the fed gov, right? “
Since that’s not at all true I hope we don’t understand this.
Collateralizing loans into CDOs and CMOs was extremely profitable and the government didn’t control it in any fashion. The Commodity Futures Modernization Act of 2000 saw to that.
You’re confusing the OTC derivatives market with Fannie and Freddie. Fannie and Freddie dealt in low risk, low yield conforming paper and had done so for decades.
The private OTC derivatives market peddled high risk, high yield paper and they were eating F&F’s lunch during the bubble. They were in this market in a huge way, and in it entirely because they wanted to be. It was very lucrative.
Investors gobbled up all the high yield paper that they could get. When the underlying securities collapsed they learned the meaning of ‘high risk’.
“we do realize that banks and institutions were forced at the point of a gun to write bad loans, right?”
This also is untrue or at least very misleading.
The Community Reinvestment Act applied only to retail banks and S&Ls, deposit taking financial firms. It did not apply to investment banks, to hedge funds, to pure mortgage lenders, and to other shadow banking firms that raise their money from investors.
The CRA mandated that deposit takers write a percentage of their loans in neighborhoods where they take in deposits. Ergo “community reinvestment”. There was no requirement that the loans be mortgages and certainly not that they be risky.
Banks holding bad mortgage paper did so either because their own lending practices were bad or because they were purchasing mortgage paper on the secondary market and didn’t vet it themselves.
Retail banks usually have good lending practices. They got in trouble when they trusted the rating agencies and bought AAA rated paper on the secondary market. A lot of that paper turned out to be junk at best and a time bomb at worst.
Whatever the lack of merits of the CRA if it hadn’t existed it wouldn’t have made a difference. If every CRA loan written had failed it wouldn’t have created the financial crisis. There simply weren’t enough of them.
The financial crisis developed in the multi trillion dollar derivatives market which was driving the demand for subprime paper. Bundlers wanted all the subprime paper that they could get and they had an army of loan brokers writing it for them.
Seriously, wow thanks for the education.. this really helps.
It is called fraud. My sister had 5 different banks own her mortgage during 3 years time. Wells Fargo was the last and they foreclosed on her. She did not pay her mortgage for 3 years while her paper was sold to all those banks.
The lenders would sell packages of mortgages with the bad ones mixed in. The next bank would resell. Hot potato.
We the taxpayers got burned.
Goldman Sachs execs and others got immensely rich with zero punishment.
FDIC's great insurance if fewer than 5 banks go under...
Nice overview ... thanks
“If they want to sue someone, they should start with Bill Clinton and the democrats who repealed Glass - Steagal”
Killing Glass-Steagall, aka the Banking Act of 1933, was a bipartisan effort.
The final nail in Glass-Steagall was the Gramm-Leach-Bliley Act, aka the Financial Services Modernization Act of 1999.
It was signed by Clinton, but Gramm, Leach, and Bliley are all Republicans.
The Republicans are the stupid party. The Democrats are the evil party. Sometimes they get together and produce something that is both stupid and evil, and they call it ‘bipartisanship’.
How does a bank sell a loan “repeatedly to multiple buyers?”
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You don’t actually sell the loans into the trusts ,, you just give them a spreadsheet with the property and loan information ,, THERE WERE NO TRUE SALES ... if you’re getting close to a deadline and need a few hundred loans to close out an issue you simply cut and paste from another CDO ...
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