I should say, MERS.
How stupid is it to create a financial product out of a mortgage which doesn’t have any legal interest in the underlying property. What’s the other piece of this corpse/ghost type separation? Someone who has an interest in the property but is getting no income from it? What are our bankers smoking?
“What are our bankers smoking?”
TARP Money. The small bankers usually have pretty good practices. Its the big global banks that do stupid stuff like this. At least thats my experience.
ok...let’s say a bank holds $2 million in less than prime quality loans...So it sells the mortgages to another bank or insurance company for $1.4 million but it still continues to retain the interest income from the monthly payments the homeowners make, the principal is sent on to the other bank or insurance company, which goes towards the $1.4 million they paid out..Meantime if a homeowner defaults, the other bank can foreclose and get the bulk of the money back from that particular mortgage, figure a $25,000 loss per foreclosure...If the other bank eventually brings in $1.6 million then it has made out ok...Also- they can bundle those mortgages up and re-sell them to Freddie Mac and get their $1.4 million or so back at any time...It’s only Monopoly Money to those fellas...
It’s all in the money flow...