This is why they won't stop the foreclosure machine...

[mdavies013]

Wall Street makes a mortgage. They then sell the mortgage, sell synthetic mortgages that will replicate the returns of the mortgage, and then buys multiple policies in case of the guaranteed default.

Let's say for simple math they have magnified the loss to the order of 10...every $100,000 house they save from foreclosure will cost them $1 million.

Now consider that 4 million homes were foreclosed on in 2008+2009.

If you are the bank...would you spend $2k to save $1 million?

[msongs]

1. step one - make it illegal to sell a mortgage w/out property buyer's consent nt

[sabrina 1]

2. Exactly, how did they ever get the right to sell people's mortgages without their

permission? I have wondered about that for a long time.

[oldhippie]

4. Uh, you agreed to it when you signed the mortgage contract ......

You did read the contract, right? There was a part in there about "... and their assigns..."
That's how they got the right.

Edited to add: Sorry didn't mean you personally. I don't even know if you have a mortgage. I was speaking of the general mortgage holder. Sometimes I come off too snarky.

[sabrina 1]

5. I have not had a mortgage yet. But when I do, I will definitely be asking a lot

of questions I might not have thought to ask before I found out about this mess.

But that doesn't really answer my question. Who made it possible for them to make that a condition of taking out a mortgage? And if you refuse to give them permission, can they legally refuse you if you have qualified in every other way? Maybe this is something people need to look into. I definitely would not trust them and if they are going to profit from my mortgage, why can't I share the profits? We are asked to share the sacrifices but not the profits. Looks like they set things up pretty nicely for themselves to accomadate their various schemes.

Edited to respond to your edit. No problem, I didn't take it badly, didn't know people agreed to allow them to use their mortgages that way. I assumed you made a deal, they lend you money, you pay it back with interest. Seems like they are always figuring out ways to use people for profit, and not to people's advantage as we know now.

[oldhippie]

6. I would suggest reading a sample mortgage contract ......

..... long before you ever need one. Like, now. You will see that there are all kinds of things in there that you didn't think about. The mortgage companies and their lawyers have thought about them, a lot, as they have run into a zillion different things that have gone wrong with contract agreements.

I guess most people allow the banks and mortgage companies to use them that way because they want the money to buy a house. I guess you could not agree, or try to change the terms, but then the bank may not lend you the money. You want the loan, so they kinda have the upper hand. The bank makes sure it can sell the loan to another party so that they have some liquidity. It really shouldn't make any financial difference to you who next owns the right to receive your payments.

Where things got all balled up was the slipshod way that the banks and institutions packaged, swapped and sold the mortgages without going through the proper procedures and recording of deeds and such so that the transactions could be properly traced. That's how people were getting foreclosed upon that never even had a mortgage. Somebody screwed up a transfer and recording. I even worry about it, and I haven't even ever had a mortgage on my house.

Again, I think it would be instructive for you to drop by a bank or mortgage company and ask for a sample mortgage loan contract. You will probably learn a lot and have a lot more questions. Then you can be one of the knowledgeable parties when it comes time to get a mortgage.

[sabrina 1]

9. Thank you. I will do that when I get a chance. Do you know if Credit Unions

are any different, and if you can get a mortgage through a CU? I was listening to someone talking about a Community Bank which claimed that they never foreclosed on any of their customers. When they got into difficulties they made it a practice to contact them and renegotiate their loans to a more affordable payment giving them some breathing room, if eg, they had lost a job. I think I would avoid going to any of the big banks now. They don't view their customers as people.

[oldhippie]

12. I'm not sure about credit unions .....

.... as I haven't dealt with one in years. I haven't had a mortgage in awhile, so I haven't looked at the details of what the local banks offer. My primary bank is a local community bank. They are great, and I know all the tellers and bank officers and they always say hello when I come in the bank. But most of my neighbors are real estate brokers, and they tell me that the local banks just aren't competitive when it comes to mortgage rates. They just don't have the reach and diversity of the big banks and mortgage lenders and their loan rates, and thus payments, will be much higher. So yes, working with a local bank where they know you is a pleasure, but can you afford it?

Now you've got me curious. I may stop by today and chat with the local bank president (he is also my city councilman and a neighbor) and ask a few questions about their mortgage policies and whether they keep or sell their loans.

My son is finally starting to think about buying his first house, so I will probably find out a lot more about the details as I start to help him. I'm a retired EE, but I also have an MBA in financial planning. I told him I will only charge him a modest rate for my financial advice!

[Yo_Mama]

14. That is absolutely right

Mortgage rates on the national market are very low now, but if you are a community bank and you don't originate for sale (you'll keep the mortgage), you can't originate a 30 year fixed mortgage for that price.

The reason is that the money the bank gets to lend to the borrower is cheap now, but it comes in the form of deposits, which are essentially a short term loan to the bank. As circumstances change, the amount the bank will have to pay for deposits will rise. But most of the mortgage money won't be paid back. So in seven years, the bank might have a mortgage with a balance of $100,000 for 3.75% with servicing costs of one quarter of a per cent, giving a net return on its money of 3.50%. The bank might be paying an average interest rate to customers of 4% by then, with an extra quarter of percent in account servicing costs. So every month, the bank would be losing 1/2 a percentage point on that mortgage. This is how banks loan themselves out of existence - and CUs also.

That is why the GSEs exist. That is why mortgage securities exist. They allow mortgages to compete in terms of today's money market instead of the expected money market over the life of the loan. When a mortgage-backed security is created, it is competing in the capital market with seven and ten year Treasuries or corporate bonds for capital. And those rates are currently very low, so the mortgages can be sold to investors in securities for a much lower interest rate.

ALL COMMERCIAL BANK LENDING IS BORROWING SHORT AND LENDING LONG. This is the dominant feature of banking. To keep the portfolio of loans, banks have to impose a higher interest rate so that they can cover future changes in interest rates.

Now the community banks can write much shorter term home loans competitively for lower rates, and they can write adjustable rate mortgages for competitive rates. But why should a borrower now get an ARM? Is it all likely that mortgage rates will be lower five years down the road?

[sabrina 1]

16. Thanks for your response. I see what you are saying about local banks not

being able to compete with big banks when it comes to mortgage rates. But after all that has happened now, and the reason I asked the question is because I read somewhere advice to those looking for a mortgage, that people might be better off trying to get a mortgage from a smaller, local bank. And if more people did that, wouldn't that make it possible for them to be more competitive with their rates?

If you do find out more, I would definitely be interested.

I'm sure your son would be happy to pay you for your expertise,

[Yo_Mama]

13. Because it's their property and their right to sell their property?

And what difference does it make?

If you sign a mortgage contract, you have to pay back the note on the same terms no matter who owns the mortgage.

The math doesn't change because the mortgage is sold. The money you owe is the money you owe, and the legal recourse if you default is the legal recourse.

Mortgage rates in the US are kept lower than they otherwise would be because of organizations like Fannie Mae - set up by the government - which buys mortgages and markets the payment streams.

I just don't see your point.

The problem with refinancing mortgages that are underwater is that many of them will default anyway, so all you are doing is multiplying your losses. In the end, the next buyer pays for it, which is why FHA has raised their insurance rates so high.

[mdavies013]

3. My problem is that Wall Street is a fraudulent Ponzi scheme.

What us the purpose of a synthetic mortgage other than to rip someone off.

That and if 80% of mortgages didn't meet lending standards why haven't they been put back to the banks.

[truedelphi]

8. Ssh. Don't think about this too much

When you do, you realize that both Parties are "party" to these Wall Street, Ponzi scheme notions.

And until Corporations are denied their "personhood," and until campaigns are financed without oodles of cash from saiid Corporate "Persons," life will go on as it has for the last 12 years. With bought and paid for politicians that really won't do anything to change any of this. After as long as the politician is nice to the Big Wall Street Corporations, they don't have to worry about their house being foreclosed upon.

In fact, I was just reading about a former aide to the SEC who will soon be an executive at Goldman Sachs. There was another guy with this wierd last name (something like Obama?) who stated if elected, this sort of revoling door policy would end under his watch. He was quite emphatic abut it, too.

Sadly, I guess the guy with weird sounding name never got elected. Because the revolving door policy continues to operate.

[HeiressofBickworth]

7. In 1995

when I bought a house the bank assured me they did not sell their mortgages. And, sure enough, they didn't. In about 2 years, the bank actually closed and a mortgage company scooped up the mortgage business. Same effect, I suppose. The mortgage wound up in hands other than the originator of the loan. I sold the house in 2003 and haven't had a mortgage since. Yes, all the releases and deeds were filed at the time I sold. I'm glad to be out of the potential dangers of fraudulent foreclosures and other problems.

[Honeycombe8]

10. Except for one thing. The banks are spending millions in lawsuits w/the ins. cos....

that the banks are expecting payment from for the defaults. The ins. cos. are suing for fraud or negligence, or are being sued for nonpayment.

A bank can't just get a mortgage insured and expect to be paid when the borrower defaults, if the bank didn't do its job to ensure it was a good mortgage to begin with. It's called due diligence. They represent to the ins. co. that they got certain paperwork, did certain things, verified income, and such things.

The banks also sold baskets of the mortgages to investors, as investments, also representing to them that the banks had done due dilgence to ensure the mortgages were good. Those investors are also suing.

It's a mess.

[Honeycombe8]

11. Are mortgage companies considered part of Wall Street?

Banks did mortgages, and banks are part of Wall St. But what about mortgage companies? They are not banks. But are they part of Wall St, too?

[ms.smiler]

15. Honeycombe8, I wonder if my explanation and lawsuit can help you better understand the largest Ponzi

scheme in history.

The OP is here: http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=439x2412603

Loan originators sold the mortgages to home buyers. Banks purchased the loans and converted them into securities which they used to defraud MBS investors. Mortgage servicing companies are owned by banks and Hedge funds. Servicing companies are the companies that collect payments from homeowners & are usually the party that brings a fraudulent foreclosure action against homeowners.

A GSE like Fannie, securitized mortgages the same as the banks.

MERS is an important player in the scheme. That is the private and secretive land records system that was set up by Fannie and the banksters. It’s used to conceal the history of the securitized loans.

“Robo-signing” and document mills are necessary and needed when the banksters want to recreate the mortgage loan in favor of themselves, not the investors who funded the mortgages. Those fraudulent documents are filed in our public land records.

Securitized mortgages enable the banksters to collect multiple times on the same loans. Securitized mortgages also create gaps and breaks in the chain of Title to millions of U.S. properties. Homeowners with such loans will not receive a valid Deed and have clear Title upon completion of their payments.

I’ve been researching mortgage/foreclosure fraud for 3 ½ years. To the best of my knowledge, it is not presently possible to purchase a legitimate mortgage loan.