Makes for very good reading. Shows that the advent of low-doc and non-doc loans were, as epected, sure to result in higher delinquencies. As we have pointed out before here, that was the point — to get loans that were sure to go into default. That was the only way they collect the “insurance” (credit default swaps).
Filed under: bubble, CDO, CORRUPTION, currency, Eviction, foreclosure, GTC | Honor, Investor, Mortgage, securities fraud | Tagged: borrower, disclosure, foreclosure defense, foreclosure offense, fraud, Lender Liability, mortgage meltdown, predatory lending, rescission, securitization, TILA audit |
BANKS AGREE TO CLEAR CREDIT DEFAULT SWAPS
-How does this affect Fannie Mae defaulted loans? I think this article discusses the bond default CDS contracts now void of major firms, not the MBS derrivitives that swap out defaulted loans….
thats where I’m not clear with CDS. What are their role relative to defaulted loans?
Fifteen dealer banks on Tuesday told the Federal Reserve Bank of New York that they plan to centrally clear more than 90% of their interest-rate and credit- derivatives trades by the end of the year.
Banks will also begin submitting monthly reports to the New York Fed detailing new transactions and outstanding trades in over-the-counter markets, representatives of the industry group known as the G15 wrote in a Tuesday letter.
“These targets will push major dealers to accelerate their progress,” New York Fed President William Dudley said. “We also expect them to work with central counterparties to rapidly expand the universe of eligible products and to continue to increase clearing levels beyond these initial targets.”
Members of the G15 banks include Goldman Sachs Group Inc., J.P. Morgan Chase & Co., Credit Suisse Group and Deutsche Bank. Clearinghouse operators are also working to include buy-side market participants like hedge funds.
Clearing, in which a central counterparty serves as the buyer to every seller and seller to every buyer, has been pushed by regulators and exchanges as a way to reduce risk in over-the-counter markets, which came under scrutiny as the financial crisis spread.
Lawmakers in Washington are weighing an Obama administration proposal that would mandate clearing of all standardized OTC derivatives, while dealers have voluntarily sought to clear more credit-default swap and interest-rate swap trades.
While much of regulators’ focus in the past year has been on clearing credit derivatives, the letter highlights the push by dealer banks to clear more trades in the much larger interest-rate swaps market.
Each G15 member agreed to submit 90% of new interest-rate derivatives trades for clearing by December 2009. Banks will submit at least 60% of existing interest-rate swap trades to central counterparties.
Interest-rate swap clearing is dominated by London-based LCH.Clearnet. In the U.S., a facility called the International Derivatives Clearing Group owned by Nasdaq OMX Group Inc. is targeting the market, with about $450 billion in transactions test-cleared as of early August.
Chicago-based CME Group Inc., which operates the largest interest-rate futures market in the world, is prepping its own swaps clearinghouse and is expected to launch before the end of the year.
In credit-default swaps, G15 member banks said they expect to clear 95% of new credit default swap trades by October.
So far, banks have cleared more than $2.2 trillion worth of credit derivatives transactions via ICE Trust, a clearinghouse set up in March by Atlanta-based IntercontinentalExchange Inc. for the purpose of clearing credit-derivative transactions.
ICE, which last week announced BNP Paribas as the 13th clearing member of ICE Trust, said Tuesday that it plans to facilitate same-day clearing of credit- default swap trades as it rolls out buy-side access for hedge funds and other institutions in October.
The ability to clear credit-derivative trades the same day that trades occur will reduce the time that buy-side participants have counterparty exposure to dealers, and will reduce both parties’ operational costs, according to ICE.
CME is preparing a rival credit derivatives clearing service, though there remains no launch date.
—Michael S. Derby contributed to this article.
Write to Jacob Bunge at jacob.bunge@dowjones.com
i have believed for over a year now that most of the liar loans were the “lenders” lying in order to get the mortgages “approved”. However, it makes a believeable story line that the
BORROWERS were the ones doing the lying without exception. That shifts the blame and the focus away from the truth, as does the “missing paperwork” (geez, these brokers were so busy trying to get people into their homes, they got behind on the paperwork), “yes your honor, we have a sworn lost, missing or destroyed note affadavit, even if we never owned the note, it hasn’t been assigned to anyone in 4 years, we have no personal knowledge of the note’s whereabouts, haven’t checked the servicer’s addition, this default has been manufactured and facilitated by people who don’t speak english, the phones are in India, the fax machines are in Ca. or Fla, no wonder their modification didn’t go through”, but mistakes do happen, so can we jsut get this foreclosure over with, the homeowners can’t afford an attorney, this gives us a good shot at stealing their home. S0- the confidentiial witnesses have testified as to their complicity in this horror show, at least that is a start.
zurenarrh & abby –
See LivingLies article: “8th Circuit Comes Down Heavy for Homeowners on TILA Rescission” at
http://livinglies.wordpress.com/2009/03/25/8th-circuit-comes-down-heavy-for-homeowners-on-tila-rescission/
Money quote from the court’s ruling: “Requiring borrowers to sign [documents] which are contradictory and demonstrably false is a paradigm for confusion.”
This happened to me also. I didn’t fill out the refinance application; it appears that someone with Countrywide did–I was not aware of what was actually on the application until fairly recently. At any rate, the application is that of a fictitious person. Unfortunately, a real person, i.e. me, signed it.
I mean, this application said my wife and I lived in the house in 2000 when we didn’t even buy it until 2006. It said our son “lived with family”–he’s lived with us since the day he was born. It didn’t list my wife’s law school loans as an expense, nor did it list the second house note we were paying at the time as an expense. It said we paid 15% more for the house than we actually did.
I should point out that my wife and I gave them correct documentation; but they decided not to use it on the application. Why? I guess if they had, they wouldn’t have had our signatures under the words “I promise to pay” and therefore wouldn’t have gotten to sell another note and trigger another credit default swap. If only I knew then what I know now.
I feel like this is something I should sue over, but I’m afraid that the judge will simply ask “Is this your signature on this application?” And I’ll have to answer “Yes” and that will be that. However, I also feel that my signature doesn’t and didn’t change the application “errors” above into facts, and that due diligence on the part of CW or an underwriter would’ve easily revealed the application’s falsehoods.
I’ll have to read the site you’re referring to, Abby.
If you want to find out who the real ‘liars’ were go to the
Stanford Law Securities Class Action Lawsuit website.
Read, for instance, the investor lawsuit against New Century Mortgage. The CW = Confidential Witness(es) who were former employees of New Century.
They describe how the employees were the ones who actually input the fictitious salary information into the computer underwriting system in order to ‘force’ somebody to qualify for the mortgage loan!
Again, I provided loan docs, however the originator processed the loan as a no-doc and I was NOT made aware of this.