Why would Goldman Sachs buy Delinquent and Defective Mortgages?

By the Lending Lies Staff

Just last year Goldman Sachs entered into settlements with state and federal governments over the sale of toxic mortgage backed securities to investors while subsequently shorting the very same securities they were selling.  Goldman would agree to provide $1.8 billion in debt relief to delinquent borrowers.  However, since Goldman (and likely no other identifiable party) doesn’t owns the debt, Goldman cuts its losses by repackaging the toxic debt, assigning it an AAA rating and selling it to unsuspecting investors and pension funds for a fee, thus off-loading any liability.  Goldman knows the feds won’t do anything to stop its crimes spree- so why not sell mortgage backed securities you know are toxic?

Goldman has once again successfully masterminded a new strategy to satisfy the $1.8 billion settlement without having to fund a dollar of that outstanding obligation, and while also profiting on this RICO scheme.

Goldman’s plan includes buying up billions of dollars of non-performing and defective loans at massive discounts.  Goldman just announced they were purchasing 4.5 billion dollars in non-performing loans from Fannie Mae.  It would be interesting to research if Fannie Mae discloses that these loans have material defects that cannot be remedied.

Goldman then contacts the homeowners and negotiates loan modifications by incentivizing the homeowner to participate by reducing their principle balance.  Most desperate and unsuspecting homeowners have no idea that Goldman is acting as a debt collector and there is no underlying party that owns the debt or has a right to modify the mortgage contract in the first place.  Once the modification is signed, in theory, a “new” loan is issued that rectifies all past endorsement, assignment and trust issues, while whitewashing all prior fraud.

The homeowner is now making payments on a new loan that is less than Goldman’s initial discount on the original purchase.  Goldman than credits the principle forgiveness against its $1.8 billion dollar mortgage relief obligation while making money!  Goldman is able to skirt the punishment and the fine costs them nothing because the debt was acquired at an even larger discount.

Finally, the true ingenuity of this plan emerges.  Once the loan is modified and performing, the loans can be repackaged and resold as Triple-A paper once again to unsuspecting buyers.

The Wall Street Journal reports that the debt scavengers at Goldman Sachs are the largest buyer of Fannie Mae’s non-performing loans, having purchased $5.7 billion worth of unpaid loans over the past several months.  Goldman Sachs should have been barred from ever participating in mortgage backed securities transactions after its last criminal enterprise.

Over the past year-and-a-half, Goldman Sachs has become the largest buyer of severely delinquent home loans from Fannie Mae. In fact, Goldman has acquired nearly two-thirds of $9.6 billion in loans the agency has auctioned off, representing unpaid loan balances in excess of $5.7 billion, according to the Wall Street Journal’s review of government records.

In all, Goldman has spent roughly $4.5 billion on some 26,000 Fannie-owned loans, according to government records. It has also been buying mortgages, from private sellers and Freddie Mac.  Apparently while everyone is unloading zombie mortgage loans, Goldman Sachs is buying as much toxic sludge that is available.

According to the government-sponsored enterprise, the portfolio was split into four pools of loans and auctioned off.

The winning bidder of the smallest of the four pools is Igloo Series II Trust (Balbec Capital). That pool contained 1,465 loans that carry an aggregate unpaid principal balance of $246,748,844.

The pool has an average loan size of $168,429; a weighted average note rate of 4.51%; a weighted average delinquency of 29 months; and a weighted average broker’s price opinion loan-to-value ratio of 78.75%.

The remaining $1.43 billion in unpaid principal balance went to MTGLQ Investors, a “significant subsidiary” of Goldman Sachs.

MTGLQ Investors is now a fixture among the NPL sales from both Fannie Mae and Freddie Mac.

Last year, MTGLQ Investors bought billion-dollar pools of NPLs from Fannie and Freddie in several different sales.

In this latest sale, MTGLQ Investors bought the remaining three pools of NPLs.

The first pool contained 3,062 loans that carry an aggregate unpaid principal balance of $496,205,215.

Goldman has an excellent business plan.  By renegotiating and repackaging worthless mortgage loans it can polish high-risk loans into grade-A paper.  The pension funds take on all of the risk if the homeowners default, and Goldman will have kicked the can down the road to the newest suckers in the scheme.

On Tuesday Goldman won the majority of defective loans at Fannie Mae’s latest auction, its largest to date. The bank bought about 8,000 loans with unpaid balances of $1.4 billion.

Goldman has paid between 50 and 90 cents on the dollar for the loans, according to Fannie Mae, however, some (if not all) of these loans are likely not worth a dime until fraudulently modified.

Meanwhile, because Goldman is getting credit toward fulfilling the terms of its settlement, it can afford to pay more for the delinquent loans than other competing bidders, which essentially means they’ve not only created but they have cornered an entire market.


16 Responses

  1. At what point do those goons end up in the trunk of somebody’s Caddy?

  2. MTGLQ Investors owns our note now – Fannie mae sold to them without an assignment during ever-banks escrow fraud to cause a default (paid 2 annual insurance payments – would not correct) – note was not endorsed at that time – xerox copy and Recontrust and Bank of america parties did not provide endorsed note either – not until Nationstar involvement did an endorsement in blank by David A. Spector appear – no date – not even a true and correct copy of the note – FANNIE claims through third parties that they purchased the predatory 2003 jumbo non insured cwhl inc or treasury bank, NA loan from bank of america soon after the countrywide home loan origination (deed of trust states that this party or that party made the loan – so does the funding document – there are also errors in the refinance re-conveyance a party named CTC REAL ESTATE SERVICES who was not the current or the new trustee reconveyed the property to landsafe who was the trustee of both the 2002 va loan and the non insured 2003 jumbo loan – doesn’t seem right) – SELENE FINANCE is new servicer – no party came to required mediation in the everbank / Fannie mae foreclosing entity non judicial foreclosure of 2014-2016- not ever-bank or Fannie mae – nationstar came with everbank declaration of beneficiary and claimed they were servicer for everbank! (Robinson Tait atty for everhome, everbank and fannie mae was there on behalf of servicer Nationstar) Everbank sold “all beneficial” rights to Nationstar – Nationstar all beneficial rights to MTGLQ and nationstar also made some corrections to BACHL void assignment of 2010 after said sale to MTGLQ and transfer of serving to SELENE -they assigned a second assignment to themselves – and the parties even re engaged MERS to do so – Our Title chain is a mess – the 2002 CWHL VA refinance took off 8 years – then the 2003 CWHL non insured jumbo loan added them back plus 30 (for 60k – we did not meet the requirements – they said we needed 8k in reserves even stock – we did not have it – I told my husband I’d agree if they said yes – because our other loans were tough to get – I guess VA had higher standards – husband had been unemployed since 9/11 – – WE have a BACHL modification – wherein they claimed it was HAMP during temp payments – then after BACHL/BANA merger they changed the permanent to themselves with no clear notice of said change – had all the waivers – no clear notice they were adding 10 years – nor an accounting of the arrears. We now realize there was much misrepresentation and escrow error / fraud – and was physically forced by RECONTRUST – they used fake foreclosure papers – and their physical visits to my home – caused my breakdown – it is clear they knew of the predatory nature of the loan – zipped it up with a modification – THEN sold to Fannie Mae – with defects corrected – I still wish I could be – live – somewhere else – too poor to move – and to where – the extortion I am paying now to MTGLQ is cheaper than rent – but will be paying until I am 79 and might have a balloon payment – that is what HAMP / Fannie Mae temp modification stated – USA isn’t what I thought it was – is a cesspool of corruption from top down – bottom blokes or anyone wanting to be honest doesn’t stand a chance in business where USA corp. is involved – it is sick – health has been impacted adversely – still in therapy trying to get my life back together on two medications – as continuing harm when ever-bank started the escrow fraud after I knew what BACHL had done (I have their accounting spreadsheets -except 8 months of trial payments wherein they did not send statements – our libor rate lowering – I guess they did not want us to compare our current rate with the mod rate – ours was lowering the predatory loan looks good – except it was not a jumbo loan amount – while the cwhl appraisal done did increase the value of our home to a jumbo amount – it appears to me with the fraudulent 2002 refinance reconveyance by CTC REAL ESTATE and payoff to servicer – that this is how the ponzi scheme started – a jumbo loan that wasn’t – CWHL inc did not pay off investors of 2002 VA pool – only paid what was expected – and the trust pool was taken over when Bank of America made settlements and stopped paying on said trusts – 2002 – 2004 reports claim – fannie mae doesn’t say who the defaulting party was just that they were purchasing the pools after non payment – BANA sent letters claiming all was fair and cited the ACT – the emergency stimulus act – this also gave Fannie mae funds to purchase all the toxic assets – even state in records recently obtained that the last loan refinance was in 2000 – and a bunch of other lies – – I have had a string of stress related illnesses – where I had to seek medical treatment = and Bank of America has caused continued harm – and while in the foreclosure they stated they had no interest in the loan – yet Nationstar corrected an assignment and as attorney in fact for Bank of America, N.A. assigned the loan to themselves – u’fing believable – and in WA state the atty seem to be unwilling to take on the banks – esp if Fannie Mae claims any ownership

  3. CJ. Is MTGLQ acting as your servicer or Investor ? This whole thing is a scam. They want to sell the property and submit an insurance claim is my guess. We offered a bit under appraised value on a Short payoff and they refused. POS all of them

  4. MTGLQ keeps denying my client’s short sale even though we’re bringing them $100k over principle balance and netting them just under $20k of full payoff…this scenario where you profit off your punishment has got to end! and yes, disgusted1, Shellpoint is the conspirator…

  5. Is Loan Servicer Rushmore Loan Management Services LLC , Roosevelt Management and US Bank doing this as well?

  6. Agree. All in the accounting. What is the accounting??

  7. I am not so sure. It is hard to contact someone in default.

    Real hard, generally they are trying to get moved etc. Goldman may be doing something but I am not so sure it is that.

  8. First need to know if Freddie/Fannie charged off the loan. If they did , can’t securitize as no asset exists.

  9. Wait until everyone finds out that they fund the purchases with only 10% of the total purchase price (reserves) and the rest are on the balance sheet.

  10. “Goldman then contacts the homeowners and negotiates loan modifications by incentivizing the homeowner to participate by reducing their principle balance. Most desperate and unsuspecting homeowners have no idea that Goldman is acting as a debt collector and there is no underlying party that owns the debt or has a right to modify the mortgage contract in the first place. Once the modification is signed, in theory, a “new” loan is issued that rectifies all past endorsement, assignment and trust issues, while whitewashing all prior fraud.”

    This may be what mortgage modification is all about and then they reject with no reason.

    With the increased activities of the Junk Debt Buyers since 2014, there may be a possibility that the Junk Debt Buyers buy defective mortgages with a hope of getting judgment by hook or crook.


  11. Servicing is being outsourced by Goldman. If a loan modification is not done in Goldman’s name, title is destroyed. Any modification should be recorded as it is a new contract.


  12. Obama did nothing to prosecute the criminals who masterminded this scam. Now Trump is handing them all the levers of power in the banking industry. Explain to me how America is anything resembling a just country. Explain how are we self governing.

  13. Wow. Audacious scheme and great analysis. I was wondering about all this. Still wonder how aware the participants are of this, compartmentalization and doublethink seem to shield people from their own actions.

  14. MTGLQ is coming in and crediting bidding the full amount at auction while Shellpoint string’s you along.

Contribute to the discussion!