2012 Abstract Shows Absence of Data Credibility for Borrowers, Lenders, Investors and Government Regulators

Hat tip to Bill Paatalo who brought this to my attention.

see: Abstract – US Residential-Mortgage Transfer Systems – A Data Management Crisis

U.S. Residential-Mortgage Transfer Systems: A Data-Management Crisis

John Patrick Hunt† , Richard Stanton‡ , and Nancy Wallace§ May 16, 2012


This paper reviews the current state of residential-mortgage data structures from origination through the securitization supply chain. We discuss the various uses of these data, their limitations in mortgage-risk management, and the current lack of transparency in important segments of the mortgage market.

We conclude that despite the size and importance of the mortgage market in the overall U.S. economy, current data-management practices make it difficult or impossible for borrowers, lenders, investors and government regulators to perform the oversight and analysis functions necessary to maintain an orderly market and to ensure fair pricing of securities backed by those mortgages.

Editor’s Note: Except for the seminal study by Katherine Ann Porter that she conducted at the University of Iowa in 2007, there is no study concluding the obvious — that the banks deliberately chose to use and invent systems that make it difficult and in fact, usually impossible, to track any residential loan in either the money trail or the paper trail.

The two things that stand out from this very comprehensive report, are that there is no common number used to identify loan documents and  their finding that the alleged REMIC Trusts are composed of multiple pools. These are high value financial instruments. In the securities markets we use a CUSIP number for every stock and bond purchased and sold. No such control number is used on mortgage loans.

The finding that the alleged REMIC Trusts are at least theoretically composed of MULTIPLE LOAN POOLS corroborates a basic tenet of my analysis, to wit: there is no single pool of loans that is attributable to a REMIC Trust and therefore, the mortgage loan schedule (MLS) presented in court does NOT represent the entire asset picture of the Trust. It’s very clever. If they are caught red handed they only need say that they didn’t think the other loan schedules were relevant. Nonetheless they proffer the MLS as THE MLS when the Trust was formed and that the MLS represents a current picture of the ownership of the PAPER even though it does not represent that the Trust is the obligee of the borrowers’ debts.

Katie Porter, now running for Congress in California, came to a more sinister conclusion that turned out to be true. She predicted that the original note would not be available at time of enforcement because it had been destroyed. I corroborated this conclusion when I surveyed multiple “lenders” who only claimed to be the “holder” of the note, not the obligee of the debt,  and not the holder in due course (i.e., where the REMIC Trust paid for the debt, and didn’t even receive a copy of the note.)

Like many other reports and abstracts prepared by eminently qualified experts in economics, securities, underwriting of loans and underwriting of securities, the conclusion is real, obvious and not contested by anyone representing the banks. The system was rigged to enable all loans and all paper trails to be shifted around at will to suit the needs of the TBTF banks — leaving the borrower, the borrower’s attorney and the court with only clouds of smoke and mirrors.

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