COMBO TITLE AND SECURITIZATION SEARCH, REPORT, ANALYSIS ON LUMINAQ
EDITOR’S ANALYSIS: WHAT IS THE EFFECT OF TRADING, BUYBACKS, RECONSTITUTED “TRUSTS” ON THE CLAIMS OF “OWNERSHIP” OF THE LOANS?”
Up in the clouds of finance and trading desks they are creating accounting entries indicating transfers of mortgage backed bonds. AIG announced it is “buying back” $17 billion worth of the worthless stuff. Industry insiders estimate that more than 50% of all Special Purpose Vehicles (SPV) have been “reconstituted” into new vehicles and sold again. And then you have “trading” as investors purchase and sell MBS speculating on their eventual value, which I contend is zero.
Meanwhile on the ground, 7 million foreclosure sales have been conducted at auctions at the behest of people and parties who claim they have the right to foreclose. The only way that could be true is if they are the lender or creditor or they have acquired the receivable without conditions or other provisions. But we all know that the trading activity, bailouts, insurance, credit default swaps, and other third party transactions either paid the obligation, or transferred it. In the case of AIG, who insured MBS values, and the contracts written for credit default swaps, they specifically waived the right to subrogation, so they obviously didn’t buy the MBS or the SPV, they simply paid the liability.
Yet in courts and non-judicial proceedings, “foreclosures” have been conducted as though they are real, even though the highest probability is that the claimant is not in the least related to the loan or the purchase of the loan, and the party for whom they claim the position as “agent” has long since been dissolved or has transferred its claims to interests in the loans.
Then, to top matters off, somebody, not necessarily the party that started or ordered the foreclosure, makes a “credit bid” at the foreclosure auction. This means that instead of paying cash for the house they use a piece of paper that says they are the creditor, when everyone knows that at the very least they are not and never were in the position of a creditor because they neither loaned any money nor purchased any receivables with actual money. They were appointed by unnamed authorities to start the foreclosures and “bid” on the property like mobsters order hits through intermediaries so they can’t be charged with murder.
The fact remains that the shell game on the ground, in the court system is merely a reflection of the shell game in the clouds where they are pretending that the MBS actually are backed by loans even though the borrower never agreed to the terms that the investor received when they advanced the money. It is also true that the investor never agreed to the terms of the loans that were funded or the manner in which they were executed, and that transfer of the loans, in any form, were never made.
So why are we pretending that we know who owns the loan and that the documents proffered are accurate representations of the funded loans? Why are we pretending that the credit bid is valid and why are we pretending that the claims of foul predatory lending, along with investors’ claims of predatory proprietary trading by investment houses are “irrelevant.” The answer can only be that when somebody is paid not to see something they don’t see it. When their job depends upon them being ignorant of the facts, then they know nothing. And that is why we have this huge market of predatory loans and predatory foreclosures by people who are knowingly committing fraud on the homeowners and investors — from the ground up to the sky.
For example: There were several “Maiden Lane” entities named for a small street dating back 200 years right off Wall Street. These were created during the bailouts and other chicanery to create the impression that the mega banks were in stable condition. These Maiden Lane Entities were said to own the mortgage-backed securities, which is to say, they were now in the position of the “lender” on loans that were funded to homeowners.
How they came to own those loans is a mystery because there is no document in any public record that effectuates the transfer but it has been widely announced, thus giving actual notice to anyone who is involved with those loans that any particular loan can and probable was the subject of some sort of transfer. None of these entities ever show in foreclosure proceedings, nor do you ever see AIG, the U.S. Treasury, or the investment houses, some of whom were stuck with MBS that had not quite made it to sale.
Now here is the kicker — The price, although not publicly disclosed yet, is 100 cents on the dollar — on securities of no value or if you want to twist things around, on securities of at best dubious value. Why would they do that, what assets are they buying, and what is the effect on foreclosures of loans held in those “portfolios”? DEFINE THE ASSET!!
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NY Times
A.I.G. Offers to Buy Back Securities for $15.7 Billion
By MICHAEL J. DE LA MERCED
9:12 a.m. | Updated with New York Fed statement
The American International Group offered on Thursday to pay $15.7 billion to buy back mortgage securities held in an investment fund set up as part of its huge government bailout.
The move is intended to further simplify what remains of the rescue package granted to A.I.G., the insurance company, before it begins selling off the government’s 92.1 percent stake in an offering that will probably be held in May.
Under the offer, outlined in a letter A.I.G. sent on Thursday, it would buy back securities held in an investment fund financed primarily by a loan from the Federal Reserve Bank of New York.
That vehicle, known as Maiden Lane II, originally held about $30 billion worth of securities, though its portfolio value now stands at $15.9 billion. Through principal and interest payments from the securities’ underlying mortgages, the balance of the New York Fed’s loan to the fund has fallen to $13.2 billion from $19.5 billion.
It was set up to buy securities that A.I.G. had acquired through a subsidiary that lends stocks owned by the insurer to other investors for purposes like short-selling. While stock-lending businesses normally invest in safe instruments like Treasury securities, A.I.G.’s unit invested in higher-yielding mortgage-backed securities — which soured as the housing market collapsed, costing A.I.G. money.
To pay for the transaction, A.I.G. will draw upon cash held in its insurance subsidiaries, which would then hold the securities and profit from the coupons they pay out. The company said it believed that the securities would actually generate more income than the low-yield investments those subsidiaries hold, said a person with direct knowledge of the matter who spoke on condition of anonymity because he was not authorized to speak publicly on the matter.
A.I.G. is offering to buy the securities at an average of 50 cents on the dollar, this person added.
A.I.G. consulted credit ratings agencies to ensure that taking on the securities would not substantially affect its debt ratings, the letter said. In the letter, A.I.G.’s chief executive, Robert H. Benmosche, said the New York Federal Reserve would reap a $1.5 billion profit on the loan it made to Maiden Lane II.
Jeffrey Smith, a spokesman for the New York Fed, declined to comment.
Update: The Federal Reserve Bank of New York said in a statement:
The Federal Reserve has received a formal offer from AIG to purchase the assets in Maiden Lane II, LLC (MLII). The Fed has been aware of AIG’s interest in those assets for some time. Any decision on a possible disposition of these assets will be made in a way that maximizes the proceeds to the taxpayer and that is consistent with the goal of fostering financial stability.
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Filed under: bubble, CDO, CORRUPTION, currency, Eviction, foreclosure, GTC | Honor, Investor, Mortgage, securities fraud | Tagged: AIG, Maiden Lane, MBS, predatory lending, predatory trading, residential mortgage-backed securities ("RMBS"), SPV, trading | 19 Comments »