Do Mortgage Pools Really Exist?

Jake Naumer in St. Louis (my hometown!) forwarded a comment to me today that he found particularly interesting. It’s from Neil Garfield’s blog and was from an anonymous poster. It said:

“The trusts were just set up to pass through current cash payments for MBS [Mortgage Backed Securities] and derived MBS synthetic securities. Mortgages remain with the bank that purchased the loans from originators – only current cash flows are passed through. A foreclosure never qualifies as a current cash flow.

Many mortgages were simply sold as non-compliant by the bank before the loan receivables were ever securitized. And, if they were securitized, at some point loans are charged off. [I think he means loans in default?]

The only tranche in an SPV [Special Purpose Vehicle] that holds any rights to non-cash pass-through payments – is the residual tranche held by the servicer. The bank itself will pool the default charge-offs and sell to a distressed debt buyer at a discount. But the servicer will still claim to “hold” the rights to the loan – even though the mortgage loan receivables are long gone from the acquiring banks off or on balance sheet. The servicer is now servicing for a party that will NEVER be disclosed to you.

But the courts did not like that servicers claimed to be the creditor. (Note: I’m seeing this happen right now – see my previous post on Tiffany’s Story. The MERS assignment was from the original “lender” to the mortgage pool instead of the servicer, in June 2010, several years after the pool’s formation in 2007.)

So, attorneys for the default debt buyers started initiating claims under the name of the trustee for the SPV that once passed through current payments.

Need to get beyond this – the trustee is not the CURRENT creditor (or even past creditor) anymore than the servicer.

Problem is – it is very difficult to get through discovery in courts. Documents produced are minimal – and no one will divulge that the acquiring bank – or its SPV conduit – has long rid itself of your loan.

If anyone here suddenly ran into large sums of money – and paid the trustee for the SPV that claims to hold the collection rights to your mortgage – you would be paying the wrong party. Your payment would never be accounted for – than how can they be the foreclosing party?”

Christine here: All I can say is WOW. I think he’s absolutely right, given what I’m already seeing with the assignments directly to the mortgage pool. Why aren’t the mortgages in the pool already? He’s saying that defaulted loans are being packaged up and securitized AGAIN but no one realizes this is what’s happening. The same servicer is still in place and on the surface, it looks like the loan’s ownership hasn’t changed. But it may have.

As for discovery, he’s also correct. The problem is that judges aren’t listening to pro se plaintiffs enough to make a difference. I think this will change as soon as more attorneys get up to speed and the discussion moves forward.

In the meantime, this adds even another layer to the mess – despite thinking that the mortgage pool is the real creditor, it may not be. That’s why you have to question everything.

Got questions? E-mail me: Christine@desertedgelegal.com or call me, 602-350-2151.

DISCLAIMER:

****CHRISTINE SPRINGER IS NOT A LICENSED ATTORNEY. THIS BLOG IS COMPRISED OF HER OPINIONS, OBSERVATIONS AND INTERPRETATIONS AND IS NOT INTENDED TO BE CONSTRUED AS LEGAL ADVICE. PLEASE CONSULT WITH AN ATTORNEY BEFORE RELYING ON OR TAKING ANY ACTION BASED ON THE INFORMATION IN THIS BLOG.****

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