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New Questions Raised In Mortgage Financing

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http://www.nytimes.com/2011/02/10/business/10mortgage.html?_r=1&ref=business

Banks have been fighting with disgruntled bond investors and insurers for months, arguing that they do not need to buy back soured mortgages they placed inside securities before the financial crisis.

Now, it turns out, some of those banks may have secretly collected partial payments on those same mortgages several years ago and pocketed that money.

At least that is a theory being pursued by plaintiffs’ lawyers in some of the largest mortgage bond lawsuits, in which banks are accused of filling mortgage bonds with loans that did not belong there.

The theory surfaced in a recently unsealed lawsuit against a mortgage unit at Bear Stearns, the failed investment bank that is now part of JPMorgan Chase.

In the suit, the Ambac Assurance Corporation, which insured some mortgage bonds created by Bear Stearns, contends that the bank was partly compensated by loan originators for mortgages that became delinquent shortly after they were packaged into securities. Bear Stearns’s mortgage desk kept the payments, according to the suit, rather than apply them to the bonds that contained the delinquent loans.

Interviews with more than a dozen former workers at several big banks, including Lehman Brothers and Deutsche Bank, suggest that several banks received millions of dollars at a time in such payments, known as early-payment-default settlements.

But the money trail of these settlements is murky. It is unclear how much of the money was added to bankers’ profits — and bonuses — and how much was forwarded to buy out bad loans from mortgage bonds.

Whether or not the settlement payments were shared with mortgage investors, they are likely to be used in court to show that Wall Street banks knew about the growing stream of mortgages that had missed payments within their first 90 days, a common sign of mortgage fraud. That sort of evidence may matter to government investigators at places like the Securities and Exchange Commission, which is looking into whether banks misrepresented the sorts of mortgages placed in bonds.

At Bear Stearns, there seems to have been some knowledge of the failing loans, according to the Ambac case. Ambac says there is evidence of more than 100 early-default settlements for batches of loans that soured quickly. An example in that case describes an $11 million payment for one batch of loans. For another batch of “at least 12 loans,” there was a $2.6 million payment.

Ambac’s case was filed in federal court, but a judge there ruled this week that the case belonged in a different jurisdiction. Erik Haas, a lawyer for Ambac, said the company planned to refile in state court.

JPMorgan Chase, which bought Bear Stearns three years ago, said Ambac was a sophisticated investor that knowingly took risks in its deals.

“We do not believe Ambac’s claims are meritorious and intend to defend Bear vigorously,” said Jennifer Zuccarelli, a JPMorgan spokeswoman. Ms. Zuccarelli would not comment on Bear Stearns’s use of settlement payments.

More at the link.

The system just appears to be getting more and more corrupt. Considering the sums invested if the courts go against the banks, do these institutions have the money to pay out? Could we see the banks start suing the bankers who got the bonuses on these deals in an effort to get the money back?

Still I'm sure this only happened for a small number of cases.

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Fraud ring.

FED - fraudulent monetary policy, induces bubble and people react to that, CPI is understated and the slush debt into the system and pretend it is growth. It isn't it is poison.

People lie about their earnings to get mortgage finance which becomes so easy to get even the crooks get in on the act borrow the money and waltz off before the ink is dry.

Bent brokers, loan arrangers and appraisers are taken on in 1,000's, no 10'000's so the above can be processed.

The lenders take all this bent paper and get bent mortgage insurance companies to write policies which they can never cover.

They then take the bent loans, bent insurance, bent papworkwork to the bent ratings agencies to get them to stamp a credit ratingon this shit. The credit rating agencies take their cut and stamp it.

Some mug investors then buy this shit becuase it is the only thing giving an annual return near or greater than the bent and fraudulent rate of inflation.

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  • 284 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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