Tuesday, September 14, 2010, 10:16 AM
Posted by Administrator
Early this morning, a short woman with brown hair was standing behind me in the sign-up line for people who throught they had hearings on mortgage foreclosure cases. She told me that she worked for one-of-those-big-prestigious firms. Before the economy went to crap, she did commercial real estate...the paperwork that went with purchases and sales. Now, she gets involved in complicated foreclosures as kind of a more intelligent side kick to the mortgage foreclosure firm's associate.

As I pumped her for information, her brown eyes darted back and forth. I apologized for making her uncomfortable and I told her that what I was asking had nothing to do with the hearing I was in court for this morning. I didn't want her to think that I was trying to get her to rat out her people.......the banks and mortgage certificate holders that got us into this mess.

So, here is what I found out as a result of my attempts to get her to rat out the banks and mortgage certificate holders that got us into this mess.

1) By way of example "U.S. Bank National Association, as Trustee, successor by merger to LaSalle Bank NA as trustee for Washington Mutual Mortage Pass-Through Certificates WMALT Series 2006 AR5-Trust" is (according to this woman) really just a happy bunch of guys sitting around having a beer and telling stories. It is not...as I had foolishly thought...a bunch of rich people and banks getting richer on the backs of middle class homeowners.

2) I had thought that part of the problem getting a short sale or a modification approved was that there was nobody able to make a decision for these trusts. I was wrong. If you are a lawyer for a pretigious firm like the brown-haired woman, you can call the "servicer" and the "servicer" will call the trust investor for an answer. She said that she always gets an answer.

3) On the other hand, she told me that these trusts had many, many investors so it was unclear to me what "investor" she was getting an answer from. So, I will stupidly continue to believe that a huge problem with the "trusts" is that they were set up to make money....and that the ways to divvy up the money are set up in the trust agreement. On the other hand, they weren't set up to lose money or make deals to cut their losses (short sales and modification). So, if there are a lot of investors.......nobody is really going to agree to anything.

Before I talked to this woman, I had believed that once a mortgagee (the homeowner) defaulted, AIG...with money from the U.S. government.....paid off the mortgagors (the certificate holders) for whatever was still owed ont he mortgage. Sort of like when you total your car, Progressive or GEICO or ALLSTATE pays for the loss. Then, Progressive or GEICO or ALLSTATE take your car to their yard and sell the salvage for several thousand dollars to pay itself back for some of the money the insuror paid out. (I once sold a wrecked LEXUS for about $4,500.)

But, AIG didn't take the mortgage over to try to pay itself back for some of the losses. The losses were just government money so...who cared? So, the idea was that the certificate holders would still have the mortgage to sell or foreclose on and get even more money.

The woman said "no". "Mortgage insurance doesn't pay for the entire loss." By "mortgage insurance", I found out, she meant the payments to the certificate holders to AIG (so, I was right about this part). The certificate holders then got to foreclose the mortgage or sell it to make up the difference between what they had been paid and the amount of their investment. ...or to make even more money.

Whether I am right that there is windfall going to these certificate holders or the woman is right that they are just getting even......I am glad that, at least, they won't be out of pocket. It is bad enough that middle class people are losing what they've got. It would really stink if rich mortgage investors and bankers had to suffer, too.

Editor's Note (by Bob Smith): Duhl is ...and has been for years... a registered Republican. On this subject, he says "Yeah, but in the past 15 years, I haven't been able to find one I'd vote for." Duhl intends to run for Congress, himself, in 2012. He says "But, wouldn't I be the first Jewish congressman?"

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