Month: November 2010

Just When You Thought You Knew Something About Mortgage Securitizations

Dan Edstrom is a guy who is in the right place at the right time. His profession? He performs securitization audits (Reverse Engineering and Failure Analysis) for a company called DTC-Systems.

We thank the guys from zerohedge.com for this article!

Make sure you visit them today to learn more…

Just When You Thought You Knew Something About Mortgage Securitizations

by williambanzai7

Dan Edstrom is a guy who is in the right place at the right time.

His profession? He performs securitization audits (Reverse Engineering and Failure Analysis) for a company called DTC-Systems.

The typical audit includes numerous diagrams including the following:

  1. Transaction Parties and Flow (similar to the chart below, but much easier to understand)
  2. Note exchanged for a bond Foreclosure parties
  3. Priority of Payments from the Security Instrument (Mortgage, Deed of Trust, Security Deed or Mortgage Deed)
  4. Priority of Payments from the Pooling and Servicing Agreement

This diagram shows that they are not following the borrowers instructions in the security instrument Continue reading “Just When You Thought You Knew Something About Mortgage Securitizations”

Securitization: What is it?

The idea behind securitization is that a lender can make a loan and immediately sell the loan so that their capital is not tied up for 30 years. In reality it doesn’t quite work this way.

fig.1

The idea behind securitization is that a lender can make a loan and immediately sell the loan so that their capital is not tied up for 30 years.  In reality it doesn’t quite work this way.

In the classic securitization example, a company that originates loans sets up an agreement with a warehouse lender (GMAC, Morgan Stanley, Bank of America, Wells Fargo, etc).  The agreement typically provides that the warehouse lender will provide the capital for the loan to the originator and the originator will provide the loan to the warehouse lender for securitization.

Continue reading “Securitization: What is it?”

Yesteryear

It used to be that when a homeowner took out a mortgage, the bank held the paper.

fig.1

It used to be that when a homeowner took out a mortgage, the bank held the paper.

If you had questions or needed help you simply contacted the bank.

The bank held the note and mortgage on-site and could produce this paper if they needed to payoff, foreclose or sell the loan.

When the loan was sold the note was endorsed and the mortgage assigned.

The new owner of the loan actually took possession of the note, mortgage and the assignment.

The assignment was property recorded in the county and the appropriate taxes and fees were paid for the transfer.

No other party was present and the homeowner was not confused as to who owned the loan.

Those were much simpler times.

Securitization Blog Online …

DTC Systems.net, we provide a reverse engineering and failure analysis of Securitization for Residential Mortgages

Welcome to DTC Systems.net!

We provide Reverse Engineering and Failure Analysis of Securitization for Residential Mortgages.

Please stay tuned for posts discussing these issues in detail.   Currently we have a Securitization Workshop for Attorneys scheduled for December 11, 2010 in Auburn, CA (near Sacramento).

This is an 8 hour conference geared for attorneys, paralegals, loan auditors and others who need to understand how Wall Street created these complex transactions.

More information on this will be posted shortly.