World Savings Bank, A Living Legacy of the Subprime Crisis

World Savings Bank, A Living Legacy of the Subprime Crisis

By Daniel Edstrom
DTC Systems, Inc.

World Savings Bank loans were the worst of the worst loans that were packaged up and sold to homeowners from the 1990’s until 2008.  These loans consisted of pick a pay loans with negative amortization.  Typical predatory negative amortization loans allow for the original loan balance to increase to 110% maximum.  Meaning if the loan was originally issued at $100,000.00, the loan balance can keep going negative until it reaches $110,000.00.   World Savings Bank decided that this wasn’t enough and allowed their negative amortization loans to reach 125% of the original principal balance.  This is the gift that keeps on giving.  As home values have been decimated by the meltdown and continue to drop, properties with World Savings Bank loans have principal balances that keep going up and up and up.  No underwriting was given on these loans, the value of the properties and the promise and belief they would ever rise was the only consideration given to support the loan.  The other consideration used in “lending” the money had nothing to do with the homeowners.  World Savings Bank wanted to entice investors into parting with their money.  Lots of money.  In fact BILLIONS and BILLIONS of dollars.  It turns out that World Savings Bank had NO STAKE in the transaction, they were only the middleman.  One big fat rich middleman.  This was at the expense of both borrowers and investors who purchased certificates from the many REMICs setup by World Savings Bank.  What REMICs?  What securitizations?  Didn’t Wells Fargo tell you that these loans were securitized?   Why does the Office of the Comptroller of the Currency (the OCC) allow Wells Fargo Bank to foreclose in their own name on the tens of thousands of World Savings Bank foreclosures?  The OCC knows much more than the American people what World Savings Bank, Wachovia and Wells Fargo Bank are doing to the American homeowners.  Namely that Wells Fargo Bank is walking into court claiming to be the real party in interest, claiming that they own these loans and that they were never securitized.   Of course this is nothing new for Wells Fargo Bank or Wachovia.  Just look at the auto loans securitized by Wachovia Dealer Services.  Wachovia Dealer Services did not loan the money as these were table funded automobile loans.  The money used to fund the automobile loans came from various trusts that pooled the loans and sold them to investors.  The trusts and/or the investors allegedly own the loans and not Wachovia Dealer Services or Wells Fargo Bank.  But you would never know this by going to just about any state court in this country and looking at who the plaintiff is thats filing a judicial lawsuit on these automobile loans: Wachovia Dealer Services.  Reading the Prospectus for these deals is a real eye opener:  Title will remain in the name of Wachovia Dealer Services and even though the loans are sold, the abstract of title given to the DMV will not be updated to reflect the correct ownership.  They go on to admit that title has not been perfected and that the certificateholders are at risk.  It even goes on to say that the loan contracts will not be updated to reflect that ownership has changed (endorsement under state UCC laws).  So you have no endorsement and no transfer (no perfection).  The beneficial and equitable rights have been sold.  The above all describes predatory banking, lending and servicing at its worst.

Let’s take a look now at the World Savings Bank REMICs:

World Savings Bank Flooding the Market with Money

This chart was put together using incomplete information.  For instance, in 1991 and 1999 World Savings Bank issued REMICs, the original balance at issuance is unknown (at least to me).  In 1999 or 2000 two other REMICs issued securities also of an unknown amount. You can clearly see the tremendous increase of investor money that flooded the country driving property values higher.  Once this flood of money subsided, property values went back to their normal levels.  This inflation and deflation is exactly what Thomas Jefferson was referring to.  There are two ways to create money in the United States.  One way is to print money, either physically or electronically.  An example of physical money creation is our paper currency.  Electronically created money would be similar to the current Quantitative Easing 2 (QE2) that has been in the news of late.  The second way to create money is for banks to lender money.  For more information on this read publications put out by the Federal Reserve Bank, such as Modern Money Mechanics published by the Federal Reserve Bank of Chicago.  Apparently there is also a 3rd method of creating money,  through the use of complex derivatives.  Derivatives are listed on balance sheets as “money equivalents.”  In 1983 the amount of these types of derivatives was 0.00.  Today they amount to some $600 trillion (give or take a few trillion or more as nobody really knows the exact amount).  This is quite a feat since the amount of paper currency in the entire world is $50 to $70 trillion.


Anyway, back to World Savings Bank.  World Savings Bank is known to have created 1 REMIC in 1991, 1 REMIC in 1998, 2 REMICs in 1999, 2 REMIC deals in 2000, 2 other REMIC deals in 1999/2000, 3 REMIC deals in 2001, 4 REMIC deals in 2002, 1 REMIC deal in 2003, 3 REMIC deals in 2004, 5 REMIC deals in 2005, 5 REMIC deals in 2006, 5 REMIC deals in 2007 and  3 REMIC deals in 2008.  This is at a minimum and includes on REMICs for RMBS securitizations.  World Savings Bank also did Commercial MBS deals.

The World Savings Bank REMIC transactions have the following structure:

  • Originator: World Savings Bank
  • Master Servicer: World Savings Bank (or for newer World Savings Bank REMICs this would be Wachovia Mortgage Corporation)
  • Seller: World Savings Bank (or for newer World Savings Bank REMICs this would be Wachovia Mortgage Corporation)
  • Underwriter (Lead Manager) : World Savings Bank (or for newer World Savings Bank REMICs this would be Wachovia Capital Markets)
  • REMIC: World Savings Bank REMIC ## (i.e. World Savings Bank REMIC 35)
  • Trustee: Either Deutsche Bank National Trust Company or the Bank of New York

Why is this information seemingly impossible to locate?  Because these are Rule 144/A securities meaning they are private transactions.  Here is what these securities say:  These securities will not be and have not been registered under the Securities Act of 1933 and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.

Here is the kicker: many of these REMICs have been paid in full.  Apparently somebody at Wells Fargo forgot to notify homeowners.

These loans and the resulting foreclosures will be strewn across the next two decades.  The worst is yet to come.

Author: dmedstrom

Reverse Engineering and Failure Analysis - Reverse Engineering Wall Street

14 thoughts on “World Savings Bank, A Living Legacy of the Subprime Crisis”

  1. Michael,
    What you do now depends on where you are at. If foreclosure is coming quickly, contact an attorney immediately. The only method to stop a foreclosure is to get a TRO from a judge or file bankruptcy. If foreclosure is not an immediate concern, you should do all the research you can, including QWR’s (Qualified Written Requests) and/or auditing the loan and/or securitization. An attorney would still be a very good idea. What is the closing date for your loan?


    1. I’m not in foreclosure (or even close). I closed on my loan in May 2004. If I understand this article correctly, World Savings and Loan securitized my mortgage, but never disclosed this in the mortgage doc’s? Were they supposed too? If so, do I have a way get out of the mortgage? If the REMIC was paid in full, how does that effect my mortgage?

  2. Wells Fargo is forclosing on my home. I have hired an attorney. Is it a reality that they can be prevented from forclosing ever with the proper defense?

  3. I have loans from World Savings that closed June of 2005 and another in June 2006 which refinanced the original 2nd of June 2005.

    I’ve hired an attorney who I keep informed of any updates, I’m basically researching until I need to engage his services.

    I sent 2 QWR during 2010 and eventually told they will not respond any more and to hire an attorney – though I told them to communicate with my attorney within the last QWR reply (I guess the letter was too long because that was the last paragraph).

    I see where the Attorney General has settled with Wells Fargo over the Pick-A-Pay loans, but I have other issues which I think take priority. So, I don’t want to modify the loan which may eliminate my option which I think is stronger.

    So, I too would like to learn more about the private REMIC which may contain my loans. Thanks for any assistance you may be able to provide.

  4. In regards to Miscellaneous Proceeds as it relates to Property Damage, Ie diminishing Value. What questions do we ask in QWR to determine if MISC Proceeds are/would have been applicable? How does a borrower make a claim to Misc Proceeds? The DOT makes it seem it is something automatically done by Servicer. How, is this properly presented to BK Judge? First, Borrowers Do not even know or understand this clause on Deed of Trust (N) and it does not show borrowers how to make a claim whether in purported default or not due to loss in value and possibly having your purported secured loan recast. Secondly, when I received my real estate license, MISC PROCEEDS NEVER addressed in class. Third, when I filed BK, unbeknown to me, I may not have been in default at all. Pretender Lender who was servicer only was not able to get stay lifted. NOW, under a new name they are trying to steal my house again.

  5. I have a two loans with World Saving Bank which I have sent them debt validation letters and currently have them in default and have filed a Commercial lien for damages. I have also taken the original promissory note and claimed it on a UCC-1 as it is my promissory note and I am the Secured Party Creditor and the Wachovia is the lien debtor,
    I then filed a UCC-3 assignment back to them a settlement and closure of the account which is the consideration for the loan. They have accepted it and I have sent them a notice of fault to cure and now have them in default. I have recorded a transfer statement, full release of mortgage, and reconveyance of title as I have power of attorney from them. They have not idea as to what I have done to them as they have never answered any of my request and they have by there silence agreed to my new terms the my contract with them,
    I have done an administrative process in Law and the State of California will not hear my case as they are just as guilty as the bank is.

    1. David,

      How can i make contact with you? I am in California and have done the exact process as you have laid out. I would like to pick you brain on what we can do next.


  6. I am very happy to see the exposure that’s going on with these bank frauds and wish everybody in the country would get on board with the suits, etc. We need to take these banksters down and show them who’s boss. We certainly cannot afford to play THEIR game any further!

  7. Hey Dan et al…. thank you so much for research and comments. I think I may have found my June 2004 world savings “loan” in REMIC 15. I had a fairly good idea that it had been securitized, but your site confirmed this for me. I will let you know if i pin it down ABSOLUTELY!!

    All the best,

  8. Wow…
    I would like to hear more details of what you have done David Paris and others. I don’t understand how Moody”s can do original ratings and continue to rate on REMIC 24/closed 8/2006.
    I Need To get that original prospectus !!!
    Can you get in touch with me?
    I want to do the same!!!

  9. Request for Reconveyance
    Since my World Savings Loan was Securitized (most likely) back in 7/2006 and Paid in Full when put into The REMIC..
    I want to send a request foe Reconveyance of my alleged debt..
    Since World and Golden West don’t exist and Wells is the supposed serviced should I send to them??
    Has anyone tried this approach or does anyone gave any input ?
    Please email me at
    Thanks in advance for your response!!

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