No Loan Default – Understanding Monthly Certificateholder Statements/MBS Investor Reporting
By Daniel Edstrom
DTC Systems, Inc.
Every month public and private securitized trusts provide statements reporting aggregate financial information to investors, ratings agencies, consultants, and any other interested party. These statements provide financial accounting information for the MBS pool including each tranche and in many cases details down to the loan level.
While these statements vary among the different transaction parties, there are many similarities. Typically these statements are issued by entities such as Wells Fargo Bank, Deutsche Bank, The Bank of New York Mellon, OneWest Bank, and many others.
The first page usually names the deal and the contact information for the party providing the statement, as well as various deal dates (Cut-Off Date, Close Date, First Distribution Date, etc.). In this case the External Parties are listed as follows:
- Seller: Goldman Sachs Mortgage Securities
- Servicer(s): BAC Home Loans Servicing LP
- Underwriter(s): Goldman Sachs & Co.
- Swap Counterparty: Goldman Sachs Capital Markets LP
Before we get into Servicer advances of principal and interest we will look at the class tranches, payments of principal and interest on the certificates, and the allocation of realized losses.
Numerous classes of securities are typically sold to investors (offered certificates) or held by insiders (non-offered certificates). The senior classes typically receive principal payments, while the subordinate classes are reduced by losses. Reviewing the Certificate Payment Report part of the statement you can see how this works. Review multiple statements to watch this work over time.
Moving along to the Collection Account Report, notice the collections of principal and interest for each loan group and the total for all loan groups. The statement I am currently looking at (First Franklin Mortgage Loan Trust 2006-FF3), the principal collections for Group 1 was $417,361.15 and Group 2 was $719,220.60, totaling $1,136,581.75. The interest collections were $262,819.43 for Group 1, $472,946.16 for Group 2, for a total of $735,765.59.
Because the payments of principal and interest were insufficient (some of the property owners did not make payments), the principal advanced by the servicer(s) was $91,315.43 for Group 1 and $144,747.40 for Group 2, totaling $236,062.83. The interest advanced by the servicer(s) was $236,829.99 for Group 1 and $430,684.21 for Group 2, totaling $667,514.20.
Interestingly, the Non Recoverable Advances was listed as $0.00 for Group 1 and $0.00 for Group 2, totaling $0.00.
So pursuant to the governing documents, the servicer(s) is/are making advances of payments of principal and interest to the investors, who receive the full required payment of principal and interest on the underlying loans whether or not the property owner pays or not.
We already know that the servicer reports principal and interest payment advances to the investors but does NOT report principal and interest payment advances to the property owners or to any state, federal or bankruptcy court involving property owners in litigation.
Is the servicer required to report the same information to the investors that it reports to the homeowners? That is the subject of another post.
View this certificateholder statement: http://dtc-systems.net/wp-content/uploads/2013/06/FF0603_STMT_20130528_O.pdf
