World Savings Bank, A Living Legacy of the Subprime Crisis
By Daniel Edstrom
DTC Systems, Inc.
http://www.dtc-systems.net
http://livinglies.wordpress.com
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.
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L. Randall Wray, Professor of Economics and Research Director for the Center for Full Employment and Price Stability, University of Missouri-Kansas City posted an article on the Huffington Post (http://www.huffingtonpost.com) that I somehow missed. The MERS design was woven in fraud. Professor Wray points out the two main issues with MERS. The first is that most foreclosures are illegal because those doing the foreclosing do not have legal standing. Second the practices that create the foreclosure problems also mean that the mortgage backed securities are actually unsecured debt. Professor Wray says that this means the banks must take them back, so they are toast. He also states that it all comes back to MERS business model: it destroyed the chain of title.