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.
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Financial Control Fraud
By Jim Macklin
Secure Document Research
When a person or persons who own or oversee the operations of a seemingly legitimate business or Governmental Agency uses that business or agency as a “weapon”, it is known as a control fraud. The term was coined by UMKC Professor William Black (The Best Way To Rob A Bank Is To Own One, Black, 2005). The “weapon of choice” in a financial control fraud is accounting. More losses occur in financial control frauds than any other form of property crimes …combined!
In the early stages of our most recent financial crisis, the FBI had correctly identified the presence of the type of fraud, yet, the Bush administration failed to effect any real consequences, and so the fraud was swept under the rugs of the administrations’ offices. De-regulation and the advent of hyper-bonuses helped to encourage the practices of the ratings agencies, hedge fund managers, and CEO’s of the Wall Street elite, while the AAA rated “junk bonds” went out for sale with a frenzied push for more paper. Never before, in the history of Wall Street, had a AAA rated bond gone into a default. Remember, these ratings agencies hadn’t even bothered to sample the veracity or viability of the loan files upon which these ratings were issued. This is a control fraud in its’ simplest and purest form, with all of the key players indemnified against losses through trust agreements. This is the smoking gun.
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