So here is absolute proof that the real party in interest in the foreclosures are the unsecured servicers and also proof that the “default” never occurred. Notice how Freddie Mac figures in. Despite all denials and lies in court it is obvious that the servicers are, through one means or another, advancing payments to the certificate holders regardless of the payment status of the borrowers. And there are other people paying the creditors (certificate holders) as well. That means the secured creditors of the homeowner got paid, which means there is no default and they never declared one.
And THAT is why you rarely see US Bank as Trustee for the blah blah Pass through Certificates Trust hereby declares a default in your obligation; they don’t say that because neither the Trust nor the certificate holders have been short-changed, even as the servicer declares a default and moves toward foreclosure. This also explains why they don;t modify nearly as much as they should — they don’t collect their servicer advances that way. They only collect when there is a foreclosure and the property is sold. Why do they make those payments? Simple: They pay the certificate holders (1) so the certificate holders (investors) are kept in the dark about the real quality of the loan pool and (2) to lull the investors into a false sense of security such that they buy more of these worthless mortgage bonds.
The new “creditor” is the servicer who made the advances BUT they are unsecured. The only reason for the push for foreclosure is to make money selling new certificates of new securitization vehicles based upon the repayment rights of the servicer NOT the payments of the borrower. That means that the only party interested in the foreclosure is the servicer who (a) wants to stop making payments and (b) wants to collect on the unsecured volunteer payments the servicer made to creditors of the homeowner.
The story is that the servicers need to borrow the money in order to pay the certificate holders, but that isn’t true. They would never take that risk when the whole model is based upon the absence of risk. A close look at any REMIC prospectus, reveals a provision that says that some of the money of investors will be deposited into a pool that can be used to pay the investors their expected return on investment — i.e., their own money. Yes it’s a Ponzi scheme, but it is disclosed (not that anyone read it). AND the truth is that ALL of the invested money was pooled into accounts that had nothing to do with the REMIC trust.
And THAT is why the banks cannot connect the dots between the alleged loan closing, at which investor money was being used, and the paperwork which shows payees on the note and mortgagees on the mortgage as parties who have no relationship with the investors whose money was used to fund the loan. Bottom Line: The Banks are stealing from both ends.
Excerpts from the article:
There are some new features that issuers have to build into servicer advance trusts under the new rating criteria but “it’s been workable and issuers are finding ways to get deals done that work,” said Tom Hiner, a partner at law firm Hunton & Williams who has advised on a number of such transactions.
New Residential Investment Corp. is currently in the market with a $1.5 billion deal dubbed NRZ Advance Receivables Trust 2015-ON1. The real estate investment trust recently acquired the assets of Home Loan Servicing Solutions from Ocwen Financial; this deal refinances two existing securitizations, HLSS Servicer Advance Receivables Trust and HLSS Servicer Advance Receivables Trust.
The advance facility is backed by reimbursement rights to private-label mortgage-backed securities.
In June, Ocwen completed $450 million servicer advance refinancing of its Freddie Mac financing facility (formerly OFSART). The transaction securitizes the reimbursement rights to funds advanced on mortgages insured by the government-sponsored enterprise. S&P’s ratings on the notes issued by the deal, Ocwen Freddie Advance Funding LLC’s series 2015-T1, 2015-T2 and 2015-VF1, ranged from AAA to BBB and pay a weighted average interest rate of 2.225%.
In a July conference call discussing second-quarter earnings, Ocwen executives said the deal was positively received; it was upsized by $50 million and the advance rate on the notes was 8 percentage points higher than the facility it refinanced.
Hiner expects much of the market activity in the next two quarters to come from refinancing portions of the often unrated variable funding note commitments extended by bank lenders during the S&P moratorium on rating deals with term ABS.
This trend could result in a total of 10 to 12 term ABS deals by the end of the third quarter, according to Hiner.
The new deals have new features to address S&P’s recalibrated rating methodology, which takes into account the potential for extended timelines for reimbursements, the liquidity risk of the notes under stressed conditions, and the servicer’s ability to continue advancing based on its credit quality.
Timelines are further adjusted based on the actual recent experience of the servicer in recouping advances. The criteria establish “standard” reimbursement curves along with “above standard” and “below standard” ones for different advance types and rating scenarios.
The new methodology also includes a more stringent liquidity reserve fund requirements; this requirement varies according to the geographic diversification of receivables in the master trust.
“In a high-stress scenario, you could have potential issues where you didn’t receive cash from the receivables because you may not be liquidating properties as quickly,” said Jeremy Schneider, the agency’s director of RMBS ratings.
Hiner also expects to see more additional deals backed by repayments rights to advances on agency mortgages, similar to Ocwen’s. While servicing mortgages guaranteed by Fannie and Freddie is not as capital intensive as servicing nonagency mortgage securitizations, Hiner thinks that more participants with agency servicing portfolios will look to the ABS market for funding.
S&P’s older criteria for rating servicer advance receivables securitizations was not tailored for agency RMBS, simply because it had not seen many deals backed by IOUs from Fannie and Freddie. “But now there is more of an appetite,” said Waqas Shaikh, S&P’s managing director for RMBS ratings. The new criteria takes this into account.
Nationstar is the only other issuer to previously place agency notes under its Nationstar Agency Advance Funding Trust in January 2013.
There might not be any more deals from New Residential, however. The REIT said during its second-quarter earnings call that it has $3.5 billion of additional financing to fund increased balances of servicer advance receivables and upcoming maturities. The company acquired $5.1 billion of reimbursement rights through its purchase of HLSS; its portfolio now totals $8.5 billion.
And Ocwen, which has so far sold $66 billion of agency MSRs, is in the process of selling another $25 billion, according to its second-quarter earnings report. However, the issuer intends to remain in the agency space. On the company’s April 30 conference call to discuss operating results for the first quarter, CEO Ron Faris said Ocwen did not intend to sell any of its Ginnie Mae MSRs and would not completely exit GSEs or servicing or lending. The issuer still has $34 billion in GSE servicing rights and approximately $8 billion of GSE subservicing, and plans to continue to originate and service new Fannie Mae, Freddie Mac and FHA loans.
However, Ocwen executives said that they remain “optimistic” that the company will eventually be able to resume purchasing mortgage servicing rights based on discussions with the New York Department of Financial Services and the California Department of Business Oversight. The servicer’s ability to acquire new MSRs is currently restricted as part of last year’s settlements with the two regulators over its practices.”
- So homeowner is obligated to make payments
- The note references others obligated also (guaranty / surety)
- The PSA references the obligation and requirement to make advances of principal and interest
- The PSA references the ability to make use of an “advance facility” to fund advances
- Investors purchase securities (providing funding through the advance facility)
- The funds from the advance facility investors are funneled through the trust to certificateholder investors to cover all payments that were required but were not made on the pool of loans in the trust
- The servicer skims off their fees from the funds, which means they were paid their servicing fee even though the homeowner may not have made any payment