Mortgage Renegotiation

[Beestie]

Originally Posted by classicman

And the legislation that enabled them is at fault, no?

There was no enabling legislation - there was also no legislation prohibiting lending institutions from orginating the stuff.

There's no law against making risky loans. Nor will there be. Free market thing and all.

[monster]

oh wait, and it would be easy to add a time limit. use debit/gift cards instead of checks.

[monster]

oh good, I'll stop feeling guilty about it then!

[classicman]

Perhaps I worded that poorly, no I know I did.

[sugarpop]

This is the reason why I said (somewhere) that I don't think mortgages should be traded. If you have to hold on to a mortgage, then you are more likely to make good, sound loans. I never even knew mortgages WERE traded until recently. Really, who came up that genius idea? that is the STUDIEST thing I've ever heard. Well, not really, but close.

[Beestie]

Originally Posted by sugarpop

This is the reason why I said (somewhere) that I don't think mortgages should be traded. If you have to hold on to a mortgage, then you are more likely to make good, sound loans. I never even knew mortgages WERE traded until recently. Really, who came up that genius idea? that is the STUPIDEST thing I've ever heard. Well, not really, but close.

Mortgages aren't really traded. A small number are but the vast majority are combined with other mortgages into mortgage securities. While its tempting to blame this idea for the economic downfall, it is precisely this idea (that has been around since the 1970s) that has allowed the vast majority of Americans to obtain affordable mortgages.

Its only the recent development of the uber high-risk stuff that is to partially blame for the economy. The underlying secondary mortgage market is really a thing of beauty and remarkable efficiency.

[classicman]

Yeh they just started trading them last year or so.

[sugarpop]

Thanks Beestie. My understanding (and believe me, while I have very strong opinions around this issue, I don't understand most of it) is that they were bundled and sold, and that happened so many times, in some cases they don't even know who owns the mortgage.

What is the credit default swap?

[classicman]

Originally Posted by sugarpop

while I have very strong opinions around this issue, I don't understand most of it

tw will have a field day with that one. n Thats gotta be worth at least 500 words.

[Clodfobble]

It ought to be appalling to more than just tw.

[xoxoxoBruce]

My mortgage was sold to a different lender a half dozen times. But not being bundled into a package, each buyer had to look at it by itself, and judge it's merit as an investment for them. When they are bundled, the buyer is buying a surprise package.

[Beestie]

Originally Posted by xoxoxoBruce

My mortgage was sold to a different lender a half dozen times. But not being bundled into a package, each buyer had to look at it by itself, and judge it's merit as an investment for them. When they are bundled, the buyer is buying a surprise package.

Your loan was sold once - maybe twice. What was sold over and over was the servicing rights - collecting the payments.

Unless your loan was one of the few that don't get carved up, it was put into a pool of other similar loans, and the combined payments from you and your pool-mates are split up into all sorts of interesting structures. However, as complicated as the structures are, all the payments to all the structures have to equal all the payments by all the borrowers for any given month. And that can get incredibly complicated.

[sugarpop]

Originally Posted by Beestie

Your loan was sold once - maybe twice. What was sold over and over was the servicing rights - collecting the payments.

Unless your loan was one of the few that don't get carved up, it was put into a pool of other similar loans, and the combined payments from you and your pool-mates are split up into all sorts of interesting structures. However, as complicated as the structures are, all the payments to all the structures have to equal all the payments by all the borrowers for any given month. And that can get incredibly complicated.

hmmm. Maybe when I used the "traded" it was wrong, but from this description, can you understand how I made that mistake? What do you mean by "carved up" and"interesting structures?" I am trying to understand this. Thanks!

[Beestie]

Originally Posted by sugarpop

hmmm. Maybe when I used the "traded" it was wrong, but from this description, can you understand how I made that mistake? What do you mean by "carved up" and"interesting structures?" I am trying to understand this. Thanks!

CMO
REMIC
MBS
CDO

Quiz on Monday.

[xoxoxoBruce]

Originally Posted by Beestie

Your loan was sold once - maybe twice. What was sold over and over was the servicing rights - collecting the payments.

Unless your loan was one of the few that don't get carved up, it was put into a pool of other similar loans, and the combined payments from you and your pool-mates are split up into all sorts of interesting structures. However, as complicated as the structures are, all the payments to all the structures have to equal all the payments by all the borrowers for any given month. And that can get incredibly complicated.

Damifino? Several times I got notices from different places saying they now held my mortgage. It was a pain in the ass because they would invariably say the last guy wasn't collecting enough escrow.

But then the letters would start, do you know you live on a 100 year flood plain? Who wrote the flood insurance policy? Who wrote the homeowners policy? Why doesn't your mailing address match the deed address? Blah, blah, blah, every damn time. I was glad to be done with it.