Financial Services Industry Threatens Retaliation at Municipalities Who Use Eminent Domain to Fix the Housing Crisis

Financial Services Industry Threatens Retaliation at Municipalities Who Use Eminent Domain to Fix the Housing Crisis

The financial industry is taking another run at a plan to help homeowners, this time the proposed program in San Bernardino County that would use eminent domain laws to acquire underwater mortgages and then refinance them for borrowers at market rates. The financial services lobbying group SIFMA said they would exclude mortgages in San Bernardino and other localities that engaged in this tactic from what is known as the to-be-announced (TBA) market. Here’s their statement:

In the TBA markets, buyers and sellers trade in a forward manner – that is, a trade executed on a given day may not settle for one, two, or even three months. Importantly, at the time of the trade, the identity of the mortgage-backed securities that will be delivered is not known. Rather, the counterparties agree on certain general characteristics of the pool, such as the issuer, coupon, term (15 or 30 years), and settlement month of the trade. This means that the collateral that falls into the various categories must be considered fungible. Investors must have confidence that, as a general matter, one MBS is interchangeable with another. Performance should be comparable, and risk factors should be similar.

Yves Smith contends that the TBA market exclusion would not represent a huge loss for San Bernardino County or their borrowers. She estimates an added expense of 10 to 30 basis points (0.1-0.3%) as a result. But it’s an unnecessary expense, an example of bankers using their power to punish any entity that engages in something they disfavor. Even if this is justified – and it may be, given that the TBA market assumes that something like a taking in eminent domain cannot happen – it represents the same kind of thuggery banks engaged in, with regulator support, when they shut down state consumer protection laws against mortgage fraud during the run-up to the housing bubble.

Rest here…

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4closureFraud.org

Comments
2 Responses to “Financial Services Industry Threatens Retaliation at Municipalities Who Use Eminent Domain to Fix the Housing Crisis”
  1. Tim Bryant says:

    The TBA market is illegal anyway. San Bernandino should be blessed if they are excluded. The TBA market is exactly what it stands for “To Be Announced”. It sells your mortgage before you ever sign it. By doing so, the lender in your closing docs is not the true beneficiary at the time you sign it. EACH AND EVERY “MERS mortgage” in the TBA market is void ab initio, not merely voidable. MERS is not the beneficiary, nor is the lender in the mortgage, so they have no legal status to enter into any contract. Nominee status for an entity who has no “holder in due course” or “person entitled to enforce” status, is a nullity. The lender on the mortgage and loan are required to clearly disclose that they are an “accomodated party”, and not the beneficiary.

    This is also true when a warehouse lender is involved, under a “Warehouse Line of Credit Agreement” which MERS acts as a dual agent for the warehouse lender, and the lender on the closing docs. That is in the MERS “Electronic Tracking Agreement Warehouse Lender”.

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