Reply #49: Can I get some additional explanation? I'm confused. [View All]

[Tansy_Gold]

I read the linked article and I've read some others about the Kemp/BofA case, but I'm still not clear on what exactly happened.

1. Kemp takes out a mortgage with CountryWide. There's a note and a mortgage and all the usual original documents, which CountryWide has in their possession.

2. CountryWide "securitizes" Kemp's mortgage along with bazillions of other mortgages issued by CW.

2a. These MBSes are sold to "investors" as, ostensibly an interest in collecting the interest/profits/whatever from the particular bundle/portion of CW's massive portfolio of mortgages. Thus CW collects the sale price of the MBSes but continues servicing the loans and then, I presume???? paying out the proceeds to the purchasers of the MBSes?????

3. CW goes belly up and is bought by BofA. Now BofA has the task of servicing the loans, collecting the payments, and passing them on to the holders of the MBSes???

4. Kemp files for bankruptcy and in the course of that case it is discovered that CW never delivered the physical mortgages and notes to a "trustee" who was supposed to physically have them as evidence of the MBSes????

4a. Existence/records of the sale of the MBSes indicates that someone other that CW actually "owns" the mortgage debt and is entitled to the proceeds, but CW still "owns" the paper.

4b. Purchasers of the MBSes who find out they don't have legal right to claim the proceeds may turn on CW/BofA and demand their money back???

4b (1). Is the buyback of the MBS reduced by the amount already paid out by CW/BofA on the MBS???

4c. CW doesn't really own the paper because it sold the MBS, but since they didn't transfer physical possession of the paper, the trusts don't own the debt either, so the debt is still owed by Kemp but no one knows to whom it's owed????



I live in a community where there are a lot of foreclosures, a lot of people trying to renegotiate their mortgages and a lot of people trying to buy foreclosed properties. I've heard all kinds of nightmare stories, and at least one potential buyer has said they've had to change real estate agents because it became clear neither the agent nor the broker -- a loooooong time player in the local market -- had any clue what was going on.

This buyer is a family transferred to AZ by the breadwinner's job, and the employer has allocated a lump sum to cover moving expenses, rent while house-hunting, closing costs, etc. The less spent on rent, the more that can be applied to downpayment, etc. That money will run out 1/31/11 and they have been unable to negotiate an affordable sale even with willing and sometimes DESPERATE sellers. They were two days away from closing on a house three weeks ago only to have it fall through because of paperwork "difficulties."

Does the general public have any clue what this all means? I know it means catastrophe, but how and why and who benefits and who pays?


Tansy Gold, the ever curious and frequently confused