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Premium member Presentation Transcript Slide 1: SECURITIZATION CHAIN Who owns the note?Slide 2: Who owns the note? SECURITIZATION CHAIN This fascinating presentation will explain what occurs in the CHRONOLOGY of the actual events mean Real life events is a not pursuit of what appearSlide 3: What is Securitization? The process of turning an (illiquid) asset or group of assets into a marketable debt security, loan or other financial instrument in order to obtain funding or manage risk exposures Less known as a major primary funding sourceSlide 4: Broadly Unknown Funding Sources Loan Markets – traditional consumer, commercial and industrial loans provided by banks, finance companies and other institutions Bond Markets – corporate bonds issued by large corporations and institutions Equity Markets – public share offerings issued by large and small companies Money Markets – short-term financing, primarily commercial paper issued by large corporations and institutions Securitization is Less Known & MIS-understood Securitization is not as broadly known and understood as straight loans, bonds and commercial paper However, securitization is a significant primary funding source for US corporations and institutions (as we will soon learn more about) Securitizations can be issued or funded in the form of loans, bonds or commercial paperSlide 5: What Assets are Securitized?Slide 6: What Assets are Securitized? MORTGAGESSlide 7: What Assets are Securitized? MORTGAGES CREDIT CARD RECEIVABLESSlide 8: What Assets are Securitized? MORTGAGES CREDIT CARD RECEIVABLES AUTO LOANS & LEASESSlide 9: What Assets are Securitized? MORTGAGES CREDIT CARD RECEIVABLES AUTO LOANS & LEASES STUDENT LOANSSlide 10: What Assets are Securitized? MORTGAGES CREDIT CARD RECEIVABLES AUTO LOANS & LEASES STUDENT LOANS TIMESHARE LOANSSlide 11: What Assets are Securitized? MORTGAGES CREDIT CARD RECEIVABLES AUTO LOANS & LEASES STUDENT LOANS TIMESHARE LOANS INVENTORY / DEALER FLOORPLAN LOANSSlide 12: What Assets are Securitized? MORTGAGES CREDIT CARD RECEIVABLES AUTO LOANS & LEASES STUDENT LOANS TIMESHARE LOANS INVENTORY / DEALER FLOORPLAN LOANS EQUIPMENT LEASESSlide 13: What Assets are Securitized? MORTGAGES CREDIT CARD RECEIVABLES AUTO LOANS & LEASES STUDENT LOANS TIMESHARE LOANS INVENTORY / DEALER FLOORPLAN LOANS EQUIPMENT LEASES TRADE RECEIVABLESSlide 14: What Assets are Securitized? MORTGAGES CREDIT CARD RECEIVABLES AUTO LOANS & LEASES STUDENT LOANS TIMESHARE LOANS INVENTORY / DEALER FLOORPLAN LOANS EQUIPMENT LEASES TRADE RECEIVABLES FUTURE FLOWSSlide 15: What Assets are Securitized? MORTGAGES CREDIT CARD RECEIVABLES AUTO LOANS & LEASES STUDENT LOANS TIMESHARE LOANS INVENTORY / DEALER FLOORPLAN LOANS EQUIPMENT LEASES TRADE RECEIVABLES FUTURE FLOWS RENTAL CAR FLEETSSlide 16: What Assets are Securitized? MORTGAGES CREDIT CARD RECEIVABLES AUTO LOANS & LEASES STUDENT LOANS TIMESHARE LOANS INVENTORY / DEALER FLOORPLAN LOANS EQUIPMENT LEASES TRADE RECEIVABLES FUTURE FLOWS RENTAL CAR FLEETS FLEET LEASESSlide 17: What Assets are Securitized? MORTGAGES CREDIT CARD RECEIVABLES AUTO LOANS & LEASES STUDENT LOANS TIMESHARE LOANS INVENTORY / DEALER FLOORPLAN LOANS EQUIPMENT LEASES TRADE RECEIVABLES FUTURE FLOWS RENTAL CAR FLEETS FLEET LEASES ETCSlide 18: The Shadow Banking System Because of the size of securitization as a funding source, it is sometimes referred to as the “shadow banking system” Source: SIFMA, Federal ReserveSlide 19: Funding the US Consumer Approximately 25%, or $580 billion, of all US consumer credit funding (non-real estate) is provided by securitization Source: Federal ReserveSlide 20: Funding US Homes and Commercial Real Estate Approximately 50% of all US real estate funding is provided through securitization Source: Federal ReserveSlide 21: Funding Corporate America Approximately one-third of Fortune 1000 companies utilize securitization as a core funding source Trade receivable securitization programs are widely used by low and non-investment grade companies as a lower-cost funding source Dealer floorplan securitization are used by equipment, auto and other manufacturers to fund their dealers’ inventory Captive finance companies use securitization to fund equipment loans and leases originated to support sale of the products manufactured by their parents Why is Securitization so Popular? Reduced funding cost Capacity Matched Funding Off balance Sheet Treatment Alternative Funding Source Liquidity Non-recourse EtcSlide 22: PART 2 – BASIC SECURITIZATION CONCEPTS & STRUCTURES The Structuring Steps of a Securitization Key components of any securitization include: Data analysis Financial structuring Legal structuring and documentationSlide 23: Simplified Structure The typical securitization structure uses a Special Purpose Entity (SPE) to legally and financially isolate a specific pool of assets that the originator wishes to securitize SPE / Issuer Investors Asset Sale Agreement Sale of Assets Servicing Agreement Collections Funds Funds Collections representing Interest & Principal Secured Notes / Debt OriginatorSlide 24: So here's what happened First create the SPECIAL PURPOSE VEHICLE Second issue CERTIFICATES (Bond) Third get the CERTIFICATES ARE RATED Forth Purchase INSURANCE or CREDIT DEFAULT SWAP Fifth Sell the CERTIFICATES to the INVESTORSSlide 25: So here's what happened The next thing they do is COLLECT THE MONEY The money goes to an AGGREGATOR The aggregator then puts the DEMAND Down line on the SECURITIZATION CHAIN To MORTGAGE ORIGINATORS, BROKERS, and AGENTS!Slide 26: So here's what happened Brokers says “I need a hundred million dollars in Loans” “And here our the terms of the loans in CATEGORIES” Because they have Already created trenches in the SPV MEMBERS So WITHOUT ANY LOANS may have Trench A Loans Trench B Loans Trench C Loans Trench D Loans Z toxic waste Loans already thereSlide 27: So here's what happened And whether they USED THE Lehman approach Where they actually attach a FAKE SPREADSHEET 1. which they refer to in the documents 2. as being populated by eight sample data 3. which is to say, “FALSE” Fake List of Mortgage Loans This Fake Spreadsheet will LATER be REPLACED LATER with Real Mortgage Loans! True List of Mortgage LoansSlide 28: So here's what happened Wall Street then has this DEMAND that they made on Mortgage Brokers and Loan Originators Which eventually got to the point where they COULD NOT SATISFY THE DEMAND SO THE AGGREGATOR CREATED Their OWN COMPANIES THAT WOULD ORIGINATE MORTGAGE LOANSSlide 29: FIRST LOAN APPLICATION That's why you got B of A for Lehman and Lehman owned by Aurora So that the money is still with the AGGREGATOR Now they sign a POOLING OF SERVICE AGREEMENT and An ASSIGNMENT AND ASSUMPTION AGREEMENT Then they get a FIRST LOAN APPLICATIONSlide 30: Now The Fraud Begins Now the AGGREGATOR funds their OWN Loans Remember They are holding the money from investors Now They send various reports which are of dubious accuracy Of populating the data for that Special Purpose vehicle Which they change around at WILLSlide 31: M.E.R.S. Using either MERS the “HITMEN!” WHY? Because Aggregators have the RIGHT to go in there on a PASSWORD and CHANGE any DATA they want!!! Or using their OWN internal devices to change Data! Which Lehman and Bear Stearns, Citi and others Control!Slide 32: M.E.R.S. So you had M.E.R.S. and You had a Shadow M.E.R.S. So whether they had M.E.R.S or not They still had M.E.R.S. Allowing the Aggregators to constantly C HANGING AROUND the MORTGAGE DATA !!Slide 33: WHY THE FORECLOSURES? Questions, why you have in all foreclosures Give the appearance of all these CREATED companies OUT OF NOWHERE Trustee services Foreclosure reconstructs services and all his other companies They need to funnel them to make ensure one thing!!!!Slide 34: WHY THE FORECLOSURES? It rarely happens That the same property and the same borrower is foreclosed upon at the same time!!! By more than one supposed Pretender Lender! They don't know who OWNS the loans and they don't care!!! All they care about is MAKING SURE that Two people don't make a claim On the SAME PROPERTY at the SAME TIME So in order to do that they had to CREATE these companies that Outsource providers of FORECLOSURE SERVICES Severing companies that receive 10 - 15% on EACH FORECLOSED MORTGAGE! 10 - 15% on EACH FORECLOSED MORTGAGE!Slide 35: ROBO SIGNERS When in fact, as we just described way before Wells Fargo entered the picture. The SECURITY was sold to the investor Thereby locking in all rights under the assignment and assumption agreement and pooling and service agreement BEFORE YOUR LOAN EVER TOOK PLACE !!Slide 36: ROBO SIGNERS Well back before securitization, but that was called lawyers No longer because In order to make this happen They had to FABRICATE the documents necessary via ROBO SIGNERS They must try and show that Wells Fargo, the servicer is the OWNER of this loan and nobody else.Slide 37: OPERATION OF LAW So that's a roundabout way of getting to the point Why did I say it was interesting under Reconstituted MASTER POOLING and SERVICE AGREEMENT And any answer is YOU CAN'T EXECUTE ANOTHER DOCUMENT After the SALE to the INVESTOR every other document that is in place is FIXED Nobody has AUTHORITY to change them WITHOUT going to the INVESTOR And nobody went to the INVESTORSlide 38: OPERATION OF LAW So by Operation Of Law Because those DOCUMENTS already existed and MONEY had changed hands by OPERATION OF LAW When you signed the papers for YOUR ALLEDGED LOAN You the HOMEOWNERS were signing with the INVESTOR BUT, THE HOMEOWNER DID NOT KNOW THIS FACT! HOWEVER, BY OPERATION OF LAW YOU WERE!!Slide 39: INVESTORS and HOMEOWNER First of all, Nobody went to the INVESTORS!! The servicer or Aggregator could not take a chance The INVESTORS might PEEK under the HOOD and said What are you doing under there ?Slide 40: COURT Wells Fargo, the servicer comes in Court and says, “We are Wells Fargo,… you heard that name Judge ….and we have been around for 150 years” And it's I NCONCEIVABLE to the JUDGE although more judges are starting to see it But it is INCONCEIVABLE to most HOMEOWER’s that Wells Fargo, the servicers would be so DOWN AND DIRTY as to be LYING DIRECTLY about what their POSITIONSlide 41: The homeowner must object! COURT You do not have the permission to view this presentation. In order to view it, please contact the author of the presentation.