Who Owns Blue’s Mortgage? Nobody Knows and BoA is Toasted

November 22, 2010

When mortgages are “securitized” by the banks that originate them (“sponsors”), such as Bank of America — whom we’re slowly learning, this weekend, due to developments in a New Jersey bankruptcy hearing last week, may have actually and completely fallen into the insolvency abyss — they’re subject to a “pooling and servicing agreement.” In lay-speak, these “pools” and/or “bundles of mortgages,” serve as the basis for what is known as “mortgage-backed securities,” or more correctly, “mortgage-backed securitizations” (i.e.: “MBS,” and/or “RMBS,” which are the initials for “residential mortgage-backed securitizations”). These MBS/RMBS are then sold off by special purpose vehicles/special purpose entities (“SPE’s,” “SPV’s”), licensed bond traders/trading firms, and investment trusts (entities that actually create the mortgage-backed securities and then sell them to others) to investors. (Diarist’s Note: This is the “Cliff Notes” version, and technically speaking, it’s not 100% accurate, since it’s considerably more complex than this.)

Even simpler – BoA sold phoney securtities and the buyers are due thier money back – which BoA has lost.


  1. Well, I don’t know who this Blue is.. ha ha. But I know that my mortgage is only for 15 years give and take..@ 5 1/8%. I just pay the bill to BoA. If a chine man owns the mortage.. they can hand over the check to them.. I still own 50% of my house. Today, the title insurance companies are having a ball. Banks are making mega $$ off the refinancing stuff.. FEES! This is how they make money! They are in biz to make $$. Not to help out folks as Obama and his admin think..

    Ireland is tanking Doggie.. and then portugal and SPAIN.. many us folks think what does this have to do with US… ha ha.. Consequences of what happens OVER THERE.. have an indirect influence on US. The WHO keeps all mum about that stuff.

    Cracked me up the other day when I saw Obama sitting in a GM car while he was in Spain.. duh.. Yeah it says GM on it.. but it was made in Europe!!! 50 Billion went to GM too keep them going in MI.. what do they do.. they build an $800 Million plant in MEXICO! Our tax dollars at work!

  2. My dream scenario since my mortgage is with BofA (at least that’s whom I pay): Court orders BofA to forgive all mortgages!!!! I can dream can’t I?

    • As shown in the Fraudclosure Flowchart, Rutherford will have to be in default on his mortgage before he can find out if B of A can document the mortgage.

      I look for Congress to pass a law saying that a foreclosure can go on even if documentation is lacking. After all, who do congresscritters really represent?

  3. Dream on Rutherford. Nobody will win on this one – the bubble has popped and the $$$ is gone. The only thing to do is get it all out there and over with.

    5 1/8% is high. My credit union shows 4.125% for 15 years fixed.

    • rule of thumb to refinance.. interest rate should go down to 3% for it to be worth it. The FEES paid at refinancing will not justify the application if the rate isn’t at least 2 points below what you have…

  4. 1) Let’s say that BofA can’t document that it ever lent money to Rutherford, so it can’t foreclose on him and, in effect, Rutherford’s mortgage is forgiven.

    2) But BofA has included Rutherford’s mortgage in a bundle which was sold to other investors. The investors look to BofA to make them whole for BofA’s screwups – which may be limited to lost paperwork, but may also be due to loans that were never documented in the first place. Or due to loans for which the original documentation was plainly fraudulent from the git-go. (I have moved on from Rutherford’s case!)

    3) So of course BofA looks to the sorry outfits that wrote the undocumented loans or “liar loans” that it foolishly bought. Perhaps BofA can get some of its money back from one of those sorry outfits. After all, the whole thing is the fault of ….

    4) Countrywide? Oops… Countrywide no longer exists. On July 1, 2008, Countrywide became a wholly-owned subsidiary of ….

    Bank of America!

    • Well there you go …. my mortgage was originally from Countrywide. LOL

      All I can say is 2011 will be an interesting year in the Lawson household.

    • Rutherford… YOU should be writing books or for some paper!!! I’m serious.. WTF?? I enjoy your stuff on-line.. I don’t worry about the small stuff. Let God worry..

      Have faith and hope..

    • SW, you’re very kind. I toil in obscurity on the blog hoping one day to be discovered. Odds? About 1%.

    • Get closer by purging the idiots. They chase intelligent commenters away.

    • Good news! Tex Taylor seems to have purged himself from Rutherford’s blog.

      I would like to take partial credit for it, but that’s probably a stretch. I had a good day yesterday. Tex – not so good. Fakename got in some awesome licks on him too. Plus Rutherford chimed in on some of his more outrageous statements.

      What a horrid human being Tex is. Lots of pent-up anger and resentment there.

    • Tex has serious serious ego probems… i ignore him and he hates it 🙂

    • Gray, I wouldn’t thump my chest just yet. Tex has a pattern of leaving (usually with an announcement) and returning, albeit sometimes weeks later.

      I know you guys fault me for it but I have built up an immunity to Tex’s toxic side. Of course, it’s been about a 2.5 year process. 🙂

    • His toxic “side”?

      I haven’t ever seen another side.

    • There is not one. Maybe the blog owner can tolerate him – and a few others of his ilk – but they add nothing except poison. This morning is a perfect example. Repeated regressive talking points along with personal attacks – if that is what you want – you got it. Intelligent discussion – no.
      I suspect if the attacks were deleted Tex and his ilk would go away – that is all they are there for.

  5. In 1982 I opened a checking account at Sooner Federal Savings and Loan. They had a branch located conveniently near the house I lived in back then – at The Farm in Tulsa. I have used the same checking account ever since.

    Meanwhile, “my” bank kept changing underneath me. Sooner Federal went belly-up in the S&L debacle. The feds sold its remains to something called First Gibraltar, which in turn flipped the business to Bank IV of Wichita. A few years later, Boatmen’s Bankshares of St. Louis acquired Bank IV. Less than a year later, Boatmen’s was acquired by Nationsbank, headquartered in North Carolina. Then Nationsbank acquired Bank of America in 1998, and changed its own name to the name of its new subsidiary.

    So that is how I became a Bank of America customer – by doing absolutely nothing.

    I also have had a Visa card through AAA since about 1998. I can’t remember what bank was behind the card originally, but in several steps it became a Bank of America Visa.

    Too big to fail? That clearly means too big to exist. Break that sucker up into fifty state banks. And put an end to bank mergers forever.

    • Yeah I had a checking account like that – it kept changing.
      I now – and for the past 18 years have checking account through a credit union. Also had my mortgage there until I paid it off.
      The credit union has never changed ownership, they did not sell off my mortgage. Funny thing – they cared if I could pay it too.
      Lenders should be forced to keep a big enough cut of all mortages and other loans – so that they always cared.

  6. Oh my!

    Testimony in a New Jersey foreclosure case decided last week may spell big trouble for Bank of America. If what one bank employee said on the stand proves to be accurate, paperwork problems it acquired when it purchased the failing mortgage provider Countrywide in 2008 could leave BofA on the hook for billions of dollars.

    Linda DiMartini, a supervisor and operational team leader for the Litigation Management Department of BAC Home Loans Servicing, testified in the foreclosure case of John T. Kemp that it was “customary for Countrywide to maintain possession of the original note and related documents.” If that’s true, then Bank of America may discover that it has millions of loans on its books that it thought it had transferred to trusts that issued mortgage backed securities, because 96% of Countrywide loans were ostensibly securitized.

    As the Congressional Oversight Panel explained, that outcome alone could cause massive damage to a bank’s balance sheet. And as bad as that would be, it isn’t the only problem that could result from Countrywide hanging on to the notes.

    If the mortgage-backed securities aren’t in fact “mortgage-backed,” investors who bought them could be able to force BofA to buy the securities back. A significant number of buybacks could on its own destroy BofA’s balance sheet. Nor could BofA stave off either outcome retroactively by delivering those notes today. First, the contracts that created the trusts would typically forbid transferring the loans into the trusts now. Second, even if somehow that could happen, such a transfer would destroy the special tax status the mortgage backed securities enjoy and give the investors a different reason to put back the securities or sue over them.


    Too big to fail?

    • ask Lehman Brothers if you can fail…

    • Exactly.. Here we allowed Lehman to fall.. but the Goldman Sachs we bailed. WHY?=> Warren Buffet!!!!

      Ireland is tanking folks. Not good. Portugal is next.. then Spain.. Our Economy is shot as well. market talk is that Black Friday fell short. People CHARGE IT.. immediate satisfaction. The Chinese and Germans are the only ones getting rich.

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