Business

Published — September 23, 2015 Updated — September 24, 2015 at 7:01 am ET

11 things we learned investigating how the government sells mortgages to investors

Introduction

1. Over 98,000 “bad” mortgages have been sold to investors through a government program since 2010.

2. The Department of Housing and Urban Development (HUD) sells mortgages to investors at a steep discount — at times as little as 41 percent of the mortgages’ collective value.

3. Homeowners typically aren’t informed when their mortgages are sold. This prevents them from advocating for better terms, which they’re entitled to under Federal Housing Administration protection.

 

4. Wall Street investors pay only two-thirds* of the full mortgage value when they buy mortgages from the government (*median price).

5. Homeowners aren’t so lucky: they must pay about 124 percent* of the property value to keep their homes (*median price).

 

6. HUD sells the mortgages in bundles as large as 5,944 loans. HUD designed the program to include nonprofits and community organizations, but the size of the bundles means large, institutional investors have a leg up in blind auctions. Currently only 2 percent of sold mortgages go to nonprofits.

7. HUD’s mortgage sales program is meant to help distressed homeowners avoid foreclosure. But rather than offering better terms to borrowers, the new owners of these homes often flip them for a profit, advocates say.

 

8. Only 16.9 percent of the mortgages HUD sold to investors between 2010 and 2013 have avoided foreclosure.

9. Of those 16.9 percent, less than a third are performing, and over 10 percent have either sold through a third-party sale or been handed over through a deed-in-lieu, still resulting in a homeowner without a home.

 

10. Even if a home isn’t foreclosed, there’s a high chance that the homeowner will lose their house anyway. According a Center for Public Integrity analysis of address data, Bayview Loan Servicing, LLC, took ownership of 1,319 properties. Other beneficiaries: JP Morgan Chase: 841 properties. Bank of America: 639.

11. Many homeowners say they were still involved in renegotiating their loans while their mortgages were sold to investors. HUD’s own rules state the lender can only turn the loan over to HUD for sale once all efforts to keep homeowners in their home are exhausted.

Read the investigation for the full story. Then tell us what you think in the comments section below.

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sam fetters
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sam fetters

What do AT&T, Verizon and Crown Castle International Corp have in common? The largest institutional shareholders of each includes firms like: Vanguard, BlackRock, State Street (the “Big Three”), Invesco, Fidelity (FMR), JP Morgan, Wellington Management, Geode, T Rowe Price, Bank of America, and other of the largest money-management and investment firms, whom operate collaboratively (even comprising the largest shareholders of each other), forming virtual monopolies amongst the largest “competing” corporations, in most every single industry, via large share holdings. (source = http://investors.morningstar.com/ownership/shareholders-major.html?t=CCI) These are the same firms whom also largely own the third largest telecom, T-Mobile. The own the largest… Read more »

Jello Beyonce
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Jello Beyonce

I’ve a theory that the supposed “Trade Wars” and “sanctions” and political/military strife going on between the U.S., China, Russia, etc. are merely distractions, serving to divert attention away from the growing authoritarianism and Oligarchic control spreading across the globe. “Nationalism” is being used as a propagandist covert means of continued increasing Globalism. As this article states: “A Russian woman stood up to speak at one of these public meetings, and she said that when she lived in Russia, the government slam dunked her and she had no say,” King said. “Now she lives in the United States of America,… Read more »

ET69
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ET69

Marx was right about capitalism . Capital gets more and more concentrated in fewer and fewer hands. There is no way out of this greed. We need socialism!

Linda Gordon
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Linda Gordon

5g is a kill grid. The depployment of this weapon is an act of terroism genocide and ecocide. The marketers need to be jailed as terrorists.

Bob Frankston
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The real issue with 5G is that it’s an attempt to roll back the Internet and return to the telecom of the 1970s when the phone company controlled all.