Archive for Municipal bond

Foreclosure settlement

Posted in Curious Puzzle, Hillsborough County, FL with tags , , , , , on November 25, 2011 by verbumsapienti2

black hole moneyTo truly eradicate the underlying rot behind the banks’ Mortgage Electronic Registration Systems, Inc. (MERS) program, you need to follow the money.

Counties lost millions on mortgage transfer fees, but who gained the most from all this? The real money was made by those involved in turning these mortgages into federal government-back securities that could be bought and sold on the open market.

The sweetest of the sweet deals are those mortgages that were run through city or county “housing” departments, which resulted in the securities also attaining the status of tax-free municipal instruments.

You only have to go back to the Housing Finance Authority (HFA) of Hillsborough County which in Nov. 2010 got approval from the Board of County Commissioners to bond $250 MILLION to buy and sell existing bank low-income home mortgages.

Just the potential 1% processing fee to turn these mortgages into tax-free municipal bonds should be enough to launch an investigation into who gets what and why. Who then also benefits from offering these bonds for public sale?

The County taxpayers gain not a dime from all this financial activity, but pay dearly in cleaning up the mess thus caused.

It is way past time to lift this MERS rock at the county level to expose the slimy creatures crawling there.

<IMHO> Fred Jacobsen

Hillsborough County Fallout?

Posted in Curious Puzzle, Hillsborough County, FL with tags , , , , on September 3, 2011 by verbumsapienti2
Seal of the United States Federal Housing Fina...

Where's the money?

Any chance that fallout from the national robo-signing and fraudulent bank mortgage investigations might have any negative impact on Hillsborough County for all the “bundled” mortgage-backed securities that came out of the County Housing Finance Authority?

Recall last year’s Hillsborough BOCC consent agenda approval of County Housing Finance Authority’s additional $250 MILLION finance plan “…for the purpose of providing funds for the purchase of qualifying mortgage loans…”

The Department of Housing and Urban Development and other agencies provided the 50 state attorneys general a report on robo-signing practices at the largest mortgage servicers (such as Mortgage Electronic Registration Systems, commonly called MERS and the Nationwide Title Clearing company in Pinellas County).

Counties across the United States are discovering that illegal or questionable mortgage paperwork is far more widespread than first thought, tainting the deeds of tens of thousands of homes dating to the late 1990s.

black hole moneyThe AGs launched a multistate investigation into mortgage servicers in October when evidence of forged and mishandled foreclosure documentation surfaced in state courts. HUD and the Federal Housing Administration launched their own investigation of their servicers in early 2011.

Federal regulators launched a broad legal assault on big banks Friday, claiming they sold nearly $200 billion in fraudulent mortgage investments to housing giants Fannie Mae and Freddie Mac that led to massive losses during the financial crisis.

The suits, brought by the Federal Housing Finance Agency, name 17 domestic and foreign banks as defendants.

Among them: Bank of America, J.P. Morgan Chase, Goldman Sachs, Morgan Stanley, Citigroup and Deutsche Bank.

According to the court filings, those firms and others “falsely represented” the quality of the loans that were bundled into securities and sold to investors and “significantly overstated the ability of the borrower to repay their mortgage loans.”

The result, the suits claim, were investments that were far riskier than the banks led taxpayer-backed Fannie and Freddie to believe, and the securities ultimately were worth a fraction of their original value.

Maybe Hillsborough County should get ahead of this and look into its own fiscal closet for the trail of the promissory notes for those mortgages held before they were sold to investors.

<IMHO> Fred Jacobsen

No Vig for Hillsborough

Posted in Economic Development, Hillsborough County, FL with tags , , on January 30, 2011 by verbumsapienti2

Vigorish is an interesting Yiddish word for the bookmaker’s “take” in handling betting transactions, regardless of the outcome. We mostly hear it used as simply “the vig”.

In investment banking, “vig” is sometimes used to describe profits from advisory and other activities.

In Hillsborough County, vig is paid to lawyers and brokers every time tax-exempt municipal bonds are created and sold to private investors.

County government seems to have turned a blind eye to the enormous profits going to everyone except Hillsborough taxpayers, without who’s acquiesce, none of this would be possible.

The County is leaving money on the table for others to scoop up, by the bag full.

This is being done as a result of the Hillsborough BOCC at one time or another abdicated oversight of  certain “authorities” they helped create.

One recent example is the approval by the BOCC for the Hillsborough County Housing Finance Authority (HFA) “finance plan” to create up to $250,000,000 in new tax-exempt bonds to buy home mortgages, bundle them up into securities which are then sold to private investors.

Not only does the County not get any vig on these transactions, the County taxpayers  also miss out on collecting mortgage transfer fees. Nationwide, this represents a multi-billion dollar loss to counties.

For those of you who are also Federal taxpayers, remember that these are tax-exempt. The wealthy private investors who buy these security bonds PAY NO FEDERAL INCOME TAX on the interest income. This may go a long way to explain the size of the current Federal budget deficit.

Next up for BOCC consideration is Commissioner Mr. Ken Hagan’s proposal to somehow turn the little known and independent Hillsborough County Industrial Development Authority (IDA) into some “supercharged” economic development engine.

Since 1989, the IDA has quietly issued $2 BILLION in tax-exempt bonds to fund construction of not only private schools and hospitals, but also for-profit manufacturing facilities and TECO pollution controls.

While all these programs can somehow be justified as in the public interest, County taxpayers make no money on the transactions. Federal taxpayers make up for the lost tax revenues.

Commissioner Mr. Hagan has not reveled any details on how this (so far, half-baked) new economic development proposal would actually work, except that the IDA would be encouraged (enabled) to vastly increase the creation of yet more tax-exempt municipal bonds to be sold to private investors.

While no one questions the importance in investing in Mom, Apple Pie and The American Flag, we should all question who is getting “the vig” while Hillsborough (and Federal) taxpayers take it in the wallet.

<IMHO> Fred Jacobsen

H.R.6460 – Transparency and Security in Mortgage Registration Act of 2010

Posted in Curious Puzzle with tags , , , , , on December 20, 2010 by verbumsapienti2

What we’ve got here is…failure to communicate.

Why is it that the Hillsborough Board of County Commissioners do not seem to want to look into the possible ramifications of MERS related mortgage filings and their recently approved $250,000,000  municipal bond issues which has the potential to create even more “pooled” or “bundled” mortgage-backed securities?

What are MERS related foreclosure documents costing taxpayers in county staff time?
What are MERS related mortgage files costing county taxpayers in lost fees?

Either they do not know to look into this,
or they do not care to look into this.

Does no one read the SP Times?

<IMHO> Fred Jacobsen

Six degrees of separation – connect the dots

Posted in Curious Puzzle, Hillsborough County, FL with tags , , , , on December 16, 2010 by verbumsapienti2

Six degrees of separation (also referred to as the “Human Web”) refers to the idea that everyone is on average approximately six steps away from any other person on Earth, so that a chain of, “a friend of a friend” statements can be made, on average, to connect any two people in six steps or fewer.

How far away are the members of the BOCC from wealthy “muni” bond investors?

1. Bank of America Merrill Lynch has just come out endorsing tax-exempt municipal bonds as a sound investment.

Bank of America has agreed to a $137 million settlement with several states including Florida amid an investigation into allegations members of the bank took part in a scheme involving bids on municipal bond derivatives. The Bank of America settlement is the latest installment of the federal government’s investigation into anticompetitive practices in the municipal-bond industry, including bid-rigging, price-fixing and kickback-paying.

Bank of America is a shareholder of Mortgage Electronic Registration Systems, Inc. (MERS).

2. MERS acts as a “nominee for Lender and Lender’s successors and assigns”. This allows blocks of home mortgages to be treated as a single entity for investment management and eliminating county transfer fees.

MERS is facing lawsuits from counties across the nation for lost revenue from missed filing fees. MERS and the MERS System’s role in the foreclosure crisis is being investigated by the U.S. House of Representatives Judiciary Committee.

3. The “MERS System” is used by member financial organizations to register single family home mortgages. With one such member company, Nationwide Title Clearing in Pinellas County, employees  had little knowledge about the thousands of mortgage assignment documents they have been signing, coining the term “robo-signing.” This caused nightmares for counties. Over 60% of single family home mortgages are in the MERS System.

4. What Government National Mortgage Association (GNMA), or Ginnie Mae does is guarantee investors the timely payment of principal and interest on Mortgage-Backed-Securities (MBS) backed by federally insured or guaranteed loans.

5. The Housing Finance Authority (HFA) of Hillsborough County recently requested County Board approval for a $250,000,000 “financing plan” to bond the purchase GNMA-guaranteed, single-family, low-income first-time home-buyer mortgages from banks OR TO PURCHASE SECURITIES FROM A MASTER SERVICER…

6. With very little discussion about “The Financing Plan” or the “master servicer”, The Hillsborough Board of County Commissioners, passed the resolution 7-0. County Commissioners also voted to find alternate funding sources for a Tampa light-rail system which had been soundly rejected by county voters. Coincidentally, the light-rail route would require the taking of existing rentals, thereby creating a new pool of first-time home buyers eligible for GNMA mortgages.

It can only be hoped that the dots are not as well connected as they seem.

<IMHO> Fred Jacobsen


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Curious Puzzle fraught with lack of understanding

Posted in Curious Puzzle with tags , , , , on November 12, 2010 by verbumsapienti2

A front page article in today’s St. Pete Times by Susan Taylor Martin shows that employees at Nationwide Title Clearing company in Pinellas County had little knowledge about the thousands of mortgage assignment documents they have been signing.

Taylor says in the article:

“Nationwide Title does not prepare foreclosure documents. However, it does process assignments of mortgage, which transfer ownership of a loan from one party to another and are key in determining who has the legal right to foreclose.”

However, one of the things that Martin misses is that once these mortgages are “assigned”, no transfer fees are paid to the counties, which cost them Billions of dollars in lost revenue. A recent Associated Press article covered how Mortgage Electronic Registry Systems, Inc. (MERS) operates to the detriment of the Counties.

Another thing is that these “assigned” mortgages become publicly-traded tax-exempt municipal bonds. Not only do investors profit from the interest and tax-free nature of the bonds, the underlying mortgages are GURANTEED BY FEDERAL TAX PAYERS.

The Nationwide Title Clearing Official Website says in part:

“We specialize in… assignments, MERS services…”

What this means is that if there is a default on the bonds, you and I step up to pay the investors.

Sweet deal for investors, huh? Sucks for taxpayers.

<IMHO> Fred Jacobsen

 

More pieces to the Curious Puzzle

Posted in Curious Puzzle, Economic Development, Hillsborough County, FL, Opinion with tags , , , on November 10, 2010 by verbumsapienti2
Seal of the Federal Housing Finance Board.

Who's on the hook?

The continuing saga of the Housing Finance Authority request to the BOCC to issue $250 MILLION bonds to fund mortgages to first-time low and middle-income home buyers. 

It seems that it was the Federal Government’s intent that the banks and NOT the Federal Government were to be “on the hook” for the issuance of these bonds. 

This is from the FEDERAL HOUSING FINANCE BOARD FY2007-2012 STRATEGIC PLAN 
http://www.fhfa.gov/webfiles/2765/Strategic_Plan_final20072012.pdf  

“The FHLBanks are funded principally by the issuance of consolidated obligations of the FHLBank System in the public capital markets through the OF, which acts as the FHLBanks’ agent. Debt issued by the FHLBanks through the OF is the joint and several obligation of all 12 FHLBanks. Consolidated obligations of the FHLBank System consist of bonds original maturity of one year or longer) and discount notes (original maturity of less than one year). Consolidated obligations are not guaranteed or insured by the U.S. government. However, their status as government sponsored enterprises enables the FHLBanks to raise funds at rates slightly higher than comparable obligations issued by the U.S. Treasury.” 

Have these FLHBanks figured out how to get the Federal Government to guarantee these loans anyway by running them through municipalities such as Hillsborough County who cause to be issued tax-free municipal bonds which ARE somehow guaranteed by GNMA?

GNMA is already being propped up by our federal taxes, taking the risk away from certain banks and investors for risky (sometimes toxic) home loans; perhaps all in the guise of providing “affordable housing”. 

Fred Jacobsen

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