Personal wealth creation 101

Ginne Mae logo from the Ginna Mae website. Thi...

Your road to personal wealth

According to The Government National Mortgage Association (GNMA), or Ginnie Mae:

“Today, Ginnie Mae securities are among the most secure investments in the global capital market.

We offer the only mortgage-backed securities carrying the full faith and credit guaranty of the United States government, which means that even in uncertain times, our investors are guaranteed payment of interest and principal – in full and on time.”

If there are not enough tax-exempt, GNMA-guaranteed, mortgage-backed securities for sale on the open market, or are being sold with insufficient profit margins for you, you can help create new ones.

If at any time you start to feel your eyes glaze over,
stop and start again at the top.

If you are new to this, you may need to enlist the cooperation of a few established local business leaders. These are the guys who also  fund the election of developer-friendly county officials.

Wherever you are, there is probably a county Housing Finance Authority (HFA). Usually these HFA’s are obscure, little understood by the public and are run by unpaid volunteers appointed by County Board of County Commissioners (BOCC) but seldom with a commissioner on that HFA board.

With the OK from the BOCC , the HFA can issue tax-exempt municipal bonds to fund the purchase of qualifying mortgage loans originated by participating lending institutions. Be sure that the process is so convoluted and obscure that no one will understand it, or risk being seen as foolish for asking too many questions in public.

If there are not enough first-time, low to moderate  home buyer GNMA mortgages out there, work to have the county taxpayers pay to have existing low-income housing torn down to make way for new “affordable housing” to be constructed.

Use any excuse to make way for new affordable housing.

Either expand or build a new light-rail system right through likely neighborhoods. Support an Economic Development program for the same area. Try to get a new ballpark or other “regional” sports venue built. If not for professional sports, go for “youth” sports.

In any case, old rental properties get destroyed, creating many new “first-time home-buyers.”

Be sure that any originating mortgage documents contain the following language:

“MERS” is Mortgage Electronic Registration Systems, Inc. MERS is a separate corporation that is acting solely as a nominee for Lender and Lender’s successors and assigns. MERS is the mortgagee under this Security Instrument. MERS is organized and existing under the laws of Delaware, and has an address and telephone number of P.O. Box 2026, Flint, MI 48501-2026, tel. (888) 679-MERS.

By having Mortgage Electronic Registration Systems, Inc. (MERS) be designated “Original Mortgagee” this allows subsequent mortgage transfers to be quickly accomplished without going through the local county land department, saving YOU not only time, paperwork but also saving county transfer fees, which can really add up over time. A local MERS System member can also perform this function, especially if it is owned by a friend or business associate.

The mortgages you want the HFA to purchase with these bonds are for qualified first-time low and moderate income, single family home-buyers. These are the mortgages that, with the help of the banks and other lending institutions, become guaranteed by Ginny Mae.

The county HFA then forwards these thus acquired mortgages to an attorney familiar with the practice of pooling or bundling these various individual mortgages into investment-grade securities. The attorney will likely charge 1% of the face value of the mortgages for this service, more or less depending on your personal relationship.

Next these tax-exempt, mortgage-back, GNMA-guaranteed securities having been brought into the MERS System, are now ready for a securities broker to offer them for sale on the open market. Depending on your relationship with the broker, you should be at the head of the line to purchase these securities.

Having purchased as much of these securities as you are able, you can now just sit back and collect the interest on the mortgage payments knowing that although many of the homeowners had such poor finances that they were also loaned down-payments; you can rest assured that the Federal Government guarantees not only your investment, but the interest on your investment, plus the timely payment to you in the event of default.

Don’t mind whatever nagging guilt you may feel for not having to pay any federal income taxes on these securities that are none the less guaranteed by the federal government. Also never mind that the county in which these mortgage-backed securities were created will not receive a dime from their state on your tax-free income, if your state has an income tax. Turn a blind eye to the loss to the county for the lost mortgage transfer fees they would otherwise collect. Don’t even worry about any irregularities in how foreclosures may be processed, or the added costs in staff time to the county.

Just remember, you are contributing to the Public Purpose of aiding Affordable Housing.

Lastly, if you don’t want to wait around collecting your tax-exempt income, you can always call your personal investment broker and sell your mortgage-backed securities on the open stock market. Having gotten in early, these should bring you a premium price. Too bad the county, which first blessed these securities with municial-tax-exempt-bond status, receives no revenue for all their trouble.

At any point, deflect hard questions with soft smoke and mirror answers like:

  1. It’s for affordable housing.
  2. It’s always been done this way.
  3. There is no financial impact to the county.
  4. It’s not a “bond issue”, it’s a “finance plan.”
  5. We won’t be using all the bond authority requested, we just don’t want to trouble you with smaller amounts.

Repeat the above until you are satisfied with your accumulations of wealth.

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One Response to “Personal wealth creation 101”

  1. Marilyn Smith Says:

    Seems the public at large is exercising its right to STRIKE THE OSTRICH POSTURE. MERS is too difficult to understand at THE BOCC so why should the public be bothered with WHAT IT IS BEING OBLIGATED TO FOREVER, by an ignorant ELECTED BODY.

    We the citizen tax payers are: THE FULL FAITH AND CREDIT BODY.

    When we go broke, those making these terrible decisions of ignorance will be trying to run for yet another elected office. The elected office will be funded by the FULL FAITH AND CREDIT OF THE CITIZEN TAX PAYERS.

    I surely hope I am not too awfully alone with finding the organization and incorporation filed in DELAWARE; and, even with a PO BOX NO LESS.

    Would be nice to know WHERE IS THEIR PHYSICAL LOCATION.

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