Evidence from RMBS Market
Tomasz Piskorski
Columbia GSB
Amit Seru
University of Chicago and NBER
James Witkin
February 2013
ABSTRACT
"... We contend that buyers received false information about the true quality of assets in contractual disclosures by intermediaries during the sale of mortgages in the $2 trillion non-agency market.
We construct two measures of misrepresentation of asset quality -- misreported occupancy status of borrower and misreported second liens -- by comparing the characteristics of mortgages disclosed to the investors at the time of sale with actual characteristics of these loans at that time that are available in a dataset matched by a credit bureau. About one out of every ten loans has one of these misrepresentations....
.. Using our measures we find a significant degree of misrepresentation of collateral quality across non-agency RMBS pools. More than 6% of mortgage loans reported for owner-occupied properties were given to borrowers with a different primary residence, while more than 7% of loans (13.6% of loans using a broader definition) stating that a junior lien is not present actually had such a second lien. Alternatively put, more than 27% of loans obtained by non-owner occupants misreported their true purpose and more than 15% of loans with closed-end second liens incorrectly reported no presence of such liens. The propensity of banks to sell loans that misrepresented asset quality increased as the housing market boomed, peaking in 2006. Overall, more than 9% of loans had one of these misrepresentations in our data. Note, however, that because we look only at two types of misrepresentations, this number likely constitutes a conservative, lower-bound estimate of the fraction of misrepresented loans.
In the State of Oregon, a law in 1959, was very clear, RE: FORECLOSURES.
OREGON LAWMAKERS MIA?
Dear Roberta,
I
am pleased to share with you the good news that Multnomah County will be the first in the country to
pilot a new program to help homeowners who owe more than their homes are worth and want to refinance,
but are unable to take advantage of existing programs.
The
pilot program, approved by the U.S. Treasury Department, drew upon my comprehensive housing proposal, "The
4 % Mortgage: Rebuilding American Homeownership" that was released
last summer. The program will allow underwater homeowners
– those who owe more on their homes than their homes are worth – who are current on their
payments to refinance into lower-rate loans. Oregon's Housing and Community Services
(OHCS) Department will implement the pilot using money awarded by
the Treasury Department's "Hardest Hit" program.
Five
years ago, the U.S. government acted quickly and boldly to rescue major financial institutions. However,
we have not done nearly enough for American families who are struggling from the effects of the downturn
in the housing market. I strongly believe helping families who are trapped in high-interest rate mortgages
is the fastest way to get our economy back on track. I am proud that Oregon is pioneering this program
and that it may serve as a national model to reduce foreclosures around the country.
If
you are a Multnomah resident who is interested in being considered for the pilot program,
please know that that sign up for the program begins in April. You can click here
to sign up for the OHCS e-newsletter to learn more about the pilot program
and forthcoming information as it becomes available.
SEE POST RE: LETTER TO SUPREME COURTS, OREGON, WASHINGTON AND ANY AND ALL 'LAWMAKERS' AS WELL AS ANY AND ALL 'CITIZENS OF THE UNITED STATES OF AMERICA OR THE 'UNITED STUPIDS OF AMERICA' ~ CALL WHAT WE ARE NOT:
ENLIGHTENED DEMOCRATIC SOCIETY, ASK ICELAND, THE TRUTH SETS US "FREE FREE FREE, LIBERTY FOR ALL AND NOT JUST THE CRIMINALS!"
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