May 16th, 2010 reimbursement started after 20% of aggregate losses occurred.) It is now time to report on where things stand today.
At the beginning of Dec, 09, I wrote an article detailing the “Sweetheart Deal” that the FDIC gave to OneWest Bank to buy the assets on Indymac. The article described the reimbursement details whereby a failed portfolio loan would result in reimbursement rates of either 80% or 95% of the losses, based upon the original loan amount, and not what OneWest paid for the loan, which was 70 cents on the dollar. As a result, OneWest could “earn” $100,000’s above what they paid for the loan. The FDIC aggressively rebutted follow-on articles from other writers, stating that they had not paid out one cent in losses on the deal. (The only thing I failed to make clear was that the
Friday evening, May 14, I had a phone conversation with one of many people actively involved in the foreclosure crisis. We were discussing securitization and other items. This person once worked for the FDIC and headed Good Bank/Bad Bank operations for the S&L crisis.
During the conversation, he revealed that one transaction he was working on ended up in foreclosure. After the foreclosure occurred, he came into possession of a document regarding the transaction, which apparently occurred at least one month earlier. This document revealed that the FDIC has reimbursed OneWest Bank for the 80% of losses incurred from the foreclosure. As a result, OneWest made over $135,000 above what they paid for the loan.
This tells me that OneWest Bank has now hit the “magical” 20% of aggregate losses required to start reimbursement on every foreclosure that occurs from now on. Since the Loan Portfolio was approximately $12.5 billion, this means that OneWest has wiped out 20% or $5 billion of the Portfolio. Another $2.5 billion, and OneWest gets to the 95% reimbursement rate.
This has serious implications for the OneWest owned loan that is in foreclosure. Now, OneWest has absolutely no incentive for working with homeowners to save their homes, not that they did previously. The homeowner is now the prey for a “Predatory Loan Foreclosure” bank.
The only way that a homeowner will be able to stop the foreclosure will be to mount an aggressive legal defense, likely involving litigation. There will be no other way to stop the foreclosure. OneWest will ignore HAMP guidelines, seeking only to maximize profits. That is what happens when (George) Soros and (John) Paulson get hold of a bank.
(Patrick Pulatie is the CEO of Loan Fraud Investigations. He can be reached at 925-238-1221, firstname.lastname@example.org. His website is http://www.loanfraudinvestigations.com. Articles written by him can be viewed on http://blog.ml-implode.com/ and http://www.iamfacingforeclosure.com. Patrick is not an attorney and does not give legal advice.)