Just a little Research and all IMHO
Here’s a video and example on how Mortgage Back Securities (MBS) work and the parties involved. Very easy to follow and informative. In the beginning of the video he contradicts himself but than corrects himself and clearly says the investment bank buys the rights to the payments of the mortgage loans…it’s all summarized at time marker 5:40
Video on MBS
From what I understand in regards to MBS it’s common practice to refer to the payment stream as simply the mortgage loans.
In the AMENDED MEMORANDUM OPINION (link at bottom) it describes the securitization process and how it creates a vast profit potential for the Seller, the Originator, the Servicer, and the Underwriter and provides a source of capital for new mortgage loans.
It also explains that the Seller (WMI – Washington Mutual Inc.), the Originator (WaMu aka WMB – Washington Mutual Bank), the Underwriter (WMB), the Servicer (WMB) and the Depositor (WMMSC – Washington Mutual Mortgage Securities Corporation – a Subsidiary of WMI) may be the same entity or subsidiaries of the same Institution (WMI).
You can find WMMSC on the list of subsidiaries – IHUB post #184345, Thanks to diamondguru-one
I’m sure every structure is a little different But with WMI we can see the Originator (WMB) acquires a pool of mortgage loans from the Seller (WMI) and sells them to the Depositor (WMMSC). This is the only time the mortgage loans are sold…WMMSC is a subsidiary of WMI which means they sold the mortgage loans to themselves.
The Depositor (WMMSC) creates a trust and puts the mortgage loans in the trust… this is the INVESTMENT TRUST and the mortgage loans are only there as Collateral. The Investment trust creates the securities and sells them to the Underwriter (WMB) who than sells them to investors. The investors don’t own the trust or the mortgages, they would own the rights to the payments or income stream from the mortgages, this is why if a mortgage fails it has to be replaced and why they are called Mortgage Backed securities.
The investment trust is ran by a Trustee – Deutsche Bank National Trust Company (Deutsche Bank) the trustee reports to the investors about the performance of the mortgages and has the ability to return defective mortgage loans to the seller and the seller warrants that it will repurchase non-compliant loans. This is a liability.
The Court finds that JPMC bought WMMSC in its entirety and the liabilities.
This means JPMC is now the Seller and the Depositor for WMMSC and WMMSC only.
From bottom of page 2 – JPMC does not dispute that it assumed a certain amount of WaMu’s mortgage repurchase liabilities, but argues that it only assumed such obligations up to their “Book Value” Which means JPMC bought WMMSC stock and assets at Book Value…
From page 4 - WaMu sold two types of loans. The first type involved loans that met the standards of federal mortgage agencies, (Fannie Mae, Freddie Mac)
The second kind of residential mortgage loans that were sold and securitized by WaMu were sold to “private label” trusts sponsored by private sector institutions, like WaMu…
From JPMC 10K – Amount of residential mortgage loans, PRIVATE-LABEL securitization by Washington Mutual $165,000,000,000
IMHO JPMC is the new Seller, which means they bought and now own the Mortgage Loans and paid Book Value… $165,000,000,000 and plus any other assets of WMMSC
From page 5- Deutsche Bank serves as Trustee for 99 “Primary Trusts” and 28 “Secondary Trusts” (collectively the Trusts) at issue in this case…obviously all of the mortgage loans are put into Trusts.
From page 5- Defendant WMMSC, now a subsidiary of JPMC, serves as the seller and depositor for 44 of the 99 Primary Trusts.
If WMMSC represents 44 out of the 99 Primary Trusts and they have a “Book Value” of $165 Billion, What would be the Value of the entire “99 Primary Trusts”? I’ll let you do the numbers….also and the “28 Secondary Trusts” ?
All I can say is WHOLLY_$$$T $$$,$$$,$$$,$$$
All IMHO and GLTA
AMENDED MEMORANDUM OPINION
Just my opinion, research and curiosity…
Not intended to serve as a basis for investment in any security of any issuer. GLTA