Donotunderstand,
In answer to your question:
In its simplest form, WMI/WMB registered many of their mortgages in “Mortgage Pools” or “Trusts” by way of legal maneuvering. This maneuver is similar to having “exempt assets” in an individual Chapter 7 or Chapter 13 bankruptcy, and prevents a bankruptcy court from listing them as assets. As far as the court was concerned, the “hidden in plain sight” mortgages did not exist, and the debtors and creditors could not use the value of the mortgages in any of the bankruptcy negotiations. The object of this maneuver was to convince the court there was no money for equity, so that the debtors could cancel equity. Later, the estate would pay the creditors from the spoils, and the rest would belong to the estate.
Other posters have listed much information on this aspect of bankruptcy, including links.
There are many complicated details of this legal maneuver, which include selling multiple Mortgage Backed Securities (MBS) on a bundle of mortgages, often for a greater aggregate value than the mortgages. Unravelling the rat maze of MBSs, determining where the money came from to fund the mortgages, determining the value of each mortgage, determining who owns the mortgages, who services the mortgages, and liquidating the mortgages etc., is what the FDIC-R has been doing since the receivership began. The receivership is not a part of the bankruptcy, and does not have to follow bankruptcy rules as they do their job. Remember it was WMI who filed bankruptcy and not WMB. WMB is in receivership and not WMI.
WMI/WMB had $300B-$350B in mortgages as of the date WMI filed bankruptcy. If $300B of this amount came from bank depositors, it does not leave very much to make it to the waterfall after all creditors have been satisfied, and all other claims paid.
If there were $300B left after the receivership finishes its job, why would FDIC-R return the money to the WMI estate? If the bank repossesses your car and sells it for more than your loan value, they must return the excess amount to you after they deduct collection and sale expenses. The subsidiary of WMB belonged to WMI. It no longer exists, but a value above the $1.88B sales price does exist. Once the FDIC-R liquidates everything above this purchase price, they will return the excess (if any) to the owner of the subsidiary (WMB) before the seizure – the estate of WMI.
The questions remain. How much? Who will get it? When?
Current evidence indicates the answers are “none”, “no one”, and “never.”
In time, the process will reveal all.
Best regards,
David West
