Mr Cooper Group Inc (COOP)

[David West]

The Mortgage Pools.

Also known as “Trusts” as that term relates to Residential Mortgage Backed Securities (RMBS).

Although WMI may have had some “off-the-books” or “hidden in plain sight assets” (none have shown up yet), the bulk of the mortgages belonged to WMB. Before seizure, WMB assigned the mortgages to various Mortgage Pools, selling Mortgage Backed Securities to investors. In accordance with the Purchase and Assumption Agreement, paragraph 2.1, Liabilities Assumed by Assuming Bank, JPM specifically assumes all mortgage servicing rights and obligations of the Failed Bank. In paragraph 3.1, Assets Purchased by Assuming Bank, JPM further purchases all mortgage servicing rights and obligations of the Failed Bank. This may mean WMB was servicing their own loans and loans for other parties.

What happened to the mortgages?

At the beginning of the receivership they still existed, but were not a part of the bankruptcy because they belonged to WMB. The mortgages are now victim to the various ongoing actions by FDIC-R and JPM to identify who owns what and who is going to recover what part of their investment.

The link below is to the Amended Complaint of the Deutsche Bank National Trust Company. It describes in detail how the Mortgage Pools and RMBS processes worked for WMB. It is lengthy, but is well worth the read.

https://www.fdic.gov/bank/individual/failed/wamu_amended_complaint.pdf

As I have posted before:

My opinion on the outcome of the Beneficial Interests (escrow markers):

Historically, the Beneficial Interests are worthless to equity. However, hope is eternal. Sometime between now and the moment they are deleted from our trading accounts we will know.

It is clear the true value of the mortgages owned by WMB is much less than reported, due to the actions required by the WMB repurchase agreement; the FDIC-R is now sorting through this maze of confusion. Because so many investors, like Deutsche Bank National Trust Company, are going to get a piece of the repurchase action, I have called them “hollow mortgages”. Assuming there is anything left after claims against WMB are resolved, the FDIC-R should return it to the WMI Liquidating Trust (because WMI owned 100% of the bank), where it will enter the waterfall. Only time will reveal the outcome. I think there will be value returned; speculation on the value is futile. Currently, the only value that will hit the waterfall will come from those sources clearly owned by WMI, excluding anything from the WMB receivership. Any value that anyone anticipates will come from the reconciliation of the receivership of WMB is purely speculation based on unclear evidence and guesses. However, with 500,000 Beneficial Interest markers in my TD Ameritrade trading account, I sincerely hope I am wrong.

My immediate concern is will the BOD up-list WMIH to a major exchange. Don (Bluefoxx) says the agreement with KKR requires WMIH be up-listed within 180 days. If the up-listing occurs, I expect the share price to reach my exit price of $10 by year end.

Mostly fact.