Mr Cooper Group Inc (COOP)

[Dmdmd2020]

Per CBA09’s IHub Post#487509:

“Wednesday, 09/13/17 03:29:19 PM
Re: BBANBOB post# 487478 0
Post # of 565055
Ref: We KNOW or feel that there are still liquid assets(MORTGAGES)that are being serviced and creating income,so that income imho will be used to pay prefferds their diviy and may as well pay commons an annual divy until all have closed out.

100 % spot on!

The nature of securitization makes is abundantly clear the Lion's Share of Revenue is over it's amortized life. While the originator WMB would only book a gain it's generally the Financial Holding Company (FHC)- WMI having contractual rights collecting "Ongoing" Revenue / equity from undistributed income from within these SPE/Trusts.


Example:

1) WMB, in a true sales accounting, would sell pools of loan receivables to a SPE #1. Hence book a gain ( difference from loan receivables vs. cash proceeds from SPE # #1, then

2) SPE# 1 transfers the pools of loan receivables to (SPE#2 / Trust). A trust having legal ownership and control helps to solidity / make untouchable ( bankruptcy remote ) the pooled receivables. Trusts issues certificates to investors in exchange for cash. This cash is then transferred back to SPE #1 and subsequently from SPE # 1 to WMB. Hence were the gain WMB would booked from a true accounting sale.

I want to make it clear that FHC's are the Gem of conglomerates. They usually collect the revenue and disperse their non participation revenue portions according to percentages within formal agreements.

Revenue comes in many forms but the bulk of a FHC's profit comes from non bank subsidiaries, (i.e., SPE / Trusts - securitizations.)

WMI was a monster securitization machine. So see what WMI may have been making based on Peer comparison. The net income of Financial Holding Companies would be @ 7% - 8% of respective avg equity capital. So if WMI had an average equity capital of 25 Billion the yearly net income would be 1.75 Billion based on 7%.

For those interested one can go to:

https://www.ffiec.gov/nicpubweb/nicweb/FinancialReport.aspx?parID_RSSD=3828036&parDT=20170630&parRptType=BHCPR&redirectPage=FinancialReport.aspx “

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CBA09’s IHub Post#501193:

“Wednesday, 12/20/17 10:14:47 AM
Re: TJ0512 post# 501063 0
Post # of 565055
Ref:
Do you agree or not agree that WMI (the parent) relinquished ownership of WMB when WMB was seized? The only ownership WMI had in WMB was in the stock of WMB that was abandoned (*worthless stock abandonment") which created the NOL).

Comment:
Trustee abandoned and thereby no longer an asset of the estate. IRS Revenue Code 165 G-3 allowed the capital loss to be classified as an ordinary loss (NOL).

Ref:
From that point on WMI had no control of WMB or WMB subs whatsoever as WMB was sold to JPM as a "Whole Bank Purchase".

Comment:
Whole Bank as in assets - $ 298 Billion vs liabilities 258 Billion.

Ref:
Your comment regarding WMI has control of safe harbor assets.

Do you agree or not agree that Safe Harbor Assets are the actual assets within the various trusts that are protected for the benefit of the actual investors (certificate holders) within each trust?

Comment:
Safe Harbor Assets are those assets that have statutory exemption from the bankruptcy systems. Securitization qualifies for such exemption.

Ref:
Do you agree on not agree that payment (proceeds) for assets sold into the trusts has already been received and the only future benefit (besides servicing fees) relating to these trusts would be the retained interest in the trusts and are recorded as an asset on the balance sheet?

Comment:
Proceeds:

1) $ for the initial transfer of pooled mortgages.
True Sale -
Balance Sheet - Remove assets loan mortgages
Income Stmt - Difference between proceeds received (cash) minus loan mortgages transferred = Net Gain or Net Loss.


2) $ Retained Interest.
Balance Sheet - Residual Interest Receivable (Estimated future benefits)
Income Stmt - Income from Residual Interest

Note: Lions share of the Residual Interest (Retained Assets) remain with SPE # 1 - as a Safe Harbor Asset.

Ref:
On a consolidated basis in each 10Q & 10K the retained interests have been listed (I have gone back as far as 2004) and the total retained interests (not credit card related) were as follows:

in billions

MBS:

2004 - 1.62
2005 - 2.80
2006 - 1.90
2007 - 1.71
2008 - 1.23

Comment:
This reflects only a small % of the overall Residual Interest. Lions share protected within SPE #1 - Based on my experience.

Ref:
It's been said that there was a minimum 25% participation in these trusts which IMO is not the case and the only benefit going forward from 2008 was the retained interests.

Comment:
My experience from 1978 - 2004 - No Regulated Minimum. But, Certificates are issued for the Residual Interest and held by SPE # 1 ( Largest % ) and Originator ( there retained % much smaller ).

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WMI 2000 10-K filed as of 3-20-2001:

https://www.otcmarkets.com/filing/html?id=520711&guid=wS_3UWGktwOhf3h

PDF page 80 of 286:

“Fair value of retained interests...” total = $3.98 billion

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WMI 2001 10-K filed as of 3-19-2002:

https://www.otcmarkets.com/filing/html?id=1797462&guid=wS_3UWGktwOhf3h

PDF page 89 of 221:

“Fair value of retained interests...” total = $6.88 billion

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WMI 2002 10-K filed as of 3-17-2003:

https://www.otcmarkets.com/filing/html?id=2206372&guid=wS_3UWGktwOhf3h

PDF page 44 of 336:

“Asset Securitization
We transform loans into securities, which are sold to investors – a process known as securitization. Securitization involves the sale of loans to a qualifying special-purpose entity ("QSPE"), typically a trust. Generally, in a securitization, we transfer financial assets to QSPEs, which are legally isolated from the Company. The QSPEs, in turn, issue interest-bearing securities, commonly called asset-backed securities, that are secured by future collections on the sold loans. The QSPE sells securities to investors, which entitle them to receive specified cash flows during the term of the security. The QSPE uses proceeds from the sale of these securities to pay the purchase price for the sold loans. The proceeds from the issuance of the securities are then distributed to the Company as consideration for the loans transferred. The Company has not used unconsolidated special-purpose entities as a mechanism to remove nonaccrual loans and foreclosed assets from the balance sheet.
Securitization is used to provide a source of liquidity and less expensive funding and also reduces our credit exposure to borrowers. As part of non-agency securitizations, we use QSPEs to facilitate the transfer of mortgage loans into the secondary market. These entities are not consolidated within our financial statements since they satisfy the criteria established by Statement No. 140 , Accounting for the Transfers and Servicing of Financial Assets and Extinguishments of Liabilities . In general, these criteria require the QSPE to be demonstrably distinct from the transferor (the Company), be limited to permitted activities, and have defined limits on the assets it can hold and the permitted sales, exchanges or distributions of its assets.
We routinely securitize home, specialty home loans and commercial real estate loans into the secondary market. The allocated carrying value of loans securitized and sold during the year ended December 31, 2002 was $163.60 billion compared with $102.05 billion in 2001. Investors and securitization trusts do not have any recourse to the Company for loans securitized and sold during the years ended December 31, 2002 and 2001. When we sell or securitize loans, we generally retain the right to service the loans and may retain senior, subordinated, residual, and other interests, all of which are considered retained interests in the securitized assets. Retained interests may provide credit enhancement to the investors and represent the Company's maximum risk exposure associated with these transactions. Investors in the securities issued by the QSPEs have no further recourse against the Company if cash flows generated by the securitized assets are inadequate to service the obligations of the QSPEs. ”

...

“Retained interests are recorded on the balance sheet and represent mortgage-backed securities and MSR. Retained interests in mortgage-backed securities in which the securitization has been accounted for as a sale, were $10.78 billion at December 31, 2002. Retained interests in MSR were $5.34 billion at December 31, 2002.”

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WMI Q1 2003 10-Q filed as of 5-15-2003:

https://www.otcmarkets.com/filing/html?id=2306013&guid=wS_3UWGktwOhf3h

PDF page 40 of 75:

“Retained interests in the form of mortgage-backed securities were $9.96 billion at March 31, 2003, of which $9.80 billion have either a AAA credit rating or are agency insured. ”

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WMI Q2 2003 10-Q filed as of 8-14-2003:

https://www.otcmarkets.com/filing/html?id=2443906&guid=wS_3UWGktwOhf3h

PDF page 70 of 123:

“Retained interests in the form of mortgage-backed securities were $9.20 billion at June 30, 2003, of which $9.01 billion have either a AAA credit rating or are agency insured. ”

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WMI Q3 2003 10-Q filed as of 11-13-3003:

PDF page 72 of 136:

“Retained interests in the form of mortgage-backed securities were $4.18 billion at September 30, 2003, of which $4.04 billion have either a AAA credit rating or are agency insured. ”
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WMI 10-K 2003 filed as of 3-15-2004:

https://www.otcmarkets.com/filing/html?id=2831653&guid=wS_3UWGktwOhf3h

PDF page 49 of 256:

“Retained interests were $2.36 billion at December 31, 2003, of which $2.34 billion have either a AAA credit rating or are agency insured. ”

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WMI Q1 2004 10-Q filed as of 5-10-2004:

https://www.otcmarkets.com/filing/html?id=2953832&guid=wS_3UWGktwOhf3h

PDF page 67 of 111:

“Retained interests in securitizations were $2.12 billion at March 31, 2004, of which $2.05 billion have either a AAA credit rating or are agency insured. ”

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WMI Q2 2004 10-Q filed as of 8-09-2004:

https://www.otcmarkets.com/filing/html?id=3112217&guid=zv_3U6EIXgKqj3h

PDF page 78 of 121:

“Retained interests in securitizations were $1.77 billion at June 30, 2004, of which $1.74 billion have either a AAA credit rating or are agency insured.”

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WMI Q3 2004 10-Q filed as of 11-09-2004:

https://www.otcmarkets.com/filing/html?id=3270915&guid=zv_3U6EIXgKqj3h

PDF page 76 of 168:

“Retained interests in securitizations were $1.79 billion at September 30, 2004, of which $1.74 billion have either a AAA credit rating or are agency insured. ”

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WMI 2004 10-K filed as of 3-14-2005:

https://www.otcmarkets.com/filing/html?id=3536003&guid=zv_3U6EIXgKqj3h

PDF page 93 of 379:

“Retained interests in securitizations were $1.62 billion at December 31, 2004, of which $1.60 billion have either a AAA credit rating or are agency insured. ”

____________________

WMI Q1 2005 10-Q filed as of 05-10-2005:

https://www.otcmarkets.com/filing/html?id=3663289&guid=zv_3U6EIXgKqj3h

PDF page 71 of 123:

“Retained interests in securitizations were $1.77 billion at March 31, 2005, of which $1.76 billion have either a AAA credit rating or are agency insured. ”

____________________

WMI Q2 2005 10-Q filed as of 8-09-2005:

https://www.otcmarkets.com/filing/html?id=3842513&guid=zv_3U6EIXgKqj3h

PDF page 47 of 67:

“Retained interests in securitizations were $1.83 billion at June 30, 2005, of which $1.57 billion have either a AAA credit rating or are agency insured. ”

____________________

WMI Q3 2005 10-Q filed as of 11-07-2005:

https://www.otcmarkets.com/filing/html?id=3997941&guid=zv_3U6EIXgKqj3h

PDF page 44 of 67:

“Retained interests in securitizations were $1.94 billion at September 30, 2005, of which $1.44 billion have either a AAA credit rating or are agency insured. ”

____________________

WMI 2005 10-K filed as of 3-15-2006:

https://www.otcmarkets.com/filing/html?id=4277397&guid=zv_3U6EIXgKqj3h

PDF page 46 of 355:

“Retained interests in mortgage loan securitizations, excluding the rights to service such loans, were $2.80 billion at December 31, 2005, of which $2.19 billion have either a AAA credit rating or are agency insured. Retained interests in credit card securitizations were $1.64 billion at December 31, 2005. ”

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WMI Q1 2006 10-Q filed as of 5-10-2006:

https://www.otcmarkets.com/filing/html?id=4408097&guid=jmR3UWUl8lFmnEh

PDF page 45 of 63:

“Retained interests in mortgage loan securitizations, excluding the rights to service such loans, were $2.26 billion at March 31, 2006, of which $1.86 billion have either a AAA credit rating or are agency insured. Retained interests in credit card securitizations were $1.75 billion at March 31, 2006. ”

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WMI Q2 2006 10-Q filed as of 8-09-2006:

https://www.otcmarkets.com/filing/html?id=4587552&guid=jmR3UWUl8lFmnEh

PDF page 56 of 83:

“Retained interests in mortgage loan securitizations, excluding the rights to service such loans, were $2.27 billion at June 30, 2006, of which $1.70 billion have either a AAA credit rating or are agency insured. Retained interests in credit card securitizations were $1.74 billion at June 30, 2006. ”

____________________

WMI Q3 2006 10-Q filed as of 11-09-2006:

https://www.otcmarkets.com/filing/html?id=4754508&guid=jmR3UWUl8lFmnEh

PDF page 54 of 108:

“Retained interests in mortgage loan securitizations, excluding the rights to service such loans, were $1.98 billion at September 30, 2006, of which $1.43 billion have either a AAA credit rating or are agency insured. Retained interests in credit card securitizations were $1.72 billion at September 30, 2006. ”

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WMI 2006 10-K filed as of 3-01-2007:

https://www.otcmarkets.com/filing/html?id=5003677&guid=jmR3UWUl8lFmnEh

PDF page 43 of 252:

“Retained interests in mortgage loan securitizations, excluding the rights to service such loans, were $1.90 billion at
December 31, 2006, of which $1.45 billion have either a AAA credit rating or are agency insured. Retained interests in credit card securitizations were $1.47 billion at December 31, 2006. ”

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WMI Q1 2007 10-Q filed as of 5-10-2007:

https://www.otcmarkets.com/filing/html?id=5168665&guid=jmR3UWUl8lFmnEh

PDF page 40 of 61:

“Retained interests in mortgage loan securitizations, excluding the rights to service such loans, were $2.71 billion at March 31, 2007, of which $1.19 billion have either a AAA credit rating or are agency insured. Retained interests in credit card securitizations were $1.43 billion at March 31, 2007.”

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WMI Q2 2007 10-Q filed as of 8-09-2007:

https://www.otcmarkets.com/filing/html?id=5358076&guid=jmR3UWUl8lFmnEh

PDF page 41 of 103:

“Retained interests in mortgage loan securitizations, excluding the rights to service such loans, were $2.92 billion at June 30, 2007, of which $2.66 billion are of investment grade quality. Retained interests in credit card securitizations were $1.59 billion at June 30, 2007, of which $1.51 billion are reported as trading assets on the Company’s balance sheet. “

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WMI Q3 2007 10-Q filed as of 11-09-2007:

https://www.otcmarkets.com/filing/html?id=5532386&guid=jmR3UWUl8lFmnEh

PDF page 80 of 125:

“Retained interests in mortgage loan securitizations, excluding the rights to service such loans, were $2.29 billion at September 30, 2007, of which $2.12 billion are of investment-grade quality. Retained interests in credit card securitizations were $1.68 billion at September 30, 2007, of which $1.60 billion are reported as trading assets on the Company's balance sheet. ”

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WMI 2007 10-K filed as of 02-29-2008:

https://www.otcmarkets.com/filing/html?id=5769335&guid=jmR3UWUl8lFmnEh

PDF page 59 of 378:

“Retained interests in mortgage loan securitizations, excluding the rights to service such loans, were $1.71 billion at December 31, 2007, of which $1.56 billion are of investment grade quality. Retained interests in credit card securitizations were $1.84 billion at December 31, 2007, of which $426 million are of investment grade quality.”

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WMI Q1 2008 10-Q filed as of 5-12-2008:

https://www.otcmarkets.com/filing/html?id=5927846&guid=jmR3UWUl8lFmnEh

PDF page 81 of 157:

“Retained interests in mortgage loan securitizations, excluding the rights to service such loans, were $1.44 billion at March 31, 2008, of which $1.37 billion are of investment-grade quality. Retained interests in credit card securitizations were $1.83 billion at March 31, 2008, of which $418 million are of investment-grade quality. ”

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WMI Q2 2008 10-Q filed as of 8-11-2008;

https://www.otcmarkets.com/filing/html?id=6093324&guid=jmR3UWUl8lFmnEh

PDF page 84 of 388:

“Retained interests in mortgage loan securitizations, excluding the rights to service such loans, were $1.23 billion at June 30, 2008, of which $1.13 billion are of investment-grade quality. Retained interests in credit card securitizations were $1.56 billion at June 30, 2008, of which $421 million are of investment-grade quality. ”
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IMO...my conclusions as of March 21, 2019:

1) WMI was not allowed to consolidate any retained interests on the quarterly and annual financial that the Special Purpose Entities (SPEs) owned. Per CBA09 (a self proclaimed Certified Auditor) IHub post#501193, he stated that “Certficates are issued for the Residual Interest and held by SPE # 1 (Largest %) and Originator ( there retained % much smaller)”.

I contend that CBA09 is correct in his statement, due to his past experience in bank auditing.

2) if you tabulate and add all the retained interests that WMI were allowed to report on their quarterly and annual reports, the total for retained interests in MBS + ABS (credit card securitizations) , the grand total is
$101.94 billion.

3) WMI securitized approximately $692 billion from 2000 to 2008.

$101.94 billion / $692 billion = 14.73% retained interests/beneficial interests in certificate participation in MBS/ABS Trusts that WMI subsidiaries created.

3) I believe there is an even greater percentage of retained interests in SPEs which were not allowed to be consolidated on the quarterly and annual financial reports!

4) I also contend that the WMI Escrow Marker Holders are the rightful owners to all the retained interests/beneficial interests!

5) IMO... I believe the minimum recoveries to WMI Escrow Marker Holders is at least $101.94 billion excluding annual compounded interests for 10 and a half years.