Amazing! GSAMP Trust is $494 million worth of what's left over AFTER foreclosures It would be hard to think of a worse way to STRUCTURE an investment.
I didn't realize that they could skim off the 2nd mortgages that low class borrowers needed to make the down payment on overpriced houses in neighborhoods they couldn't afford to PARK near, package them in a bundle and get investors to assume all the risk. You really have to give credit to da Boyz over at Goldman, Deutshe Bank, UBS and the other houses of ill repute
As a second-mortgage holder, GSAMP couldn't foreclose on deadbeats unless the first-mortgage holder also foreclosed. That's because to foreclose on a second mortgage, you have to repay the first mortgage in full, and there was no money set aside to do that. So if a borrower decided to keep on paying the first mortgage but not the second, the holder of the second would get bagged.
If the holder of the first mortgage foreclosed, there was likely to be little or nothing left for GSAMP, the second-mortgage holder. Indeed, the monthly reports issued by Deutsche Bank (Charts), the issue's trustee, indicate that GSAMP has recovered almost nothing on its foreclosed loans. ************************** "[In hindsight,] I think we would not have rated it" had Moody's realized what was going on in the junk-mortgage market, says Nicolas Weill, the firm's chief credit officer for structured finance. Low credit scores and high loan-to-value ratios were taken into account in Moody's original analysis, of course, but the firm now thinks there were things it didn't know about.
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