German Bank Accuses Barclays of Lying About Mortgage-Backed Securities

Tue Apr 3, 2012 by on Foreclosure Defense

Man I just love it when the banks eat their own!

It’s even better when they start using MY arguments to do it. The very same arguments I’ve used to defend my clients.

The essential problem is this, securitized trusts, the ones your homes were bought and sold into, weren’t always mortgage-backed!

I’ve long had questions about the validity of these REMICs, and now the banks are making my case for me! Thanks guys!

HSH Nordbank AG is now suing Barclays N.Y. after they bought $46 million in residential mortgage-backed securities from them.

Investigators for HSH Nordbank claim that none of the 2,000 mortgage loans they sampled had actually been assigned into the trusts when they were sold.

So if they tried to foreclose on some of these properties, it made it very difficult for them to do so, the lawsuit alleges.

Had they realized the mortgages weren’t properly assigned, they never would have bought the securities in the first place, HSH Nordbank’s lawyers say.

As I’ve always said, it goes back to making the banks prove who owns your mortgage. HSH Nordbank basically is admitting that they couldn’t do exactly that! Now this isn’t exactly a new phenomenon.

I blogged about a similar lawsuit involving AIG and Bank of America last year. But the banks, it seems have, clearly have not learned their lesson.

According to the lawsuit, Barclays overstated the value of these loans in order to sell them off. It’s being alleged that these loans did not meet the underwriting standards of the mortgage securities that HSH Nordbank was buying into.

“For each of the securitizations, the offering documents materially overstated the percentage of loans that were owner-occupied, and thus materially understated the certificates’ degree of risk,” the lawsuit says, according to the Wall Street Journal.

Translation, Barclays was allegedly offering up homeowners as collateral.

Homeowners that didn’t always exist.

So don’t feel bad homeowners, you’re not the only ones who the banks will lie to or steal from in order to make a buck.

They are doing it to themselves too!

This is what Eric Schneiderman and his RMBS working group are now investigating.

I’ve talked about the robosigning scandal so many times I’ve lost count, but it’s with these securitized trusts where the banks culpability really lies.

The banks sold these mortgages into these very loosely bundled trusts so fast it makes a NASCAR race seem slow, and they needed robosigning to cover up that fact.

Banks got sloppy, didn’t do their homework, and now they are all getting called on the carpet for it.

But not just by me, by other banks!

These securitized trusts’ tax-exempt status are clearly now being put into question because of lawsuits such as this, and that’s where Schneiderman is going to get the banks.

Trust me, when the next settlement comes, and it is coming, no one is going to be talking about robosigning.

You can quote me on that!

Tags: bank, banking, banks, barclays, eric schneiderman, finance, fixed income securities, german banks, hsh nordbank, hsh nordbank ag, mortgage, mortgage backed security, mortgage loan, mortgage loans, mortgage security, mortgage-backed securities, mortgages, REMICS, residential mortgage backed security, rmbs working group, securities, securitization, structured finance