Information on the Loan and Mortgage
|Amount of Principal
|Loan Closing Date
|Date Promissory Note was Signed
|Loan Maturity Date
|Date Promissory Note is due to be paid off
|Amount in years for pay off
|Type of Note
|Terms held on Promissory Note (Ex: Fixed Rate, Adjustable Rate, Interest Only, Neg AM)
|Initial Interest Rate
|Initial Interest as stated on the Promissory Note
|Number assigned to Loan as stated on the Promissory Note
|Deed of Trust
|Mortgage Electronic Registration Systems, Inc. number recorded on your deed or located by a property address search of http://www.mers-servicerid.org
|Order of Lien (First, Second, Third…)
Information on the Securitization Trust
|A statutory trust and the intermediary owner of the loan documents. The issuing entity also issues securities that represent undivided interests in the cash flows from a particular pool of loans.
|Title of the Offered Securities
|Name used by the SEC EDGAR Database for Trust/Security
|The entity that buys the loans from different Originators, combines them into a pool, and sells them to the Depositor.
|The entity acting on behalf of a trustee for security holders’ benefit in collecting funds from a borrower, advancing funds in the event of delinquencies and, in the event of default, taking a property through foreclosure.
|The entity that collects monthly payments from borrowers and passes the cash flows to the Trustee. The Servicer must advance to the Trust payments due from delinquent borrowers before collection.
|Acts on behalf of the Trust and the investors. It is essentially an administrative function, to represent the Trust, to monitor the effectiveness of the servicing, to manage and oversee the payments to the certificate holders, and to administer any reserve accounts.
|Often the same entity as the Trustee, and is typically engaged to hold onto the funds in cash reserves serving as internal credit enhancements of the securitization and collateral security documents related to the transferred assets.
|Lender Paid Mortgage Insurance company. (As reported by Moody’s “Provides a tangible benefit to securities backed by subprime mortgage loans.”)
|Loans in the mortgage pool shall have been granted on or before the cut-off date. This means all loans are already in existence as of that date.
|Loans in the mortgage pool shall have been sold or transferred from the originator to the seller, and from the seller to the depositor on closing date. Some trusts allow only say, 25% of all loans to be in the hands of the depositor at that date.
The Parties to the Transaction
|Also known as the Debtor or person who borrows money from the Lender.
|Current address of the borrower(s).
|Address of the real property under lien.
|Also known as the Debtor or co-person who borrows money from the Lender.
|The Lender is the Originator of the loan for the Debtor. In some instances the Lender and the Originator are the same entities, in others, the role of the Originator is to buy and accumulate loans from different lenders. In the latter, the Originator is also called a Wholesale Lender.
|The entity designated to receive the income from a trust, estate, or a deed of trust.
|Is responsible for the day-to-day management of your mortgage loan account, including collecting and crediting your monthly loan payments and handling your escrow account.
|Typically the Escrow Company
|Extra Judicial Foreclosure
|Mortgages that are bound to extra-judicial foreclosure, in case the loan turns sour, name the trustee up front. The trustee’s name is on the deed. In some instances the named trustee is only a decoy, like the Public Trustee of XYZ County, Colorado. In the actual proceedings, a real trustee is appointed to handle the foreclosure. Transactions involving the appointment of trustees are included in the chain of title.
|Company handling the close of a mortgage loan by providing chain of title research, title insurance, closing venue and notary for day of close. In some states the Title Company handles escrow.
The Securitization Trust
The following diagram illustrates, in simple theoretical terms, the flow of transactions in a typicalsecuritization trust as they would have affected each party that has a role in it.
The foregoing diagram is not intended to show any differences between the typical flow of transactions and the actual, as the examiners have noted in their review of the documents presented. The latter is presented in the section titled “How the Parties Changed the Process of Securitization” which is the subject of the succeeding section.
How the Parties Changed the Process of Securitization
The examiners reviewed the documents presented and noted the following:
- This section provides professional insight from the auditor on the research done on your loan documents.
- A securitization is the term used to describe the process of issuing securities backed by the cash flows from a pool of underlying assets. Securitization has also been defined as “the sale of equity or debt instruments, representing ownership interests in, or secured by, segregated, income-producing asset or pool of assets, in a transaction structured to reduce or reallocate certain risks inherent in owning or lending against the underlying assets and to ensure that such interests are more readily marketable and, thus, more liquid than ownership interests in and loans against the underlying assets.”
- A securitization transaction typically has the following characteristics. An originator of homogenous income-producing assets sells the assets to a newly-formed special purpose entity, also known as a securitization trust, which can be any legal entity that is designed to make the chances of it filing for bankruptcy remote. The trust will then issue, directly or through a trustee, securities in the form of certificates to investors. The securities represent an undivided interest in the assets of the trust. An underwriter will typically find the investors to purchase the securities. Such investors will pay cash for the securities and the proceeds are used by the trust to purchase the assets from the originator. The term of a securitization transaction can range between 5 years to 30 years, depending on the nature and term of the assets backing the securities. The cash flows generated by the assets are used to repay the amounts due under the securities issued by the trust.
- Securitization is a complex series of financial transactions designed to maximize cash flow and reduce risk for debt originators. This is achieved when assets or receivables are acquired, classified into pools, and offered as collateral for third-party investment. Then financial instruments are sold which are backed by the cash flow of the underlying assets.
Given these findings, the examiners have prepared the following diagram to illustrate how the lender and the parties to the securitization trust changed the typical process of securitization:
History of Transactions
The transactions in this diagram are presented in chronological order:
|Deed of Trust
|Execution of Deed
|Simultaneous Sale, Securitization
The Promissory Note and the Deed of Trust should be in the possession of … the above graph provides an outline as to the location of the Note and Deed which should ALWAYS travel together…. However, the Deed of Trust could be in the possession of Mortgage Electronic Registration Systems, Inc. It was created to eliminate the need for executing and recording the assignment of mortgages, with the idea that it would be the beneficiary on record (see separate Report on MERS).
Whether or not the Promissory Note bears the proper endorsements, and the Deed of Trust the proper assignments, could be ascertained only upon actual inspection of these documents.
The Filings page contains all of the information provided in the SEC EDGAR Database associated with the trust your mortgage was located in. Clicking the links below takes you directly to the following official documents filed for this security.
Prospectus Form 424B5. The link to the Prospectus Supplement and Prospectus is provided herein.
Trust Annual Form 10-K for the year. The link to the Form 10-K is provided herein.
Form 15-15D or Notice of Suspension of Duty to File Reports. The link to the Form 15-15D is provided herein.
A complete list of Securities and Exchange Commission filings by Trust is provided herewith.
Pooling and Servicing Agreement:
Summary of events from the 424B5
Cut-Off Date –
Closing Date –
Approximate Amount –
The Chain of Title and the Foreclosure Process
This section the auditor will list transactions affecting the chain of title and any foreclosure proceedings in process. These findings are based on the Voluntary Liens Report, if available for the property address, and any foreclosure information and assignment of mortgage documents submitted for audit.