Why Is Goldman On A Buying Spree For Delinquent Mortgages

Tyler Durden's picture

Last year Goldman Sachs entered into a settlement with federal and state governments over its role in packaging and selling toxic mortgage-backed securities in the housing meltdown to unsuspecting buyers while subsequently turning around and shorting those very same securities.  As part of the settlement, Goldman agreed to provide $1.8 billion in homeowner debt relief to delinquent U.S. borrowers.

The only problem with the settlement is that Goldman doesn't actually own any mortgage debt, they prefer to package it up into pretty little bundles, slap a AAA rating on it and sell it to pension funds for a fee instead.

Of course, that's not a problem for Wall Street's vampire squid because they've found a whole other way to satisfy the entire $1.8 billion settlement without funding a single penny of that obligation in cash, in fact, they're making money on the scheme. 

So, how does it work?  Well, the first step is to buy up billions of dollars worth of non-performing loans (NPLs) at massive discounts of up to 50 cents on the dollar.  Then, you negotiate mortgage modifications with borrowers that reduces their principle balance, of course by less than Goldman's initial discount on the original purchase, and allows them to start making payments again.  That principle foregiveness then gets counted towards Goldman's $1.8 billion mortgage relief obligation even though it actually cost them absolutely nothing because they acquired the debt at an even larger discount.  Finally, and this is the real beauty of the scheme, when the loans are performing again they can be packaged up and resold as AAA paper once again...

Here's a quick example of how it might work on an individual mortgage:

Lets assume a borrow has a $200,000 mortgage outstanding but isn't making payments.  Goldman then comes along and buys that mortgage for $100,000 from Fannie Mae.  Goldman then goes to the borrower and offers to reduce his mortgage balance to $150,000 if, in return, he'll agree to start making payments again.  That $50,000 debt reduction then gets applied to Goldman's $1.8 billion settlement obligation. And the coup de gras, once the loan is performing again, Goldman can sell it for $150,000, thus pocketing a $50,000 cash profit plus settling $50,000 of their obligation to various government entities.

GS

 

As the Wall Street Journal notes today, to our great 'shock' nonetheless, Goldman has suddenly become the largest buyer of Fannie Mae's NPLs, having purchased $5.7 billion worth of unpaid loans over the past several months.

Over the past year-and-a-half, the Wall Street giant has become the largest buyer of severely delinquent home loans from mortgage giant Fannie Mae. The firm has acquired nearly two-thirds of $9.6 billion in loans the agency has auctioned, representing unpaid loan balances of $5.7 billion, a Wall Street Journal review of government records shows.

 

In all, Goldman has spent roughly $4.5 billion on some 26,000 Fannie-owned loans, according to the government records. It has also been buying mortgages, in smaller size, from private sellers and Freddie Mac, Fannie’s sibling, according to county records, government filings and traders.

 

On Tuesday Goldman won the majority of loans at Fannie’s latest auction, its largest to date. The bank bought about 8,000 loans with unpaid balances of $1.4 billion.

 

Goldman has paid between 50 and 90 cents on the dollar for the loans, according to Fannie Mae records.

Meanwhile, because Goldman is getting credit toward fulfilling the terms of its settlement, it can afford to pay more for delinquent loans than other competing bidders, which essentially means they've cornered an entire market.

Just another beautiful Obama-era 'deal' for U.S. taxpayers...Obama gets to publicly take credit for 'punishing' the evil vampire squid of wall street all while privately tossing them a sweetheart deal...seems that Hillary isn't the only politician with conflicting 'public' and 'private' positions on key issues.

h/t @davidschawel

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Ignatius's picture

"Why Is Goldman On A Buying Spree For Delinquent Mortgages?"

'Cause they're syphalitic, dog-fucking pukes?

thesonandheir's picture

These cunts make me sick. 

1.21 jigawatts's picture

hmmmm... being Jew-wise: they're likely planning on writing it into their books as immediate profit at 100 cents on the shekel.

Long matzah.

Winston Churchill's picture

They capitalize part of the income streams when they sell those mortgages on.

So the buyers get charged a 40% premium over the mortgage loan.

Goldman are making money coming and going on this corrupt deal.

When does Obozo start getting his payoff in speaking fees ?

Smedley's picture

Buying it up for pennies on the Dollar!!!

Hilarious.....

:D

venturen's picture

When are the criminals going to jail? Or will citizens have to perform their own justice?

Miffed Microbiologist's picture

Simple answer? Never. They fear nothing because there are no consequences and when you have so much moral hazard the jackals become more and more emboldened. Then a few are made into lampshades and the rest scurry back into the shadows and wait for the time to come out again to resume the game.

The pendulum will swing back at the same degree it has been pulled in the opposite direction. This is a physical law. Balance can never be achieved when such forces are in play.

Miffed

NidStyles's picture

Eventually Jews will go extinct.

They aren't exactly reproducing at any rate that will ensure continuity of their race. Good thing they did the same to the Arabs, so tha tthe last of the ME scumbags will be nothing more than apes with low-IQ.

 

Not sure what it is about that area of the world, but it produced some really shitty humans. Don't get me started on the Khazar region either...

mkkby's picture

Wrong, fail.  Jews will rule the world.  Easily.

Everyone else is committing suicide by idiocracy (except maybe the japanese).  High IQ beats low IQ every time.  Numbers make no difference.  Just remember how a few hundred white europeans conquered africa and south america, taking their gold.

You and I may not like it, but 100/200 years from now the brown masses will be slaves again with nobody coming to the rescue.

hotrod's picture

Why doesn't Fannie just offer up the loan forgiveness to begin with?  Amazed that all this loan forgiving is still going on.  Housing market not that bad

chunga's picture

They don't forgive, they foreclose.

AGuy's picture

"Housing market not that bad"

Actually it is pretty bad and getting worse now that mortgage rates are rising. In the Northeast its a completely dead market, I seen homes lists for more three years. To two most common signs in the Northeast is "Home for Sale", "Space available"

The West Coast may be a different matter because of the Chinese looking to leave China or just get capital out. Sooner or later that will come to a halt.

blueberry100's picture

“…little has changed in government, no matter that the ‘great disruptor’; and ‘ultimate outsider,’ Donald Trump, has been elected.  As amidst yesterday’s three-ring “Ides of March” circus, few saw that Trump’s nomination to work with former Goldman Sachs banker, and current Treasury Secretary Steve Mnuchin as Deputy Treasury Secretary, is former Goldman Sachs banker James Donovan.  Who, when officially appointed, will work with Mnuchin; former Goldman Sachs President Gary Cohn – Trump’s National Economic Advisor; former Goldman Sachs banker Steve Bannon – Trump’s White House Chief Strategist; former Goldman Sachs banker Dina Powell – Trump’s ‘Senior Counselor to the President for Economic Initiatives’; and, for the cherry on the cake, former Goldman Sachs lawyer Jay Clayton, who will oversee America’s historically rigged markets when his appointment as SEC Chairman is finalized.  In other words, if anyone believes Washington is working for the ‘99%’ that elected it; let alone, with a billionaire President surrounded by a billionaire cabinet and a virtual Goldman Sachs C-suite; I’ve got a bridge in Brooklyn to sell you.”

quadraspleen's picture

Mortgage buying scheme, scheam, sceam, scam

Benjamin123's picture

"Heskem" "Haskama"= Hebrew for "agreement"

ljm81's picture

Sounds about right.. we really got to get rid of these fuckers to make things better or its never gonna happpen.

Anybody know any ex snipers with time on their hands LOL

Arnold's picture

What nationality youse want?

PoasterToaster's picture
PoasterToaster (not verified) ljm81 Mar 17, 2017 4:03 PM

Yes, but finding one who specializes in nail guns is the hard part.

Quinvarius's picture

This entire article is bullcrap.  Goldman is not going to anyone and asking them to reduce payements and refinance.  Goldman is not buying this garbage, unless they are idiots.  If anything the author here is pimping this complete and total garbage to help Goldman or someone else unload.

Seasmoke's picture

So Why the fuck can't the borrower get the loan for $100,000 !!!!!

HRH Feant's picture
HRH Feant (not verified) Seasmoke Mar 17, 2017 7:33 PM

+1000

Best. Question. Ever.

Singelguy's picture

It is very simple. If the bank that issued your mortgage was willing to cut your principal by 50% , everyone would default just to get the discount. By selling it out the back door the bank still manage to maintain their image of being the tough guy and people continue to pay for fear of losing their home.

PoasterToaster's picture
PoasterToaster (not verified) Mar 17, 2017 4:05 PM

What happened with that investigation into Obama stealing 140 billion from Fanny and Freddie to fund Obamacare?  Maybe a link here.

chunga's picture

I used to get pissed off about this shit, but it was about 5,000 scandals ago.

tOO BiG To fAiL LOan MOdIFiCATioN FOrm   r.1.A.002.B.XXXX

 

 

     The following agreement is approved by the Office of the Comptroller of the Currency, Securities and Exchange Commission, Fair Trade Commission, Financial Industry Regulatory Authority, Commodity Futures Trading Commission, The Federal Reserve System, Office of Thrift Supervision, Federal Trade Commission, Federal Deposit Insurance Corporation, Mortgage Bankers Association, American Bankers Association, National Association of Insurance Commissioners, National Association of Realtors, National Foreclosure Mill Guild, Department of Justice, US Supreme Court, US Congress, US House of Representatives, Office of the President, Office of State Attorneys General, Goldman Sachs, Bank of America, Wells Fargo, JP Morgan Chase, Citigroup, GMAC, Fannie Mae, Freddie Mac, AIG, Morgan Stanley, FHA Refinance Program Fund, PNC Financial Services, US Bancorp, SunTrust, Capital One, Regions Financial, Fifth Third Bancorp, MERS, Hartford Financial Services, American Express, BB&T, Bank of New York Mellon, KeyCorp, Comerica Incorporated, Blackrock, Invesco, OneWest Bank, Discover Financial Services, Ocwen Financial Corporation, Company Corporation, Litton Loan Servicing, Saxon Mortgage Services, Aurora Loan Services, East West Bancorp, Flagstar Bancorp, CNBC, National Association of Notaries, LPS, DocX, Countrywide, Harmon Law, and is subject to the following terms.

 

By reading this document, which may change or be withdrawn without notice, you waive any and all rights you may or may not have, past, present, and future and unequivocally agree to the following terms under pain of Death.

 

 tOO BiG To fAiL LOan MOdIFiCATioN FOrm   r.1.A.002.B.XXXX

 

      Before being considered for a loan modification you, your family members (born and unborn), friends, associates, acquaintances and pets, must submit one thousand [1000] certified copies of the following:

1.    The amount of any and all bank, checking, savings accounts, including account numbers and passwords.

2.    Complete list and location of any assets held in physical possession. [i.e.;  in cookie jars, under your mattress, etc.]

3.    Birth Certificates, Passports, Social Security Cards, Complete Employment History Affidavits, IRS Forms, Credit Reports, Medical History, and political party affiliation.

4.    Vehicle Identification and Registration numbers, including Proof of Insurance, of any and all vehicles and supporting Affidavit[s] describing their use, purpose, mileage, and location.

5.    Certified DNA samples.

6.    Certified Finger Prints.

7.    Certified Retina Scan.

8.    Certified Blood Sample.

9.    Certified Urinalysis Examination.

10. Proof of Title Insurance payable to the undisclosed party and their agents.

11. Proof of Title Re-Insurance from Lloyds of London payable to the undisclosed party and their undisclosed agents.

 

 

     Certified copies of the complete list above must be mailed to the undisclosed party and their undisclosed agents within twenty four [24] hours and must be received by the undisclosed party and their undisclosed agents within twelve [12] hours at the following address.

tOO BiG To fAiL LOan MOdIFiCATioN FOrm   r.1.A.002.B.XXXX

 

UNDISCLOSED PARTIES AND THEIR UNDISCLOSED AGENTS

P.O. Box 1776

Maiden Lane

New York, NY 10005

 

     Alternately, to better serve our customers, you may send your complete document package via fax to the number below. Attention undisclosed party and undisclosed agents.

 

1-800-GET-LOST

 

     In order to assure Quality Control, upon receipt of the documents listed above and in addition to any and all others that are required but not disclosed, your eligibility for a loan modification will be determined by an undisclosed party and their undisclosed agents that may or may not be a party of interest and may or may not have standing to enter into any potential agreement[s].

     The undisclosed party and their undisclosed agents retain the right to commit state and federal mail fraud, wire fraud, FDCPA violations, unfair and deceptive acts and practices, conspiracy, money laundering, racketeering, tax evasion, fraud upon the court, uttering fraudulent documents, fraudulent conveyance, slander of title, financial institution fraud, securities violations, and identity theft with impunity.

     The undisclosed party and their undisclosed agents neither admit nor deny any involvement in any potential agreement[s] that may or may not result. Any agreement[s] made are non-binding and the undisclosed party and their undisclosed agents shall be held harmless from the beginning of time to eternity.

     In accordance with the strict guidelines established by the undisclosed party and their undisclosed agents, any potential loan principle correction shall be no less than the original outcome based appraisal value and shall be no more than one hundred [100] times Present Market Value with a variable and/or fixed interest rate not to exceed one hundred [100] percent.

tOO BiG To fAiL LOan MOdIFiCATioN FOrm   r.1.A.002.B.XXXX

     Should an agreement be reached between the undisclosed party, their undisclosed agents and the borrower, the borrower, the borrower’s family members (born and unborn), friends, associates, acquaintances, and pets shall agree and consent unequivocally to the following terms.

 

1.    The borrower’s breech of any potential preliminary agreement shall be determined solely by the undisclosed party and their undisclosed agents.

2.    In the event of borrower’s breech of any potential preliminary agreement; the borrower, the borrower’s family members (born and unborn), friends, associates, acquaintances, and pets shall waive any and all rights previously afforded them up to, including, but not limited to the SPCA, US Constitution, The Bill of Rights, and The Geneva Convention.

3.    In accordance with the strict terms established by the undisclosed party and their undisclosed agents, the borrower, the borrower’ family members, friends, associates, acquaintances, and pets consent to unlawful search and seizure, wire-tap, harassment, kidnap, torture, trespass, ankle bracelet monitoring, random drug tests, unmanned drone surveillance, unlimited detainment, mandatory behavior modification and Pepper Spray.

4.    The borrower’s breech of any potential preliminary agreement shall immediately result in wage garnishment for the borrower, the borrower’ family members, friends, associates, acquaintances, and pets.

5.    In the event of borrower’s breech of any potential preliminary agreement; the borrower, the borrower’s family members (born and unborn), friends, associates, acquaintances, and pets consent to a permanent barcode tattooed front forehead and both temples that shall remain visible at all times.

6.    At the sole discretion of the undisclosed party and their undisclosed agents, the borrower, the borrower’s family members (born and unborn), friends, associates, acquaintances, and pets consent to indefinite detention in an approved FEMA camp or Guantanamo.

 

 

tOO BiG To fAiL LOan MOdIFiCATioN FOrm   r.1.A.002.B.XXXX

 

7.    At the sole discretion of the undisclosed party and their undisclosed agents, should the costs associated with incarcerating the borrower, the borrower’s family members (born and unborn), friends, associates, acquaintances, and pets become burdensome they consent to extermination.

 

8.    The borrower, the borrower’s family members (born and unborn), friends, associates, acquaintances, and pets consent to, and rightfully accept complete responsibility for destroying The US Constitution, The Bill of Rights, the wholesale corruption of our government, and the destruction of the World Economy.

 tOO BiG To fAiL LOan MOdIFiCATioN FOrm   r.1.A.002.B.XXXX

 

 

TERMS OF THE AGREEMENT

     Due to the proprietary nature of the strict requirements dictated by the agreement between the undisclosed party and their undisclosed agents, the terms of the potential preliminary Loan agreement cannot be made available to the borrower, the borrower’s family members (born and unborn), friends, associates, acquaintances, and pets. They are articulated in the attached contract found on pages [7 – 30,000] and will be stored somewhere at the sole discretion of the undisclosed party and their undisclosed agents.

The undisclosed party and their undisclosed agents retain the right to alter, destroy, or lose the 29,993 page attachment.

 

 

 

________________

Deadbeat Signature                                  

 

 

 

Affix undisclosed party corporate seal here (optional)

 

gdpetti's picture

https://www.corbettreport.com/

Meet Goldman Sachs, the Vampire Squid
tbone10's picture

Love me some Goldman, that kike made me a wealthy man!

thePablo's picture

Is the forgiven amount taxable income for the occupants?

Evan Wilson's picture

Yes, as a 1099-C form will be issued.

Yes We Can. But Lets Not.'s picture

The less gubmint (Fannie in this instance) there is, the less opportunity for sharks (Goldman in this instance) to take advantage of it (and thus, taxpayers).

Fannie and Freddie should have never existed.

Clowns on Acid's picture

If the article is accurate ... then GS is basically getting paid to organize and manage, a controlled demolition of housing prices.

In the 200k mortgage reduced overnight to a 150k mortgage, means that the property is only worth 150k, or else the owner would accpt GS offer at 150k and then sell the house for 200k on the market.

The owners could make 50k on the sale, and then put down 20k for a new 200k house and have 30k to pay the mortgage for at least a year before they stop paying and have GS agree to sell them the new 200k mortgage at 150k again.

The point here is that foreclosed house is only worth , at most 150k...not 200k. Basically the author is saying that the housing market is 25% over valued at the moment. I agree with that.

Logan 5's picture
Logan 5 (not verified) Clowns on Acid Mar 17, 2017 5:04 PM

Notwithstanding your acknowledgement or lack thereof...

 

Some jew made $50k & you didn't... So whadda ya think about that?

 

FFS ~ Way back in olden times... The jew needed to set up a table, take your gold, & promise to hold it for you, until the day you needed it back... Whereby, he handed you over a paper script valid for that redemption at such given time (which, naturally, never arrived until):

 

- some crisis occurred whereby there was a flurry of redemptions

- SAID jew had already hightailed his ass outta there

 

Today ~ It's still the same scheme (using modern technology).

TeethVillage88s's picture

I realize if Jews were kicked out of various countries in Europe and Russia starting in 1500 or 1600s... and European Revolutions also facilitate this... and we in the USA aren't even aware of smaller Empires or shorter Empires like the Venetian Empire... And well the links where Jews were kicked out of Spain, Netherlands, Russia 'might' be disputed creating a sort of confusion.

But gotta ask ZH... Anyone have some links? NB4... yes I have seen some links.

Benjamin123's picture

Plenty of expulsions are just migrations done under less-than-ideal conditions, its hard to believe that some medieval king yapped "jews are to be expelled" and then the jews just got going, all in an era before census, electronic communications, standing armies or actual national borders. The middle ages were lawless.

All immigrants have a big incentive to make up stories of opression to justify his migration. The hosts love to hear them because it makes them look like heroes for saving opressed peoples. This is even codified in law, countries are supposed to save "refugees" but can be more strict with "economic migrants", so now all migrants are refugees fleeing gestapo torture.

In Israel i have heard plenty of south american jews talk about their "antisemitic opression", much to the delight of their israeli hosts, because it reinforces their national myths. People are often surprised whenever i tell them that there is no antisemitism in South America, the place is just a big violent communist shithole in every possible way but not antisemitic. Could there be a correlation between a lack of antisemitism and social decay?

HRH Feant's picture
HRH Feant (not verified) Clowns on Acid Mar 17, 2017 7:31 PM

People can get stuck and be unable to sell their house for many reasons. One of those reasons often includes a second mortgage, or HELOC. People that refinanced with floating interest rates are going to see their interest rate, and mortgage payment, go up.

It isn't always black and white and GS is taking advantage of people that are in distress.

TeethVillage88s's picture

Ah, organize a Housing Bubble

- Then stall foreclosures to keep those investors hurt by MBS a little more confident
- Offer Global Bailout Loans from the US Federal Reserve Bank to avoid war, and calls for war
- Create Device or Institution to buy up Toxic MBS or other Assets... TARP, HARP, HAMP, whatever... and QE1-3... export the idea of QE to EU
- Keep homes off the Open Market, Prevent Flooding of Homes on Open Markets especially in Big US Cities or Markets
- Then 5 years later... set it up to buy up the subprime housing at discount, get Federal Subsidy, and sell again with fees... lobbying pays off at at least 2 to 1

Note Corruption:
1. Race to the Bottom
2. Foreign Agents every where
3. Conflict of Interest in Congress
4. No Term Limits for Congress
5. Possible Sedition, Congressional Fraud, Wire Fraud, Insider Trading, Treason

Rinse and Repeat after distraction of other Frauds, Crimes, Financial Bubbles, and Conspiracy.

Macavity's picture

Nice observation.  The fundamental crime/fraud is that GS could book a "loss" and thus "pay" the "fine".

Macavity's picture

Got it!

Life is better off now for those whose mortgages have been restructured.  But the market is still over-priced, ie didn't naturally correct itself, and as a result current and future homebuyers will pay 25% more than they would have.  Artificially inflated transfer of wealth and keeping new buyers out of the market.  Cocksuckers.

Singelguy's picture

Given the stagnation in wages and the real unemployment rate (far higher than the official 5%) I suspect that the housing market is far more than 25% overvalued. Stay tuned for Housing crash 2.0 coming to a market near you.

omi's picture

I know it's hip to hate GS, and I'm sure some of it is deserved. But if you put emotions aside, what bothers me more is why FNM cannot do mortgage modifications themselve. In this case, GS unlocks capital that's available, plus making borrower's lifes easier. Say you were in a bad time, but a good job comes along. The employer may do a credit check on you and see you're not on good terms with a mortgage. They may pass you for another equal candidate.

GRDguy's picture

Published in 1889, "The Great Red Dragon: Foreign Money Power in the United States"

stated in the introduction that their "goal is to own the earth in fee-simple."

Nothing new under the sun. GS is simply acquiring TITLE for someone.

Downtoolong's picture

 

What you are about to see are stunts performed by professional financiers in special closed circuit markets developed by the United States Government. Do not attempt this on your own on Main Street, as it could lead to serious financial loss or wealth destruction for you and/or innocent others .

 

 

  

American Snipper's picture

That's $173,000 per property, and at 50% of the debt, those are very nice homes...

Houses Depreciate's picture

$173k for a $50k depreciating shanty is a bargain eh?

Grandad Grumps's picture

Fannie Mae should not be discounting the mortgages to Goldman because Goldman can create money out of thin air and has no need for the discounts. People should be allowed to purchase their mortgage directly from Fannie Maeand avoid the parasite.

HRH Feant's picture
HRH Feant (not verified) Grandad Grumps Mar 17, 2017 7:27 PM

I agree. Should sounds great in theory. The reality is that Goldman (and I am guessing they are not the only one doing this) found an exploit and are doing what they do well. Exploiting.

Codwell's picture

Either a government bailout or they are real estate prices shooting way up.

JailBanksters's picture

It's Deja Vu all over again

You snap them up for nix, if nobody wants to buy the property again after it defaults, you pickup on the Default Insurance "AND" the Tax Payers or Club FED will give their money back, to "save" the Bank, again. It's a Win Win Win situation.

When you're on a good thing, stick to it.

When you find a better thing, switch to it.

It's only Criminal if you get caught, and if they get caught, they just pay a fine.

 

 

Macavity's picture

Looks like their fine was an "accounting loss", but a cashapalooza.

I'd love to see the original "fine" to see whether US govt was complicit.

Davidduke2000's picture

They pay nothing for them them sell them to the central bank for huge profit.

Macavity's picture

Thank you for your ingenuity and service to the American people.  /s

Now please pay out $1.8 BN in cash plus all cash profits on this bumblefuck of new restructurings and repackagings...directly to the homeowner borrowers that suffered.  /ns

Will somebody in govt please grow a pair?