- advertisements -
I'll be REALLY, REALLY curious what their prospectus says about the enforceability of the mortgages going along with those loans.
I am not at all ashamed in admitting that I don't have a clue about how this is supposed to work. Could anyone please explain this rationally? Oh wait,... nevermind.
It's a lot like a person backing their bad credit by not paying their bills. You bundle up the unpaid bills in a UBS (unpaid bill security) and then sell it back to creditors, like in never never land...
Oh my God, I'm really a millionaire! If only I could collateralize myself to CALPERS, since they almost assuredly would be buying the dreck from JPMorgan.
It's pretty straightforward actually. Surprised to see that ZH "cannot compute."
Considering that France, a country with a defaulted banking system, is AAA, a CMBS backed by defaulted loans should clearly be AAA as well.
Hey, even the EFSF is AAA, a pile of troubled european sovereigns backed by themselves and France.
Null Pointer Exception on mortgage.getPayment()
You are correct...
Will we be able to get these CMBS through Groupon?
far better to buy a mortgage backed security where you know going in the loans are bad. it's the finding out after purchase that's the real disappointment.
No Mystery At All Folks.
JPM exchanges a pool of Zero Coupon Perpetuals backed by nothing (no cash flows, no perfected titles, no possibility of recovery--- in the extreme case) with Zero Coupon Perpetuals issued by the Federal Reserve (liability, pays no interest which never matures) both of which were created on a computer by enrty of key strokes, neither of which are available in hard copy, tactile form.
What's the problem?
No problem.. they will just sell it to the Bernak
A small tranch could get rated AAA.
When someone buys up a bunch of bad debts they know roughly the minimum percentage they will collect. Structure half of that as Senior with absolute priority, then the tranches become more equity-like as further pieces are sliced off.
Lets say worst case is five cents on the dollar of a group of bad debts totalling 100 million. Best case is 50 cents on the dollar but you estimate only a ten percent chance of that level of recovery. If the "risk free" portion (half of the minimum of five million you are virtually guaranteed to collect) is being offered at three percent over ten years, then what would the next portion yield if it included 2.5 million that has a hundred percent chance of recovery and an additional 7.5 million in bad debt, with an 80 percent chance of recovery?
At what price and yield would you pay for that ten million of bad debt junior to that senior tranch, but with priority over any other tranches down the line?
Now u understand financial engineering!
JPM may know something you don't. What are our Congress critters up to now?
The concept is easily understood, but the big fly in the ointment is that this is like buying a very old used car. Who usually has the best idea of the true value of the used car - the seller that's who! He knows if he is selling a dud for a good price because he drove the piece of shit for 100,000 miles. The buyer gets screwed most of the time.
Same thing here. This time, the guy selling you the used shit box is JPM.
No problem on high level languages but go to the low ones and you get a core dump! Surprise, Surprise :)
// small C# method to express the situation more clearly!
// Remember to check the ref value after calling this function. Always returns True and an undesirable result will be loaded into billToTaxPayer
public bool IsTaxPayerFucked(List<Mortgage> mortgages, ref int64 billToTaxPayer)
bool isTaxPayerFucked = true;
int theBillToTaxPayers = 0;
foreach(Mortgage mortgage in mortgages)
if(mortgage.getPayment() == null)
theBillToTaxPayers += mortgage.Balance + JPM.Fees;
theBillTotaxPayers = int64.MaxValue;
throw new AccountingCorruptedException();
isTaxPayerFucked = true;
perl -e 'print "Taxpayer is fucking fucked, bigtime!\n"'
This is just a variant of the old Basic Computer Language statement "10 GOTO 10" except they added a few steps:
10 GOTO 20
20 GOTO 30
30 GOTO 40
40 GOTO 10
See, I'm productively writing more lines of code and my computer is just humming along.
You got one smokin' CPU!
WTF! Hey can you dudes debug my code. I cannot compile!
for( i=0; i<= tyler_posts_a_technical_reference; i++)
You're having a problem with trying to use an object to reference itself.
CMBS Backed by defaults = "Sack 'o sh!t loans" ^ 2
They are trying to figure out what their shit is worth....they are sitting on so much of it that they are trying to find an exit strategy which gives them the highest return...foreclosing and selling the properties are not an option, they can't distort the value of a building to look like its worth more than it is like they can with a synthetic CDO....you can be sure that they will be the fuckors in the end and that the poor sod's who buy this shit will be the fuckees.
They are trying to figure out how to get people to pay them for leaving a burning bag of dog shit at the front door, ringing the doorbell, and running away.
Their task is more complex: present dog shit as AAA structured financial instrument backed by a pile of burning dog shit that yields flowers and sell it to the willing buyers. It takes a lot of MBAs and CFAs on both sell and buy side to make this structure work and create appearance of something noble and useful happening.
"Could anyone please explain this rationally?"
Sure they can! Oh wait, "rationally"? No. No they can't.
Sure...let me explain. 10 years ago I took a shower with Jerry Sandusky. He told me all we were doing is 'horsing around'. He just invited me again to another 'horsing around' party. Why wouldn't I want to go back again?
Same thing. JP Morgan is Jerry Sandusky and they can't understand why everyone wouldn't line up for another good ass-raping/horsing around session (allegedly).
I assumed that it meant that they pursue the settlement of these bad debts. Pay 50 cents on the dollar, recover 70 cents--damn! just made 40%. it's like a colection agent buying your debts of $1000 for $500 who then calls you and settles with you for $700.
Actually its more like a collection agent buys your fake debt of 1000 bernak bux for about 10 dollars and tries to collect 1200$ for the interest, you know... Collection attorneys are bottom of the barrel scum who prey on ignorant people and business is good today.
Somebody has to be the vulture and eat up the putrid mess. It is the cycle of life and finance.
Vultures or at least organisms that eat dead organisms are necessary.
“Hey everyone, look at me, I’m a cowboy! Howdy, Howdy, Howdy!”
And after that, whoever bought it for $700 will sell it for $300 (braineless investor) to the same money transfer people/sharks again. And they will sell it again for $500 and will make 66.66(6)% this time and so on and so on. Anyone see something wrong with this logic ???????? If you do you have an idea what is going on and you know what to do, if not continue playing according to the system rules, for this is the only thing left in your heads.
The problem is that because the loans have not been handled properly the loans aren't actually secured. I sure as heck wouldn't give'm anything more than pennies on the dollar. Seriously ... 6% ... maybe 8%.
What you bet there is a hold harmless clause in there regarding mortgage origination and servicing irregularities.
And to think our government thinks these are the guys we should be paying billions to.
What a crock of odoriferous material.
yeah, um...to recover, they will actually have to foreclose and then SELL...aka, let the market clear
It's pretty easy........shit backed by shit leveraged up with shit.
aka....a bucket shop
I'm curious who would buy the stuff? And why?
Why? Keeps the party going.
and what are these loans going to be called: "E-N-R-O-N"?
Ben would do it.
jpm devides by zero
This has "Retail Mutual Fund" written all over it...
...right next to government pensions.
Paging all CALPERS portfolio managers...please come to a JPM all-you-can-eat dog-and-pony luncheon.
"...to achieve the highest possible return at an acceptable level of risk."
"...to achieve the highest possible return at an acceptable level of risk."
That is a BINGO!!!
Tips: tips [ at ] zerohedge.com
General: info [ at ] zerohedge.com
Legal: legal [ at ] zerohedge.com
Advertising: ads [ at ] zerohedge.com
Abuse/Complaints: abuse [ at ] zerohedge.com
Advertise With Us
Make sure to read our "How To [Read/Tip Off] Zero Hedge Without Attracting The Interest Of [Human Resources/The Treasury/Black Helicopters]" Guide
How to report offensive comments
Notice on Racial Discrimination.