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Happy New Year 2017 News

U.S. District Court opines that the metaphor “waterfall” is misleading

If you find the start of 2017 boring, you may want to read through the Memorandum Opinion written by United States District Judge James E. “Jeb” Boasberg in the case Securities and Exchange Commission v. J.P. Morgan Securities LLC, et al. The Opinion is informative, well written and quite colorful. We have never seen any RMBS related court opinion reference the song Waterfalls, the Grammy-nominated 1995 single by TLC from their second album CrazySexyCool and arguably the group’s signature song nor a court opinion suggest that movies such as Inside Job, Too Big to Fail, or the Big Short might do a better job at explaining the securitization process than the Complaint filed with the court. Judge Boasberg further shows that the metaphor “waterfall”, commonly used in our industry, may be inaccurate as “all water that enters a waterfall inevitably ends up in the pond at the bottom.” He believes that the proper metaphor the industry should use is “champagne tower”, where the “bottom investors are left thirsty until those above are filled with bubbly.”

HAMP has ended

HAMP has expired on December 31, 2016, although, borrowers who have requested assistance or to whom an offer of assistance has been extended as of that date will have until September 30, 2017 to finalize their modification. We will watch in the coming months just how this affects Non-Agency RMBS. We do expect servicers to step up with their own proprietary modifications. It may be end of year until we see any effect and then we still have to consider other factors such as improvement in home prices and overall performance to make any fair judgment. However, servicers will definitely miss those HAMP fees paid out to them over the past 7 years.

We are always available to answer questions and investigate anything that disturbs you. Feel free to suggest a topic that we should look into. We are pretty good at matching addresses to delinquent loans using the public records. Even better is the availability of updated valuations (40% of all seriously delinquent loans). We are your research team. Please call/email.

Contact us at 203-276-0672 to become a client and access all reports and attachments.

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