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Although Triaxx is using its technology to try to recover losses, that system could also help investors looking to buy privately issued mortgage securities.
As conceived by two Wall Street veterans, Thomas H. Patrick, a co-founder of New Vernon Capital, and Macauley Taylor, principal at Verum Capital, the plan calls for refinancing all the nonprime, performing loans held in privately issued mortgage pools (except for Fannie's and Freddie's) at a lower rate.
During the 1980s, for example, the California Veterans Administration issued mortgage bonds to help veterans purchase homes.
A newly issued mortgage pass-through security pays 1.3 percentage points more than an intermediate Treasury security, up from 1% last October.
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The new twist is that the investment banks will be allowed to pledge as collateral a wide variety of securities that include hard-to-sell, privately issued mortgage-backed securities.
He decided the best way to do so was by shorting the debt backed by newly issued mortgages.
It began with mortgage dealers who issued mortgages with terms unfavourable to borrowers, who were often families that did not qualify for ordinary home loans.
The bank recklessly issued mortgages and then made false certifications about their condition to the Federal Housing Administration, a government agency that insured them, the complaint said.
WHEN lenders issued mortgages to anyone who asked, borrowers could largely ignore their credit scores, the most important and most incomprehensible determinant of a loan's interest rate.
And in some spots, lenders issued mortgages to those who did not meet traditional income criteria.
It seems implausible, if not downright ludicrous, for any lender that issued mortgages at the height of the property boom to say they'll walk away from the real estate debacle without a scratch.
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