And the system efficiently separates the business of mortgage lending from the ultimate investors—such as pension funds and insurers who supply the funds by purchasing the mortgage-backed bonds.
Last December, the couple got a letter saying that a firm had purchased the mortgage on their home in Pico Rivera, Calif., from Chase Home Finance for less than its original value.
He now purchased the mortgage.
In 2011, an Albuquerque, N.M., federal judge dismissed the free speech argument raised by lawyers for the ratings agencies because, in part, the private trusts that technically purchased the mortgage bonds were not "public figures," like publicly traded companies, entitled to more protections, he said.
A so-called special-purpose vehicle — a ghost corporation with no people or furniture and no assets either until the deal was struck — would purchase the mortgages.
The indictment charges that Mr. Taub purchased the mortgages on Ocean House for $400,000 and then illegally valued them at more than $4 million, meaning that Ocean House had to make far higher monthly payments to Mr. Taub's company.
The city's plan is to purchase the mortgages from the banks and offer families fairer deals to stay in their homes.
The banks financed the construction of sprawling developments of tract homes, purchased the subprime mortgages that homeowners took out when they moved in and packaged them into bonds that were sold to investors.
According to court records in the 285 criminal cases in the investigation, the struggling homeowners would pay substantial fees with promises that so-called investors would purchase the victims' mortgages.
He predicted, for instance, that the recovery program's cost to taxpayers "will certainly be far less than $700 billion," the amount called for to purchase the troubled mortgage-backed securities.
