View Full Version : Man makes ridiculously complicated chart to find out who owns his mortgage

19th November 2010, 09:30 AM
Man makes ridiculously complicated chart to find out who owns his mortgage

We all know the mortgage securitization process is complicated.

But just how complicated? The chart below from Zero Hedge shows the convoluted journey a mortgage takes as it morphs into a security.

Dan Edstrom, of DTC Systems, who performs securitization audits, spent a year putting together a diagram that traces the path of his own house's mortgage. "Just When You Thought You Knew Something About Mortgage Securitizations," says Zero Hedge, you are presented with this almost hilariously complicated chart.

[Related: Congress gets richer in a down economy]

The controversy over allegedly shoddy paperwork has raised doubts about the legitimacy of foreclosures nationwide (a crisis illustrated here and here), eliciting lawsuits from homeowners and investors alike.

The Congressional Oversight Panel, a bailout watchdog, released a statement Tuesday that says the scandal over alleged "robo-signers," foreclosure processors who approve documents without reading them, "may have concealed much deeper problems" in the mortgage industry, HuffPost's Shahien Nasiripour reports. (See the most shocking robo-signer statements.)

Regulators will have their hands full.

Have a look at the complicated chart from Edstrom:



19th November 2010, 10:22 AM
That was the simplified version. He missed entire portions related to:

1. Credit default swaps that were probably written on the mortgage and its various streams (income stream, equity stream, etc.)
2. Synthetic CDOs compiled form the CDS
3. CDOs that may hold part or all the streams of his mortgage, or the mortgage itself.
4. Income streams from the Federal govt. to the CDS issuer, and supporting the banks, and GMAC, Freddie/Fannie etc.
5. Derivatives written on all the above.
6. Income streams from the owner himself and us to the fed. govt. and recycled back through the above.