Another trip to the trough in 2010 yields countless foreclosable loans and a perpetually extending loan to pay for them

My, wasn't he busy snuffling around the homes of others, looking for the nicest ones that the owners had fought hardest for, where the fatigue and despair became too great and they had left. In lender parlance they'd "walked away" but some of them would have been carried off.

Pigboy and his Residential Credit Solutions (RCS) got such a good deal when Geithner let him hoover up the shards of dead bank's loans, at the cost of little more than dancing a piggy-jig, that he wanted to do it again. And he did. He made a cabal with RBS (was that Forex fraud or mucking with LIBOR?) and CarVal, and three trotted away for some window shopping. That's poor peoples' front windows, not Lord and Taylor. Your front windows.

The 2009 deal was a stunner (see here), a sweetheart set-up where without risking much more than a singed snout, Pigboy got most of the income and a sliver of the risk from a dead Texas bank's assets. Then RCS got to "service" the loans in their very special way, for a few, and by the "the loans" I mean $1.3 billion dollars worth of 'em.

It was supposed to be a proof of concept for PPIP, but it sure wasn't. PPIP was supposed to help functioning banks shed worthless contracts, not liquidate defunct banks. The problem was that no bank wanted to sell those "junk" loans. Each one tended to be worth a house and some land. 

Question for Geithner: why did you give away most of the upside and get ready to take it in the neck if the whole thing went belly up? Ya did it for Denny, didn't ya? Did he talk Texan and did his eyes smile? That's how they do it, egghead! They're sociopaths. You could have hired RCS to service the loans and if they'd got out of line, sent them back to the sty. 

They did get out of line, and CFPB made a made an example of them in late July, but some of their victims lost their homes and CFPB can't fix that.  The example-making was announced two weeks after Texan pol Ted Cruz was squealing for the abolition of CFPB.  Did RCS execs bend his ear when the investigation was nearing completion? 

How about 2010? Anyone lose a house to an entity with AmTrust in the name? Pigboy paid 37 cents on the dollar for the right to foreclose on you. You owed $200,000? He got your house for $74,000. 

Piggers and pals got a very good deal.

RCS, RBS and "CVI Global Value Fund US LLC" (CarVal in fancy dress) got together and made the winning bid when the assets of a bank called AmTrust went up for auction. Their group is called "AmTrust-NP SFR Venture, LLC." Thirty-seven cents on the dollar, FDIC? Why not sell the loans to a community agency with a rent-to-own program for the real investors–the people who live in the house–They didn't deserve it, you say. And PigBoy, a criminal, does?

A lot of people lost their homes the day the AmTrust deal closed, though it took some number of months for the whole scenario to play out. The servicing agreement, hosted on FDIC.gov, is heavy on the legalese, but if I'm not mistaken it instructs RCS (who will service the loans) on what type of properties to foreclose on first and how to muck up trial payment plans if possible. The servicer goals, outlined in Item 3, Schedule 6 of the business plan specified:

(ii) prioritizing lowest risk and highest loss Mortgage Loans for modification.

Not an even playing field after all. Government-sponsored "Home Affordable" Modifications should go to those who qualify for them, period. If there is another scheme afoot, borrowers should be told. 

(vii) where feasible, applying any changes to the mortgage loan modification guidelines to Mortgage Loans currently in a trial modification prior to the loan converting to a final modification;

...so that borrowers who'd been lead to believe they had a modification in place if they made the trial payments, and were making them, could be told during the process that the payments would be higher, or that they were no longer eligible, and would face foreclosure if they couldn't come up with the different between their original payments and their trial payments right away.

And everything would be would be kept on track by regular meetings of the Servicer and the Manager, both of whom were RCS. 

Think your foreclosure wasn't based on falsified documents? Wording elsewhere in the same servicing agreement brings MERS and magic powers into the mix.

With respect to each Mortgage Loan that is registered on the MERS® System, (A) the Servicer [RCS] shall be designated as the "servicer" and the "investor" with respect to such Mortgage Loan...

Paying 37% of the face value of the loan is hardly "investing." Beware that term. It is not the same as "lender."

...upon the request of the Manager or the Initial Member, the Servicer [RCS] ... if requested by the Manager [RCS] or the Initial Member ... shall cause MERS® to change the information in such fields, to the extent MERS® will do so in accordance with its policies and procedures, to reflect its instructions.

For your convenience, the Servicing Agreement link, again.

FDIC was much kinder to the home-hoggers at RCS than RCS is to borrowers. There's a second document that's a deal between FDIC and Pigboy that says if Pigboy can't, by the two-year maturity date, sick up the $169M his group borrowed to buy the loans, they could have another term of the same length to do it, as long as it was because a) the laws changed and they weren't allowed to foreclose on as many loans as they'd planned to or b) what they owe is less than or equal to 30% of the liquidation value of the contractually current loans in the portfolio (where liquidation value is 65% of "broker price opinion,"  a slippery estimate of market value).

For your convenience, the Side deal, relaxed loan terms offered to RCS by FDIC link, again.

The triad got to work quickly.

One of dozens and dozens of foreclosures following the 2010 deal.

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FDIC gave the foreclosure squad two extra years to repay if foreclosures couldn't be done quickly enough. You get the sense this was a straight foreclosure/REO play. Anyone who tried for a modification wasted their time and whatever money they spent.

The FDIC's deals with RCS are criminal because RCS are criminals. It might make you feel better to know that RCS mistreated an AmTrust borrower so badly that a jury awarded her $2,000,000. And she didn't even lose her home. It was just the way they made it so hard for her to keep it.

I wonder how the Geithner feels about transferring so much middle-class sweat into the yachts and villas of people who think hard work is talking on the phone and going to meetings. Not much probably. He's made of pretty stern stuff, when shove comes to push (the red button). The Intercept reported this and more last week:

(Turquoise elements added.)