The shadow banking system

What will it take for this to come back. Right now there is no good reason for investors to participate with forced right downs , that benefit home owners and banks over investors, servicers acting to their benefit over that of investors and reps and warranties not being enforced.... You don't hear enough about this. ----------------------------------------------- ... [more]

What will it take for this to come back. Right now there is no good reason for investors to participate with forced right downs , that benefit home owners and banks over investors, servicers acting to their benefit over that of investors and reps and warranties not being enforced.... You don't hear enough about this. ----------------------------------------------- http://www.bloomberg.com/news/2010-07-23/mortgage-investors-with-500-billion-urge-end-of-practices-lawyer-says.html “It’s widely known in the industry that reps and warranties have not been well-enforced by servicers or trustees,” said Scott Simon, the head of mortgage bonds at Newport Beach, California-based Pacific Investment Management Co., manager of the world’s biggest bond fund. He declined to say if Pimco is part of Franklin’s group. Investors owning about a third of U.S. mortgage securities without government backing are urging bond trustees to help end practices that damage their holdings, according to Dallas lawyer Talcott Franklin. Bondholders want more bad loans to be repurchased by lenders and seek changes in how troubled debt is dealt with, said Franklin, whose firm sent letters to trustees on the group’s behalf this week detailing the size of its holdings and explaining investor concerns. “We’re telling them, ‘Hey, we’re here,’ and we’re offering to cooperate with them,” Franklin, 45, a former partner at Washington-based Patton Boggs LLP, said yesterday in a telephone interview. “We’re hoping it’s a fresh start for everybody. If you want to help, now’s the time to do it.” The letters show investors in the $1.5 trillion market, who have yet to recover from the credit crisis, are escalating efforts to minimize their losses. BlackRock Inc., the world’s largest asset manager, and Fortress Investment Group Inc., the buyout and hedge-fund investment firm co-founded by Wesley Edens, are among investors that have complained about the handling of loans backing mortgage securities during conferences, congressional testimony and interviews. “This is a turning point in favor of investors,” said Josh Rosner, an analyst at independent research firm Graham Fisher & Co. in New York who predicted the collapse of the market in 2007. “The trustees and servicers probably never expected 25 percent of deals to come together.” [less]