On Sun, 22 Feb 2009, Jordan Hayes wrote:
>> So when we refinance, the USG is paying off these original mortgages
>> off at full face value?
>
> We call that 'payoff value' but, yes.
>
>> Then why do you need step one?
>
> Because only about half of the mortgages out there are securitized.
Okay then, to finish off this clarification thread, so we can go back to evaluating My Plan -- the stuff about zip code research only applies to non-securitized mortgages? We aren't buying the pools of mortgages at the bottom of MBS securities because we don't need to own them to pay them off?
Now, theoretically, you could say that about non-securitized mortgages too -- if we paid them off at payoff value, we wouldn't need to own them either. But IIUC, that would be overpaying since they are worth less. So that's why we're buying them -- to knock down their value by 20% or 30%, to nearer their current fair market value, before this process begins.
But IIUC, we aren't doing this with securitized mortgages. We're paying them off at full value -- i.e., at 20% to 30% more.
Is that right?
And if so, what's the reasoning there? Is it because you accept that there's basically there's no way out of the securitization knot -- no way securityholders could act like a bank, and authorize their servicer to accept lower payoff values as better than defaults?
Michael