Who owns your mortgage, the mind-croggling flowchart edition

This insanely complex chart represents securitization auditor Dan Edstrom's best attempt to figure out who actually owns his mortgage: "The following flow chart reverse engineers the mortgage on the Ekstrom family residence. It took Dan over one year to take it this far and it clearly demonstrates what happens when there are too many lawyers being manufactured."

Just When You Thought You Knew Something About Mortgage Securitizations (Thanks, Mr. Tough!)


  1. “…and it clearly demonstrates what happens when there are too many lawyers being manufactured.”

    i love how its always lawyers’ fault that people hire them to negotiate on their behalf. i suppose if every lawyer in the country stopped doing anything but pro bono work we’d live in a utopia…

    no, i’m not a lawyer, but all this “blame the lawyers” stuff is just another way for people to not take accountability or responsibility for things they disagree with yet participate in anyway. what this chart “clearly demonstrates” to me is the fact that capitalism works because every company along the way is taking their cut and no one is stopping them.

    and i suppose that’s a lawyer’s fault as well.

    1. Thing is, do lawyers have some kind of “plausible deniability” clause?

      Can they say they acted in good faith and therefor just walk away?

      The thing is that lawyers are uniquely qualified in the letter of the law, the spirit of the law, and how to slip something in the cracks between the two.

      If a lawyer is supposed to represent a supposed murderer, and said person confess to doing the deed in private, is the lawyer still supposed to try and get the person to walk free?

      The problem right now is that there are so many lawyers that anyone can shop around for one willing to flat out lie about their clients activities as long as the bill gets payed.

    2. If this is how capitalism “clearly works” then it is fundamentally flawed. It doesn’t even work for itself seeing as the housing market collapsed and people have lost money at almost every level.

    3. ummm… keep electing lawyers to regulate areas they shouldn’t have any business in : Finance, health care, etc. and yes, it is the lawyers fault. No it isn’t the people who elected them, because the system to “elect” them is flawed and was designed by…lawyers.

      The simple matter is for some whack-a-doodle reason, people who get a law degree all of sudden think they know how to fix the world’s problems…the reality is they don’t – but they are sure good at keeping those who can – out of the game.

  2. And this is a reasonably simple case because non of the MBS bonds were re-pooled and tranched into CDOs.

  3. The “value” in those houses dropped. That undermined somebody’s expected future profit and also made housing more affordable for somebody else. All the actual money still exists. Anybody who lost money lost it because somebody else got it. It didn’t disappear.

  4. As a real estate lawyer working in this field and representing banks and borrowers I can tell you the current crisis was not caused by lawyers, but by a system that made a bet based on historical data and lost big time. Since the 1930s real estate has always gone up in value. based on this premise, loans were carelessly made because the view was that even if the loan was bad, the property would still go up in value and get sold to pay the debt.

    Secondly, the bundling of loans was designed to aid home ownership. If banks had to make loans solely based on their own deposits the home loan market would be 25% what it is today.

    Third, the sloppiness and robo-signer issue is, in my opinion, vastly overrated. I have not seen one case yet where the borrower was not deeply in default.

    What I do see is banks failing to properly negotiate, delay short sale approvals and miss loan mod opportunities despite the fact that ultimately they will get less.

    Michael Posner

  5. It is interesting (and a shame) that the process has become so complex. When I bought my house 20 years ago, I applied for a loan at a local bank. The loan was subsequently bought and serviced by another local bank. Any time I have had to talk to someone about the loan (such as when I received an insurance payment for roof damage and the check was written to the bank and me), I can walk into a bank branch and get immediate assistance from a real person. And chances are, that person knows my name when I walk in the door.

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