deb, it's not really "stated." It's delegated, and this has been offered for a long time. MGIC's old program was called "Simply Magic" or something like that.

The delegation agreement between the MI and the lender says that the lender eats it all if it breaks the rules. The rules are specified in the MI's Underwriting Guides, which the lenders are warranting that they are using. So it could be a full doc loan, a low doc loan, whatever.

Very frequently a big shop will hire a contract underwriter from the MI. This underwriter is actually on contract with the MI, so that person can sign off on policies right there in the lender's office.

It's quite possible that these were not flow policies (written at the loan level up front before closing). They could be "bulk" policies where the MIs wrote it based on some representations made by AHM, and now those reps don't look true.

Max, I think we pretty much chewed that post on DB's FC filing problems to death in the thread below this one.

Short version: DB screwed up. As far as I can tell, they submitted an affidavit saying they were the noteholder when they are really the assignee of the noteholder. My guess is that some dipshit used a boilerplate affidavit form.

You can't give the judge a sworn statement that you are the noteholder and another document that says you're just the assignee of the mortgage on behalf of the noteholder. The judge rightly notes that this creates a "conflict." That's judge-speak for the paperwork submitted is contradictory. I see nothing here that says DB can't refile when it straightens its paperwork out.

Otherwise, that email being quoted is supposed to be from an attorney??? Did anyone read it? It sounds like the kind of thing you get on web forums from those weirdos who claim that income taxes are illegal, or that you can get out of your debts by tendering fake payment vouchers or something.

Look, if a bunch of security issuers didn't in fact get their legal docs in a row on the individual loans, then the issuers will have to buy the loans back from the security. That is not a good thing, so the threat of it will motivate them all to go find the documents or correct them or whatever.

It's something like having lost your receipt: that does not mean that you did not buy something; it means you're having a hard time proving that you bought it. But it doesn't mean that you never owned it, and it doesn't mean that eventually you cannot prove that you own it.

Tanta, so what you're saying is that AHM was paying no more attention to the fine print than the FBs that they were selling payment option loans to

I'm not actually saying one thing or the other, since I don't have access to the loan files in question.

However, what this sounds like to me is that AHM had loans that were fraudulent or ineligible, or that it should have known were fraudulent or ineligible if it had exercised even minimal due diligence, but that it tried to pass off onto Triad for an MI cert.

That isn't a matter of not reading fine print. That would be a matter of "let's slip a bunch of trash into the Triad pile and hope they never notice." If it's true, AHM is SOL.

Actually, stargazer, there were a bunch of posts with the Yikes label, and then somehow it disappeared. My theory is that one of the two bloggers who run this site accidentally deleted that label. My further theory is that it probably wasn't CR. That means that mistakes were made.

Anyway, I think I recreated the label Yikes but the old posts lost their labels. But since I only partially understand how Blogger works on an average day, that's just a theory.

[ Ken Houghton]"And tell me again what the borrowers are paying MI for[?]"

Well, if in fact the loans are fraudulent, my sympathy for borrowers who obtained an insured mortgage fraudulently is limited.

If the loans are just simply ineligible for insurance, Triad will probably just rescind the policy. That means the borrower will get premiums back, if the premiums are borrower-paid. (If it's one of those high-rate loans that is insured after the fact by the lender, then you're screwed, but then you're no longer making mortgage payments, because you're in foreclosure, which is how Triad discovered the problem.)

MI does not insure borrowers. It insures lenders. So no, you are not paying it for any other reason than that your down payment was less than 20%.

There is certainly a good discussion to be had about the wisdom of delegating UW authority. I will only note that it results in those low closing costs that consumers love. If you bought into how it's always in the consumer's best interests to pay less for faster mortgage loans, then things like this may burst your bubble.

I've been arguing for some time that consumers ultimately do better when mortgage transaction costs and speed more accurately reflect the risks involved.