Blackrock, Pimco, Fannie Target Banks Using Texas Lawyer’s Clearing House

Via Bloomberg,

This year, the former partner at lobbying firm Patton Boggs LLP also found a unique solution to an even bigger housing problem: getting money back for investors in residential mortgage-backed securities that went bad. Franklin created a clearing house where investors can pool claims and potentially create the necessary legal clout to force mortgage lenders to buy back improperly made loans at the heart of the securities….

“If we’re going to have a mortgage system in this country that’s not government controlled, this effort or an effort like it will have to succeed,” says Bill Frey, head of Greenwich, Connecticut-based securities firm Greenwich Financial Services LLC. If the investors “don’t act together, the deals are going to continue to take huge losses.”…

Mortgage securities have been among the largest sources of the $1.8 trillion of writedowns and credit losses suffered by the world’s biggest financial companies since the start of 2007, according to data compiled by Bloomberg…

By taking mortgage payments, the servicers are most likely to know about problems with the origination of loans, such as faulty appraisals, inflated borrower incomes and missing documentation that could lead to a forced buyback of the loan, Franklin said.