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18 - US residential-mortgage transfer systems: a data-management crisis

from PART IV - DATA OPERATIONS IN FINANCIAL INSTITUTIONS

By
John Patrick Hunt ,
Richard Stanton  and
Nancy Wallace
Edited by
Margarita S. Brose ,
Mark D. Flood ,
Dilip Krishna  and
Bill Nichols
John Patrick Hunt
Affiliation:
UC Davis School
Richard Stanton
Affiliation:
University of California
Nancy Wallace
Affiliation:
University of California
Dilip Krishna
Affiliation:
Deloitte & Touche, LLP
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Summary

Introduction

The residential mortgage and mortgage-backed security (RMBS) markets in the USA are very large, and their operational practices have been deeply implicated in the continuing financial crisis. The systems in place to manage, monitor, store, and analyze the huge volumes of data associated with these markets have not kept pace with the rapid financial developments that have occurred in the last few decades, leaving the legal status of the market increasingly unclear, and leading to many data-related problems that have exacerbated the situation for millions of borrowers who either have lost or are about to lose their homes. Levitin (2010) discusses several examples, including questions regarding the following points.

  1. • Numerous failures of financial institutions with a primary focus on residential lending.

  2. • Widespread allegations of mispricing of mortgages and mortgage-backed securities.

  3. • The validity of the mortgage chain of title in the securitization process, which could potentially cause MBS holders to be unable to go after collateral in the event of a default (see also Hunt et al., 2012).

  4. • The effect of the use of the Mortgage Electronic Registration System (MERS) on the legal status of the mortgages underlying MBS (see also Hunt et al., 2012).

  5. • Whether investors will be able to “put-back” to banks securitized mortgages on the basis of breaches of representations and warranties about the quality of the mortgages.

Information

Type
Chapter
Information
Handbook of Financial Data and Risk Information II
Software and Data
 , pp. 85 - 132
Publisher: Cambridge University Press
Print publication year: 2014

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