MBS Rating Agency Fined for Misrepresenting Its Surveillance of Mortgage-Backed Securities

http://www.housingwire.com/articles/35455-dbrs-settles-with-sec-over-misrepresenting-mortgage-bond-rating-capabilities

Several things strike me about this event and the reporting on it:

1. A relatively small rating agency has been thrown under the bus and has agreed to pay a fine for something we have known for nearly 10 years — the ratings of so-called mortgage backed securities were a sham and continued to be a sham.
2. “the SEC determined that when the surveillance committee convened, it reviewed only a “limited subset” of the outstanding RMBS and Re-REMIC ratings, instead of all of the ratings.” This is of course the only way this mess could have happened — the Rating Company only did enough to justify a fee, not enough to justify the rating.
3. The acknowledgment that there is a phenomenon that I have been writing about for years “Re-REMIC.” While no details are given, it would appear that this process causes the old alleged REMIC Trust to be liquidated and a new one is created. This of course only compounds the original lie. With no contents in the original trust, the new trust doesn’t have anything either. But even on paper it indicates that in discovery lawyers shoudl ask the question about this process because US Bank  and others often appear as “Trustee on behalf of the certificate holders” of XYZ trust. If that trust doesn’t exist anymore (or never did exist because there was no res) then foreclosures in the name of a trust in name only that doesn’t exist anymore would hardly confer standing on anyone.
4. “Andrew Ceresney, the director of the SEC’s Division of Enforcement, said that not having adequate resources is not a valid reason for failing to fulfill DBRS’ stated methods.”
5. The resistance of most courts to discovery requests about the trust is all the more problematic since the named Plaintiff or beneficiary might not and in fact probably doesn’t exist.
6. But the SEC still doesn’t comment on the threshold question of whether the certificates are mortgage securities exempt from most regulation because of legislation at the end of the Clinton Administration. If the certificates were “sold” to investors and the money was turned over to the broker who was selling them for the investment bank who was allegedly representing the trust, why wasn’t the money (the proceeds of sale of certificates) turned over to the “Trustee” of the REMIC Trust? And failing that, why are we saying that the Trust has any assets when it has neither business nor cash to acquire any assets? And since the alleged loans were not acquired by the alleged trust, why are we calling the certificates “mortgage-backed” when they are neither backed nor do they have any interest in mortgages? And finally, if the certificates were not mortgage backed but were sold as mortgage backed then why are they exempt from regulation or prosecution?
7. Why is everyone pretending that these REMIC Trusts were real and that they have loans as assets even though they have no balance sheet or even a bank account?

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