Little by little the lies and secrets are being revealed to the unaware public who have not bothered themselves to research important issues and “accepted” legal concepts.
Aired on South African Broadcasting Corporation, channel 3 (SABC TV3) on 30 may 2013
Special Assignment: Bank Securitisation
Published on May 30, 2013
A journalist battles to find answers to whether his mortgage has been securitised, and speaks to other victims of this fraudulent act by the banks. Raymont Dicks (who has been a stalwart at New ERA –
in the South African public’s quest to get facts from the banks) also shares some thoughts about the legal aspects of this scheme the banks are running.
Definition of ‘Securitization’
The process through which an issuer creates a financial instrument by combining other financial assets and then marketing different tiers of the repackaged instruments to investors. The process can encompass any type of financial asset and promotes liquidity in the marketplace.
Mortgage-backed securities are a perfect example of securitization. By combining mortgages into one large pool, the issuer can divide the large pool into smaller pieces based on each individual mortgage’s inherent risk of default and then sell those smaller pieces to investors.
The process creates liquidity by enabling smaller investors to purchase shares in a larger asset pool. Using the mortgage-backed security example, individual retail investors are able to purchase portions of a mortgage as a type of bond. Without the securitization of mortgages, retail investors may not be able to afford to buy into a large pool of mortgages.
SABC3 Exposes the Banks
A 34 year old journalist has single handedly exposed a deceitful scheme involving the major South African banks.
Peter Moyo from SABC3’s Special Assignment is a hero.
Maintaining journalistic integrity at all times, Peter and his camera man, Casher, flew around the country to examine every side of the story. The result:
THE NATIONAL CREDIT REGULATOR: HUMILIATED
THE SOUTH AFRICAN SECURITISATION FORUM: HUMILIATED
THE SOUTH AFRICAN RESERVE BANK: HUMILIATED
THE BANKS AND THEIR LAWYERS: EXPOSED!
A secret and devious scheme, called securitisation, is being run by the banks and their lawyers. They have illegally repossessed homes, cars and stolen our livelihoods. This kind of underhanded activity has placed this country in a serious economic crisis.
The combined intellect and resources of the South African legal system, and those government institutions specifically set up to monitor this kind of thing, achieved absolutely nothing. In fact, the banks and the Judiciary are actively trying to punish NewERA for bringing this evidence to their attention. [See here.]
Yet, in just one month, a lone journalist has researched, understood and exposed the cover-up.
The implications are wild. If the banks are not disclosing this scheme in their financial statements, then this may be so serious that it could involve criminal action against their directors. This is just the tip of the iceberg.
Peter Moyo, you are a testimony to South Africa. You are the kind of investigative journalist that freedom fighters twice your age fought so hard to cultivate. On behalf of the New Economic Rights Alliance, we congratulate and solute you.
Watch part 1 of Special Assignment here: http://www.youtube.com/watch?v=SbCxTy3cnvw
A Complaint Rampage
We, the people, are supporting Peter by going on a complaint rampage. Complain to the NCR here. Demand a Commission of Enquiry from the minister here. Complain to the JSE here and expose the scheme to the FSB here. Demand transparency from your bank here and, finally, complain to the banking ombudsman here. Make your voice heard. The truth is out. Send this letter to the world.
…and, while you are about it, send a message to SABC3 here congratulating them and Peter for producing this story.
THE NEW ECONOMIC RIGHTS ALLIANCE
PS. For further research, see:
First, a regulated and authorized financial institution originates numerous mortgages, which are secured by claims against the various properties the mortgagors purchase. Then, all of the individual mortgages are bundled together into a mortgage pool, which is held in trust as the collateral for an MBS. The MBS can be issued by a third-party financial company, such a large investment banking firm, or by the same bank that originated the mortgages in the first place. Mortgage-backed securities are also issued by aggregators such as Fannie Mae or Freddie Mac.
Regardless, the result is the same: a new security is created, backed up by the claims against the mortgagors’ assets. This security can be sold to participants in the secondary mortgage market. This market is extremely large, providing a significant amount of liquidity to the group of mortgages, which otherwise would have been quite illiquid on their own. (For a one-stop shop on subprime mortgages, the secondary market and the subprime meltdown, check out the Subprime Mortgages Feature.)
Furthermore, at the time the MBS is being created, the issuer will often choose to break the mortgage pool into a number of different parts, referred to as tranches. These tranches can be structured in virtually any way the issuer sees fit, allowing the issuer to tailor a single MBS for a variety of risk tolerances. Pension funds will typically invest in high-credit rated mortgage-backed securities, while hedge funds will seek higher returns by investing in those with low credit ratings.