I think it is possible that WF originated the loan... sold it... and just had to buy it back when it stopped performing.

The homeowner may have missed or forgotten that middle part, that the loan got sold after origination.

Happens a lot...

Edited: OK, missed the part where the loan was originated elsewhere. It is still possible that it got sold by WF after they bought it tho... they got sliced, diced, bundled and sold a lot.

Seems that this might simply be the "remedy" for dealing with the crap when it stops performing... the seller of the packaged products has to take back the "bad apple(s)".

and if we had honest regulators they'd be demanding answers to those questions too.

Honest regulators, Gen that must be a thing of the past.
Hell I wouldn't doubt the regulators told them to do this.
90 days later do it again.

These crooks will continue to play hide the sausage in order to keep up appearance of the green shoot theory of our economic recovery and I don't doubt any longer that it goes all the way to the top. I would not be surprised if Goldman via Giethner hasn't opened their secret playbook to all the banks, filled with these sort of "extend and pretend" plays. And it won't stop until somebody steps up and calls for a game of hide the sausage in them as all of this is outright fraud!!!

All to keep the savers from being able to buy a house in cash. No way. GOTTA get on the hamster wheel so the banksters can steal some of the fruits of your labor for 30 yrs. HAVE TO.

AND how is WFC funding these buybacks. Is WFC just an agent here? i.e. who is funding WFC?

No folks, I have the original buy from the originator (by WFC) and now the repurchase.

Note that the sale was FROM WELLS TO WELLS on that document.

There was no intervening sale, the loan number and assignments match. I checked.

These games work until they stop working. They prop up a faltering balance sheet but put a hole in the cash flow statement.

It's like driving a car without ever changing your oil. Everythings fine and dandy until the engine locks up one day.

These games work Mango, because people have been conditioned to accept the abuse. Ever wonder why the zoo animals simply don't just rise up and overthrow their captors? They have them outnumbered 100:1 after all.

Yup. Same ****.

This is what the banks wanted to do with PPIP before Bair called them out, right?

In addition to funds swooping in on distressed properties, banks buying their own foreclosures could explain the sudden jump in cash sales in July.

Regarding Karl's extremely important questions, the obvious answer to a cynic on #1 and #2 would be "most likely." I would place a bet that this is classified as a "new loan" and that it was sold at or just under Par.

As for #3, we know many of the official economic stats are twisted for a positive print. It would not surprise me if this were marked down as an "existing home sale" to be trumpeted to the public.

Could this be why home sales are increasing at the same time as foreclosures? And why foreclosures continue to comprise such a large percentage of existing home sales?

The banks will have to do this at an ever-quickening pace to keep up. Expect 'strong' home sales numbers for a while.

Sounds like another WAMU in the works!?

1. Booya!
2. Booya!
3. Hmmm not so sure about that.

Great catch! You know something is fishy when the letter has all those excess statements about how normal this all is. If it was normal you wouldn't think you needed to say so!

Karl, can you tell us how far into default the homeowner is? The moral hazard building up is crazy. Unless you have real equity left in your house, why bother paying your mortgage?

Son: They stopped paying in April of this year.

Ticker updated.

Karl,

This might be a golden example of something even worse.
If we assume the mortgage was sitting with an investor after Wells originated it. The bond investor cries foul and feels they were duped because of all the "AAA rating" hoopla (rightly so). Under most of the MBS bond agreements, the investor can FORCE the originator to BUY BACK the bond AT FACE VALUE, if they think there was fraud in the origination process.

Now picture many, many angry bondholders who are claiming fraud. Now picture banks that must buy they crap back at face value. Now think the amount of capital needed.....

I tell you, TARP is a cheap go around compared to what is coming.

Beardown:
"Regarding Karl's extremely important questions, the obvious answer to a cynic on #1 and #2 would be "most likely." I would place a bet that this is classified as a "new loan" and that it was sold at or just under Par."

Maybe it was sold at above par (depending on the interest rate on the paper versus what they are now). Even better for WFC, and again depending on where rates were when they purchased this paper versus where they are now, maybe they were able to book a profit on the sale!

No Snow, this loan was purchased by Wells from the originator.

I have both assignments and the numbers match; there was no intervening transaction (if there had been there'd be a difference in the numbers, and there'd be a recorded assignment - there wasn't.)

The "sale" was also "conveniently" arranged right on the 120-day-late barrier, right when Wells calls a loan "defaulted"......

That's a sale from Wells Fargo Home Mortgage to Wells Fargo Bank. Wells Fargo Home Mortgage was probably servicing the loan for an underlying investor (whether Fannie Mae, Freddie Mac or some remnant of a now-defunct participant of the now-defunct shadow banking system). I agree with Phillup that once the loan ceased performing, Wells Fargo Home Mortgage's investor forced them to buy it back. Since Wells Fargo Home Mortgage doesn't have the means to keep such non-peforming loans in portfolio (it doesn't have a portfolio) it had to be shifted to the bank. My guess is that we will see more and more of this as the chickens come home to roost, but that this transfer of ownership from WFHM to WFB is not devised as part of an extend & pretend strategy per se. It's just what happens when the sh1t hits the fan.

Snowman....I dont think they will be able to get that amount of money without starting an outright rebellion in this country. People are starting to wake up and the average man now understands a bailout means a handout to Wall Street to no ones else s benefit.

mortgageguy: makes sense.
But going back to the investor lawsuit issue, if I were Wells I would be vacumming up every mortgage I could find that I originated that could be linked to any potential legal action by an investor (ie part of a "misunderstood" tranche).

MBS lawsuits against banks jumped in 1st quarter this year, Wachovia (now Wells) and Wells lead the league by 4:1.

If this loan was held under a security and is now transfer back to Wells Fargo Bank, does this change the rules/ability for a loan modification that can meet the proper criteria for the home owner to reestablish the ability to pay and stay in the home? One of the criteria being a loan that is P&I for the rest of the duration left at no more than 31% DTI which inclides PITI. Another one could be getting the deed and loan to an "acceptable" principle based on the true worth of the home.

Example, I know my originating loan was with Wells Fargo, that my loan is now "owned" by CMLTI 2006-AR1 without any notice to me whenever it was securitized, Citigroup Mortgage Loan Trust 2006-AR1, and that Wells Fargo is now only the "servicer" of my loan. It's my understanding that if I were in default then Wells Fargo could only negotiate a loan mod under accepted rules by the Trust, which is probably "We dont negotiate with anyone!" and I would assume Wells Fargo and I would have to use a refi along with some gov program to make the security whole. Now if Wells Fargo took that loan back because it wasnt performing, would Wells Fargo now have the ability to negotiate for themselves and like the original question above, be able to change the contract without triggering a new contract through refi?

CMLTI 2006-AR1: http://www.secinfo.com/$/SEC/Registrant.....

This is fascinating. Wells purchases it from itself. By continuing to do this, they can now report less foreclosures, more home sales, less losses on their balance sheet, and present a healthy picture to Wall Street and investors.

WOW!

This makes me want to scream.

Would this be classified as an "off balance sheet asset" coming back on the balance sheet ?