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Welcome back to the velocity of money, this is Michael J. Barnes, joining me in studio Dan Havey
and Brett Fallon on this lovely Christmas Eve we are happy that those of you out there listening and
still be here with us. We just talked about essentially the process regarding your mortgage
lender and having standing, which is a legal term. Which was a little complicated Dan. I'm not going
to lie to you
That is why all the information is on the website, Mortgageanswerman.com
And you can also go to velocityfinancial.com. There is a link there to Dan's website, you can also
call in and get more information at 480 velocity, quite frankly I would bet money that there is
nobody left at the office right now. It is Christmas Eve, but leave a message, by golly, we will make
sure somebody calls you back. You can also call an 800 number it is 888-Mod-Info now Dan is talking
about breaking these mortgages down and eventually selling them off to Bangladesh and
in different tranches. Some of the servicers are actually in India of all places, if you have a
mortgage that you're having trouble with and you need to call somebody to get help. You are actually
calling India to talk to somebody about your mortgage here in Phoenix. I do not really know
why, but none the less, Brett. You wanted to address this from a financial advisor standpoint
Yes, I am pretty immersed in this because what Dan was describing in these collateralized debt
obligations and these CDOs etcetera. Does get a little complex, I think I can clarify it may feel that a
does this apply to me, is this something I should consider in my own strategy. It works like this, this
is true for most people who took out a mortgage in the last couple of years. You start your mortgage
and get your payment book and you are writing a check to bank ABC and then you get a note maybe
35, 45 or 65 days into this loan that. Says thank you for your business you are now writing your checks
to bank "XYZ". Your payment to bank "XYZ" that is exactly what was happening
When you slice it up this way, and you get it spun off Wall Street wanted their piece of profitability
right? The mortgage industry was running rampant in terms of profitability. And so Wall Street says
hey I want a piece of that and I know how we can do it we can sell mortgage-backed securities asset
backed securities. Well there safe that's the way Wall Street was selling these to the investing public,
yeah they're safe as long as housing values keep going up 15% a year, which is completely
unrealistic it's an asset class just like any other asset class. It is cyclical, what goes up does come down
in any investment asset class. So people wanted to put the blinders on, they paid no attention to that.
As property values declined and all of these Wall Street firms that are today bankrupt and is no longer
in business they were leveraging that debt meaning they were by borrowing more money to buy more
debt. So for this collapse is all about, how does it affect you the individual. How does it impact you
the mortgage holder, It impacts you by saying does this strategy makes sense, should I refinance can I
get a better rate or should I look at a loan modification option. That's the simple answer. You
go to the website and you do your due diligence then you call the guys at Velocity, the team at
velocity and you start working through the process, because I can tell you this from a financial advisory
perspective. It is all about efficiency; investment efficiency, tax efficiency, and interest rate even
conceive all these things are combined in that is how you win the financial game, that's how you
stay ahead of the recession. That is how you create your own velocity of money; you have got to make
the call. We have to look at these efficiencies.
Gosh, that is a great endorsement; I think we should use that for a commercial for us. I appreciate it and I
don't really pay you to say those things. For more information, it is 480 velocity. Thank you again
Brett for that great endorsement and for the great relationship over the years the great advice you've
given me and my clients. So you've got all the way down to where the money is broken down. Dan
explained it on a technical level, you kind of broken down little bit that we actually get to the point of
the CDO? Actually explained what the CDO represents?
Well yes, we did the CDO is a whole bunch of mortgages that a rating firm decided all had the
same credit class
Well let me ask you a question and I'm sorry may just cut you off, I have heard a lot of buzz about
these rating firms not having a standard
I will interject on that one because that is absolutely correct, the is rating firms standard and poor
Moody's, Fitches. These are the companies that are responsible to call a security or bond or CDO as A
paper all the way down to C paper. It is actually rated all the way from AAA to BBB, the low rating
BBB is you've heard the term junk bond? That is what that means they don't call them that so much
anymore. It's not politically correct to say junk- bond but you've heard them say high yield. After
Milken went to jail, the scandals and all these things, so yes there is a politically correct spin that
is associated with it. So now these rating agencies have been called into question their objectivity, they
been called into question as to how they arrived at this rating, they've been called into question on all
these things so that investors are sitting out there saying okay so these ratings are bogus, how cheap
can I get a Senate seat in the state of the Illinois?