The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site.

All material subject to strictly enforced copyright laws. © 2021 Euromoney, a part of the Euromoney Institutional Investor PLC.
Capital Markets

Securitization under question?

The foreclosure abuses furore has led to suggestions that the whole process by which mortgages are transferred to trusts during securitization could now be in doubt. If substantiated, this would have dire consequences: non-agency mortgage finance would immediately screech to a halt.

Dustin Zacks, attorney at Ice Legal, says that as his firm has started delving into cases where foreclosures have been inappropriate, it has become clear that confusion over rightful ownership of the mortgage dates to the moment of securitization. "There are so many documents that have to be completed and checked and passed on, and in tracing back the owners of the mortgages through the chain we are hitting a brick wall around the time the mortgages were securitized. Who owns the mortgages?" If ownership is in doubt, so is the entire securitization structure.

The procedures whereby mortgage loans are transferred to securitization vehicles, known as real estate mortgage investment conduits (Remics), have been in place for decades. They are the same as those whereby mortgages are transferred to Fannie and Freddie. They involve a contract between seller and buyer establishing the intent to sell the mortgage; the delivery of the mortgage note to the buyer, and the assignment of the mortgage. Fannie, Freddie and the Mortgage Bankers Association set up the Mortgage Electronic Registration System (Mers) in the mid-1990s whereby this transfer could be achieved electronically. It is the use of Mers in securitization that has now called into question its validity.

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.


Unlimited access to and

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually


Unlimited access to and, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors


Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree