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Comment by statusquoantefa | Hacker News Reader

I once thought it would be funny to offer a service that bought "bundles" of securitized mortgages, but would then separate them out and offer to sell specific mortgages to people's arch enemies who would presumably pay a premium.

the elevator pitch is "the google of mortgages".

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I'd find it hilarious if my arch enemy [1] bought my mortgage, especially if they paid a premium to get it.

When someone buys your mortgage it doesn't change the terms of the mortgage. For the most part all that changes is who you send your payments to.

Probably the worst that they could do is (1) make you use a payment method that is inconvenient for you, such as mailing an actual check once a month, and (2) if you violate any terms of the contract be hard nosed about it.

[1] I'm actually between arch enemies at the moment, so the position is open if anyone would like to apply.

Who do I contact about buying your mortgage?

> make you use a payment method that is inconvenient for you, such as mailing an actual check once a month,

This is really the biggest challenge facing borrowers. The means of payment should really be locked in. Fortunately the servicer doesn’t always change too, but that is something that the law should probably protect.

I could imagine the law requiring the consent of the borrower to the transfer of servicer, or some similar mechanism.

>>> This is really the biggest challenge facing borrowers. The means of payment should really be locked in.

Why? Some debt terms are incredibly long, such as a 20/30 year mortgage. Many soon to be paid off mortgages were signed before online banking / online payments was a thing. So you would be forcing people to continue using outdated and inefficient technology,,, b/c no reason at all.

Can you imagine the payment technology we will have 20 years from now? If I bought a house with a mortgage today, why should I be forced to continue using today's technology for another 20 or 30 years when a better technology is out there?

Okay, yes, locking in the payment method at the start is bad, but what if it can't be changed without the consent of both parties? Presumably if some awesome new payment system becomes available, both parties would consent to use that.

A mortgage is usually a contract between two parties, so...both parties can agree to change anything about the contract at any time anyway.

> I'm actually between arch enemies at the moment, so the position is open if anyone would like to apply.

Is the lair a proper complex built into the side of a volcano? I'm not quite diabolical enough to make my minions work in an open office.

Your profile just says "lazy bastard", so presumably it wouldn't take up much of my time to be your arch enemy?

How do people upvoting this imagine this would work? There are essentially two things you could buy, and they’re available independently: servicing rights (“You are responsible for talking to the homeowner and receiving checks then sending them upstream”) and the economics of the mortgage.

If you beneficially own the economics... well, great, your arch enemy is theoretically paying you money, but you have no options to screw with them. You own an extremely regulated specialty financial product. This is similar to the misconception that stock in Google entitles you to just walk in and take a computer in exchange.

If you buy the servicing rights, you have much more surface area to be an incompetent servicer, but again extremely regulated and you’re pricing yourself to being sued by the homeowner, the GSEs et al who set up the securitization program and zealously defend it, and potentially even the entity owning the economics.

Being the servicer allows for all sorts of griefing that falls completely within regulation guidelines.

My service has done dumb things, all presumable by accident, like: deposit my check into a different account, charge me a late fee and not refund; change my escrow amount 4 times in a year; not take electronic payments.

It’s annoyed me just due to stupidity. If my arch enemy owned my loan they could do stuff like change payment addresses; “lose” payments; late pay taxes and insurance.

> How do people upvoting this imagine this would work?

He said something negative about Google. Let the upvotes begin!

Here's my go to doc about mortgage servicing in the USA. From 2007, but as far as I know still accurate:

https://www.calculatedriskblog.com/2007/02/tanta-mortgage-se...

You don't need to buy securitized mortgages. You can buy the mortgages directly. They're called whole loans. Sourcing them might be a bit tricky and I think you have to be accredited investor. They're usually sold in blocks among banks and institutional investors. I doubt you'll be able to source one specific person's loans and when these loans are up for sale, they usually don't include personally identifiable information.

The market for non-performing mortgages is more ad-hoc and you can buy an individual mortgage. But finding who owns the loan of a particular person is difficult. Also you would have to go through the trouble of foreclosing on them.

It shouldn't be too hard to find who owns a mortgage. A mortgage must be recorded timely to be properly enforceable, so most are. Just have to know what to look for at the county records office (I assume you know where your nemesis lives)

Can this be expanded to selling “nursing home futures”? In a typical home, families pay X/month to keep their loved ones taken care of. In my plan, investors can buy shares in each resident, and can expect an increasing return as the upfront costs of establishing the resident are amortized.

The nursing home turns a profit if a resident dies within a period of time where the “upfront costs” are not yet all spent. The investors profit if a resident stays alive for a long period of time in the home.

The perversion of incentives will encourage good care of the residents that maxes out their life span and to ensure that investors keep coming back.

I wonder if someone with a finance background could tease out the benefits and pitfalls of this plan.

Is maxing out the resident's life span a good goal though? Quality of life matters too.

The two are strongly correlated and one is much easier to quantify.

If one is made an incentivized goal, the correlation will be reduced. That's the underpinning of Goodhart’s Law.

https://en.m.wikipedia.org/wiki/Goodhart%27s_law

I thought about starting a non-profit which buys old debt, contacts the original borrowers and negotiates payback at the newly purchased rate. Then uses the new payments to buy more old debt.

I have this in my pile of open source AI use cases. I tried putting together a plan and it’s too labor intensive.

But an AI doing all the sifting and contacting would be economical.

You just invented collections agencies.

This has the opposite effect that you think it will have. A person with many, many enemies would have many prospective buyers which would drive down their expected borrowing costs, which then materially benefits them. It's the same reason why the cost of capital of companies disfavored by ESG mutual funds is higher (and they are thus punished) -- fewer people are willing to buy their stock.

I think those are basically credit derivatives.

That already exists. You’re describing mortgage-backed securities broken into tranches.

That's not correct. The collateral is usually shared among all tranches. You could have MBS deals w/ tranches backed by separate collateral pools but these are defined at origination. It's not that different tranches are backed by different subsets of the collateral. The cash received from all mortgages is pooled and then prioritized based on tranche seniority and other rules specific to the securitization.

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