European Union

The European Community has had a decidedly significant impact upon the legal systems of the Member States. It was established in 1957 by the Treaty of Rome, the main objectives being to develop stability throughout Europe by means of encouraging a closer union between member states. It has evolved a long way since having developed its own institutions and an autonomous legal system, with laws that bind each member state ultimately enabling it to regulate the rights and obligations of its members. It achieves this primarily through Treaties, a primary form of EC legislation that forms the basis of all other European Law. However the effect of EC treaties is unlike that of any other international agreement as the latter bind only states at an intergovernmental level and do not of themselves give rise to rights or interests which the citizens of the states can have enforced before their own national courts even if they are designed for the protection of individuals. Although the text of EC treaties does not indicate that their provisions will be any different, the ECJ has taken its own view as to the nature and effect of treaties known as the doctrine of ‘direct effect.’ This jurisprudential concept means that individuals are able to derive rights directly from community law, which can be enforced in their own national courts. It is a private species of enforcement, placing control in the hands of ordinary individuals as distinct from the public enforcement mechanism of community law as contained in Article 226 of the Treaty of Rome which enabled the Commission to bring proceedings against member states for breaches. This system was deficient in many ways as, not only was it unable to cope with the increasing work load and had insufficient remedies, it was political in nature. Direct effect, on the other hand, has allowed individuals to play a role and has potentially brought the community into the lives of every citizen. However despite its significance, it is important to put it into context of the many types of community law, not all of which entail direct effect or which can only be directly effective in certain circumstances, such as directives

LITIGATIONS, DAMAGES AND SOLUTIONS IN RESIDENTIAL MORTGAGE-BACKED SECURITIES

Mortgage-backed securities (MBS) are debt obligations whose cash flows are backed by the principal and interest payments of pools of mortgage loans, most commonly on residential property (Riddiough, 2001). Lenders establish underwriting guidelines, evaluate prospective homeowners’ credit, and make loans. Having done so, lenders generally hold only a fraction of the loans they make in their own portfolios. Most are sold to the secondary market, where they are pooled and become the underlying assets for residential mortgage-backed securities. Individuals with strong credit qualify for traditional mortgages, whereas those with weak credit histories that include payment delinquencies, and possibly more severe problems such as charge-offs, judgments, and bankruptcies qualify for subprime loans (Hayre, 2001). Securitization is the financial technology that integrates the market for residential mortgages with the capital markets. Investment banks take pools of home loans, carve up the cash flows from those receivables, and convert the cash flows into bonds that are secured by the mortgages. The bonds are variously known as residential mortgage-backed securities (R-MBS) or asset-backed securities (ABS).Mortgage-backed securities, residential property, mortgage loans, residential mortgage-backed securities, subprime loans, asset-backed securities, Securitization.

European Union

The European Community has had a decidedly significant impact upon the legal systems of the Member States. It was established in 1957 by the Treaty of Rome, the main objectives being to develop stability throughout Europe by means of encouraging a closer union between member states. It has evolved a long way since having developed its own institutions and an autonomous legal system, with laws that bind each member state ultimately enabling it to regulate the rights and obligations of its members. It achieves this primarily through Treaties, a primary form of EC legislation that forms the basis of all other European Law. However the effect of EC treaties is unlike that of any other international agreement as the latter bind only states at an intergovernmental level and do not of themselves give rise to rights or interests which the citizens of the states can have enforced before their own national courts even if they are designed for the protection of individuals. Although the text of EC treaties does not indicate that their provisions will be any different, the ECJ has taken its own view as to the nature and effect of treaties known as the doctrine of ‘direct effect.’ This jurisprudential concept means that individuals are able to derive rights directly from community law, which can be enforced in their own national courts. It is a private species of enforcement, placing control in the hands of ordinary individuals as distinct from the public enforcement mechanism of community law as contained in Article 226 of the Treaty of Rome which enabled the Commission to bring proceedings against member states for breaches. This system was deficient in many ways as, not only was it unable to cope with the increasing work load and had insufficient remedies, it was political in nature. Direct effect, on the other hand, has allowed individuals to play a role and has potentially brought the community into the lives of every citizen. However despite its significance, it is important to put it into context of the many types of community law, not all of which entail direct effect or which can only be directly effective in certain circumstances, such as directives.European Community, European Law, EC treaties, Direct effect, directives.

European Union

The European Community has had a decidedly significant impact upon the legal systems of the Member States. It was established in 1957 by the Treaty of Rome, the main objectives being to develop stability throughout Europe by means of encouraging a closer union between member states. It has evolved a long way since having developed its own institutions and an autonomous legal system, with laws that bind each member state ultimately enabling it to regulate the rights and obligations of its members. It achieves this primarily through Treaties, a primary form of EC legislation that forms the basis of all other European Law. However the effect of EC treaties is unlike that of any other international agreement as the latter bind only states at an intergovernmental level and do not of themselves give rise to rights or interests which the citizens of the states can have enforced before their own national courts even if they are designed for the protection of individuals. Although the text of EC treaties does not indicate that their provisions will be any different, the ECJ has taken its own view as to the nature and effect of treaties known as the doctrine of ‘direct effect.’ This jurisprudential concept means that individuals are able to derive rights directly from community law, which can be enforced in their own national courts. It is a private species of enforcement, placing control in the hands of ordinary individuals as distinct from the public enforcement mechanism of community law as contained in Article 226 of the Treaty of Rome which enabled the Commission to bring proceedings against member states for breaches. This system was deficient in many ways as, not only was it unable to cope with the increasing work load and had insufficient remedies, it was political in nature. Direct effect, on the other hand, has allowed individuals to play a role and has potentially brought the community into the lives of every citizen. However despite its significance, it is important to put it into context of the many types of community law, not all of which entail direct effect or which can only be directly effective in certain circumstances, such as directives

LITIGATIONS, DAMAGES AND SOLUTIONS IN RESIDENTIAL MORTGAGE-BACKED SECURITIES

Mortgage-backed securities (MBS) are debt obligations whose cash flows are backed by the principal and interest payments of pools of mortgage loans, most commonly on residential property (Riddiough, 2001). Lenders establish underwriting guidelines, evaluate prospective homeowners’ credit, and make loans. Having done so, lenders generally hold only a fraction of the loans they make in their own portfolios. Most are sold to the secondary market, where they are pooled and become the underlying assets for residential mortgage-backed securities. Individuals with strong credit qualify for traditional mortgages, whereas those with weak credit histories that include payment delinquencies, and possibly more severe problems such as charge-offs, judgments, and bankruptcies qualify for subprime loans (Hayre, 2001). Securitization is the financial technology that integrates the market for residential mortgages with the capital markets. Investment banks take pools of home loans, carve up the cash flows from those receivables, and convert the cash flows into bonds that are secured by the mortgages. The bonds are variously known as residential mortgage-backed securities (R-MBS) or asset-backed securities (ABS)

LITIGATIONS, DAMAGES AND SOLUTIONS IN RESIDENTIAL MORTGAGE-BACKED SECURITIES

Mortgage-backed securities (MBS) are debt obligations whose cash flows are backed by the principal and interest payments of pools of mortgage loans, most commonly on residential property (Riddiough, 2001). Lenders establish underwriting guidelines, evaluate prospective homeowners’ credit, and make loans. Having done so, lenders generally hold only a fraction of the loans they make in their own portfolios. Most are sold to the secondary market, where they are pooled and become the underlying assets for residential mortgage-backed securities. Individuals with strong credit qualify for traditional mortgages, whereas those with weak credit histories that include payment delinquencies, and possibly more severe problems such as charge-offs, judgments, and bankruptcies qualify for subprime loans (Hayre, 2001). Securitization is the financial technology that integrates the market for residential mortgages with the capital markets. Investment banks take pools of home loans, carve up the cash flows from those receivables, and convert the cash flows into bonds that are secured by the mortgages. The bonds are variously known as residential mortgage-backed securities (R-MBS) or asset-backed securities (ABS)