| | | Page 1, 2, 3, 4 | federal judge throws out foreclosures, bank sold mortgage, is not "owner" of mortgage
| Rabbit
User ID: 305078
11/15/2007 1:40 AM | | Re: federal judge throws out foreclosures, bank sold mortgage, is not "owner" of mortgage | Quote |
rare??
i don't think so.
banks are always selling mortgages.
but this is goofy.
i get a mortgage for 300k.
the bank sells the paper for 300k to the investors.
i default.
the bank comes after me for the 300k.
as the above poster stated, the bank has already
gotten their 300k.
so the bank wants to get paid twice for
the original mortgage.
how in the world has this not come up before now?
If you don't believe me, call your bank tomorrow and ask them for a copy of your "note" Quoting: Anonymous Coward 323596
Exactly!
They get away with it because people allow them to...because they don't know.
And, if you pay your mortgage with FRN's then are you truly paying for your home?
Now, I wonder what would happen if one let's say paid the "balance" in lawful money....how many gold ounces or silver ounces would it take??????? |
| Anonymous Coward
User ID: 322310
11/15/2007 1:57 AM | | Re: federal judge throws out foreclosures, bank sold mortgage, is not "owner" of mortgage | Quote |
It's no different than that credit card bill you ran up to the max and didn't pay.
The original lender "sold" it to a second party who in turn sold it to a "third" party.
Now the "fifth" party wants the money - but it's been 8 years so they then write off the debt!
You owe nothing on the origional card and they get tax credit on the loss. THAT is the motivation behind the "buy and sell" of debt - no matter what happens, the owner of the note comes out on top! |
| Anonymous Coward
User ID: 226992
11/15/2007 2:02 AM | | Anonymous Coward
User ID: 324958
11/15/2007 2:05 AM | | Re: federal judge throws out foreclosures, bank sold mortgage, is not "owner" of mortgage | Quote |
My two cents here (and I'm by no means an expert on this, as this comment may prove out...)
I think that there's a bit of confusion re: selling "servicing of mortgages" to another bank vs. selling a mortgage to an entity that then bundles it up as part of a Collateralized Debt Obligation.
Yes, if your original mortgage was sold to another bank that simply "services the loan" as if it had be the original "loan originator", then the actual "original originator" certainly has no claim on the property if you default on the loan. That privilege belongs to the current "servicer", i.e. the bank that currently holds the lien against the property.
Does anyone here really know of any instance where bank A sold a mortgage to bank B, the customer defaulted on the loan, and then bank A tried to foreclose on the loan?
CDOs are probably a different story though, as "loan servicing" hasn't necessarily been transferred to the CDO - just the "collateral value" of the property. In other words, the property "guarantees" performance of the CDO just as much as it does payment of the mortgage. And this is the blatant fraud of the CDO vehicle. You can't "collateralize debt" using the same collateral in two different debts! This is as patently absurd and fraudulent as allowing both bank A and bank B to foreclose on the loan in the example above.
Does this make any sense, or am I totally off base here? |
| Mark In NYC
User ID: 325789
11/15/2007 2:28 AM | | Re: federal judge throws out foreclosures, bank sold mortgage, is not "owner" of mortgage | Quote |
Many years ago I got a broker's license in Arizona and did quite well with it for a number of years. I played but I played and made money doing it. I've often regretted that I stopped and went on to other things.
So from my old knowledge of RE law (and it could be inaccurate now but I rather think it's not...)
When you take a mortgage or a deed of trust from the bank, the buyer is giving to the LENDER a bit of authority called "BARE LEGAL TITLE". This is the ability to sell the property out from under the buyer if he fails to meet the payments on-time. This is CRUCIAL because without it, there is no ability to foreclose.
The courts have held that only the tax authorities and the owner can sell a property. NO ONE ELSE CAN DO SO (except by court order under very narrow circumstances - like the owner dies and the trustee for his/her estate wants to sell the home for cash or something. Then the court must affirm that right to act for the estate and allow or disallow the sale.
Anyway, what they've seemingly hit upon is that the banks and lenders and investors in these mortgages do NOT have this bare legal title that allows them to sell in a failure-to-pay scenario. Without it, the mortgage is invalid! If they cannot foreclose and they cannot take the house back, there is nothing else available for them to threaten you with (nothing legal, anyway!)
A mortgage (or deed of trust) is normally a "lien" against the title. In other words, the title cannot be passed until this loan is paid or assumed. The title is not "perfect" or they'd say it has a defect of title in the form of a recorded lien which is a mortgage or Deed of Trust. So the question becomes one of "if you cannot get the mortgage off the deed and title, and the mortgage company cannot foreclose, then you've got possession of the house, but not the clear title to sell it. If you could argue to the courts that the lien is invalid and useless, the court could issue a "quiet title" order which removes the lien or mortgage from the title to the house. Then - if that were to be done - the title is said to be "perfect" again. And the house can be sold without a dime going to the former lender for payoff or anything else!
The US Courts are NOT happy about these foreign investors owning such huge pieces of real estate in the US and making so much money off of people in many cases, making it fraudulently. So maybe they're going to be very unhelpful to these forgein note and bond holders. They may find themselves with NO SECURITY in the property at all. It looks like this court is stepping in that direction. Serves the greedy bastards right, IMHO! But don't quit making payments just yet.
If you're in foreclosure get a really smart RE attorney. You may be able to stop the foreclosure if you can prove the bank or servicing company does not have the right to foreclose and/or sell you home out from under you!
Then the real battle begins to get the mortgage or lien itself taken off the title to the house legally. That means NO MORTGAGE AND THE HOUSE IS YOURS FREE AND CLEAR!
BIG STAKES AND A HUGE BOGGIE IF YOU WIN!
Life really is a banquet - and truly - most poor sucker are starving! Enjoy the ride baby. |
| Anonymous Coward
User ID: 226992
11/15/2007 2:46 AM | | Re: federal judge throws out foreclosures, bank sold mortgage, is not "owner" of mortgage | Quote |
there is no consideration , only fraud |
| Anonymous Coward
User ID: 284299
11/15/2007 3:51 AM | | Re: federal judge throws out foreclosures, bank sold mortgage, is not "owner" of mortgage | Quote |
Where all the GLPers that speak bankster? I want to know more about this.
Lots of these sum prime loans were set-ups. Many people who qualified for prime loans were steered to sub primes because the brokers made more money (and the lenders).
Yes, brokers made money, but these were the only chance for people to buy a home because they could never get conventional financing. Quoting: Anonymous Coward 323596
No, that's not accurate. People who qualified for prime loans were steered into sub prime loans. There's some congressional investigation into this. Not saying ALL sub primes were that, but many were. Brokers mislead clients. They got higher commissions for the higher rate, no/low money down loans, especially if they had a clause for a penalty for early payoff. Some of those penalties are six months of interest! |
| Anonymous Coward
User ID: 284299
11/15/2007 3:56 AM | | Re: federal judge throws out foreclosures, bank sold mortgage, is not "owner" of mortgage | Quote |
well legally only the owner of the note can bring legal action against the debtor...
and if the note was bundled and sold.. unless you signed something in the original mortgage that says the originating bank can still bring legal action against you even if they sell the note then they can't
the bank would be trying to collect money that belongs to someone else if they did that..
however in a lot of these cases the banks are required to buy back non performing loans they sold..
so it's possible the bank bought it back... Quoting: ^TrInItY^
I heard something on CNBC about the feds wanting to force by backs on these risky loans. I don't know if they've done it. |
| Anonymous Coward
User ID: 284299
11/15/2007 4:05 AM | | Re: federal judge throws out foreclosures, bank sold mortgage, is not "owner" of mortgage | Quote |
Many years ago I got a broker's license in Arizona and did quite well with it for a number of years. I played but I played and made money doing it. I've often regretted that I stopped and went on to other things.
So from my old knowledge of RE law (and it could be inaccurate now but I rather think it's not...)
When you take a mortgage or a deed of trust from the bank, the buyer is giving to the LENDER a bit of authority called "BARE LEGAL TITLE". This is the ability to sell the property out from under the buyer if he fails to meet the payments on-time. This is CRUCIAL because without it, there is no ability to foreclose.
The courts have held that only the tax authorities and the owner can sell a property. NO ONE ELSE CAN DO SO (except by court order under very narrow circumstances - like the owner dies and the trustee for his/her estate wants to sell the home for cash or something. Then the court must affirm that right to act for the estate and allow or disallow the sale.
Anyway, what they've seemingly hit upon is that the banks and lenders and investors in these mortgages do NOT have this bare legal title that allows them to sell in a failure-to-pay scenario. Without it, the mortgage is invalid! If they cannot foreclose and they cannot take the house back, there is nothing else available for them to threaten you with (nothing legal, anyway!)
A mortgage (or deed of trust) is normally a "lien" against the title. In other words, the title cannot be passed until this loan is paid or assumed. The title is not "perfect" or they'd say it has a defect of title in the form of a recorded lien which is a mortgage or Deed of Trust. So the question becomes one of "if you cannot get the mortgage off the deed and title, and the mortgage company cannot foreclose, then you've got possession of the house, but not the clear title to sell it. If you could argue to the courts that the lien is invalid and useless, the court could issue a "quiet title" order which removes the lien or mortgage from the title to the house. Then - if that were to be done - the title is said to be "perfect" again. And the house can be sold without a dime going to the former lender for payoff or anything else!
The US Courts are NOT happy about these foreign investors owning such huge pieces of real estate in the US and making so much money off of people in many cases, making it fraudulently. So maybe they're going to be very unhelpful to these forgein note and bond holders. They may find themselves with NO SECURITY in the property at all. It looks like this court is stepping in that direction. Serves the greedy bastards right, IMHO! But don't quit making payments just yet.
If you're in foreclosure get a really smart RE attorney. You may be able to stop the foreclosure if you can prove the bank or servicing company does not have the right to foreclose and/or sell you home out from under you!
Then the real battle begins to get the mortgage or lien itself taken off the title to the house legally. That means NO MORTGAGE AND THE HOUSE IS YOURS FREE AND CLEAR!
BIG STAKES AND A HUGE BOGGIE IF YOU WIN! Quoting: Mark In NYC
Damn, this is fascinating! |
| GREY LENSMAN 
User ID: 326673
11/15/2007 4:22 AM
 | | Re: federal judge throws out foreclosures, bank sold mortgage, is not "owner" of mortgage | Quote |
A RIGHT PICKLE AND ONE DESERVED WHEN YOU MIX
COMMON LAW
STATUTE LAW
UCC CODES.
THE COURT WAS RIGHT.
THE LAW ONLY CONSIDERS THE PRIME FACTS IN FRONT OF IT.
ABC BANK ISSUED A MORTGAGE
THEY THEN SOLD IT TO XYZ BANK.
MORTGAGE WENT INTO DEFAULT
SO ABC TRYING TO FORECLOSE WAS WRONG, IT NO LONGER HAD ANY INTEREST IN THE MORTGAGE. XYZ BANK SHOULD HAVE SUED.
HOWEVER
DOES XYZ BANK HAVE A CONTRACT WITH THE MORTGAGE HOLDER. IF NOT, IT HAS NO LIEN ON HIM.
FURTHER MORE IF THIS MEANS THAT THE MORTGAGE HOLDER GETS OF SCOTT FREE GOOD FOR HIM
1. ITS WAS BANKS ABC/XYZ FAULT, THEY DID NOT ENSURE THAT ALL PAPERS WERE IN ORDER.
2. HOW COME IT IS OK TO PAY/BAILOUT XYZ BANK FOR BILLIONS BECAUSE THEY MADE A COCK UP BUT NOT TO BAIL OUT A POTENTIAL VICTIM OF THAT COCK UP.
EQUITY MEANS JUST THAT, EQUAL CONSIDERATION.
GL
greylensman@rocketmail.com |
| Anonymous Coward
User ID: 284299
11/15/2007 4:25 AM | | Re: federal judge throws out foreclosures, bank sold mortgage, is not "owner" of mortgage | Quote |
Perhaps everyone should carefully examine their mortagages, lol. |
| GREY LENSMAN
User ID: 326673
11/15/2007 4:35 AM
| | Re: federal judge throws out foreclosures, bank sold mortgage, is not "owner" of mortgage | Quote |
IT WAS A FRAUD FROM THE OUTSET.
GIVE PEOPLE 100,000 US MORTGAGES WHO YOU KNOW COULD NOT PAY.
WHY
1. IT PUMPS UP THE HOUSING MARKET
2. EARNS LOADS OF COMMISSIONS.
NOW YOU DONT WORRY ABOUT DEFAULTS BECAUSE YOU BUNDLE A THOUSAND TOGETHER, MAKE A BOND AND SELL IT FOR 100 MILLION
BUT
CRAP ASSETS.
SO MIX IT WITH TEN PERCENT PRIME, GET IT RATED AAA THEN EASY TO SELL TO PRIME FOREIGN BANKS THAT CAN ONLY BUY AAA RATED BONDS.
THUS WHEN THE SHIT HITS THE FAN, YOU HAVE ALL THE FEES AND COMMISSIONS, THE FOREIGN OWNER HAS A 100 MILLION BOND WORTH ZERO.
THUS IT IS NOT A CASE OF 15% NON PERFORMING LOANS BUT 100% BECAUSE WHO WILL PAY WHEN THEY HAVE NO LEGAL OBLIGATION TO DO SO.
NOW ITS GETS INTERESTING BECAUSE THESE BONDS WERE LEVERAGED UP TO 15 TIMES THEIR VALUE.
SMOKE THAT.
SILVER LINING
THEY KNOW WHO ISSUED THE FIRST BONDS, WHO DESIGNED THE PACKAGE AND HOW IT WAS RATED. THEMS THE FRAUDSTERS.
GL
greylensman@rocketmail.com |
| Anonymous Coward
User ID: 268412
11/15/2007 4:37 AM | | Re: federal judge throws out foreclosures, bank sold mortgage, is not "owner" of mortgage | Quote |
In a Deed of Trust, there are 3 parties: the borrower, the trustee and the beneficiary. The beneficiary is the lender. The trustee would foreclose the property on behalf of the lender.
The beneficiary rights can be assigned to the new investor.
DOES XYZ BANK HAVE A CONTRACT WITH THE MORTGAGE HOLDER. IF NOT, IT HAS NO LIEN ON HIM. Quoting: GREY LENSMAN |
| GREY LENSMAN
User ID: 326673
11/15/2007 5:18 AM
| | Re: federal judge throws out foreclosures, bank sold mortgage, is not "owner" of mortgage | Quote |
WHEN THE BORROWER TOOK OUT THE LOAN, HE DID NOT INVOLVE OR INVITE IN A TRUSTEE.
SEEMS IF YOUR MORTGAGE HAS BEEN SOLD, IF NOT INFORMED, FRAUD HAS TAKEN PLACE, AND THE BOND HOLDER IS BELLY UP BECAUSE HIS 100M BOND IS WORTH ONLY 4M, WHAT DO YOU DO.
IF YOUR ORIGINAL LENDER IS COLLECTING THE PAYMENTS BUT CANNOT PASS THEM ON, WHAT DOES HE DO. IF HE BOOKS THEM, HE COMMITT FRAUD.
WHY SHOULD YOU PAY 100 CENTS ON THE DOLLAR IN ORDER THAT AN UNKNOWN PARTY TO YOU CAN STEAL YOUR EQUITY.
THIS RAT HOLE RUNS FAR AND DEEP.
WHY DID BANKS DO IT.
BONDS CAN GO UP AND DOWN IN VALUE.
YIELDS CAN FLUCTUATE
HIGH RISK
BUT COMMISSIONS AND FEES OFTEN LEVIED MULTIPLE TIMES ARE FIXED GUARANTEED INCOME. NO RISK.
GL
greylensman@rocketmail.com |
| Anonymous Coward
User ID: 268412
11/15/2007 5:22 AM | | Re: federal judge throws out foreclosures, bank sold mortgage, is not "owner" of mortgage | Quote |
Yes he/she did. It's written in the Deed of Trust and signed by the borrower. :)
WHEN THE BORROWER TOOK OUT THE LOAN, HE DID NOT INVOLVE OR INVITE IN A TRUSTEE. Quoting: GREY LENSMAN |
| Anonymous Coward
User ID: 260950
11/15/2007 5:37 AM | | Re: federal judge throws out foreclosures, bank sold mortgage, is not "owner" of mortgage | Quote |
 |
| Anonymous Coward
User ID: 268412
11/15/2007 5:51 AM | | Re: federal judge throws out foreclosures, bank sold mortgage, is not "owner" of mortgage | Quote |
The Trustee holds Legal Title to the house. The borrower holds an Equitable Title, which means the borrower holds the right to sue in court to obtain the title. |
| GREY LENSMAN
User ID: 326673
11/15/2007 6:11 AM
| | Re: federal judge throws out foreclosures, bank sold mortgage, is not "owner" of mortgage | Quote |
SEEMS DEUTSCHE BANK WAS NOT A TRUSTEE NOR HAD A TRUSTEE.
QUOTE
The Court's amended General Order No. 2006-16 requires Plaintiff (Deutsche Bank) to submit an affidavit along with the complaint, which identifies Plaintiff as the original mortgage holder, or as an assignee, trustee or successor-interest.
Apparently Deutsche bank submitted several affidavits that claim that Deutsche was in fact the owner of the mortgage note, but none of these affidavits mention assignment or trust or successor interest.
Thus, the Judge ruled that in every instance, these submissions create a "conflict" and they "do not satisfy" the burden of demonstrating at the time of filing the complaint, that Deutsche Bank was in fact the "legal" note holder.
UNQUOTE.
SEEMS THAT APPOINTING A TRUSTEE IS A METHOD TO TRY AND MAINTAIN INTEREST WHERE NONE EXISTS.
GL
greylensman@rocketmail.com |
| Anonymous Coward
User ID: 268412
11/15/2007 6:36 AM | | Re: federal judge throws out foreclosures, bank sold mortgage, is not "owner" of mortgage | Quote |
Perhaps Deutsche Bank was neither, in which case they have no right to foreclose.
The original or supposed intent of having a trustee (hence the name Deed of Trust) is to try to have the deed administered in an unbiased manner, but the trustee is really just the lender.
SEEMS DEUTSCHE BANK WAS NOT A TRUSTEE NOR HAD A TRUSTEE.
QUOTE
The Court's amended General Order No. 2006-16 requires Plaintiff (Deutsche Bank) to submit an affidavit along with the complaint, which identifies Plaintiff as the original mortgage holder, or as an assignee, trustee or successor-interest.
Apparently Deutsche bank submitted several affidavits that claim that Deutsche was in fact the owner of the mortgage note, but none of these affidavits mention assignment or trust or successor interest.
Thus, the Judge ruled that in every instance, these submissions create a "conflict" and they "do not satisfy" the burden of demonstrating at the time of filing the complaint, that Deutsche Bank was in fact the "legal" note holder.
UNQUOTE.
SEEMS THAT APPOINTING A TRUSTEE IS A METHOD TO TRY AND MAINTAIN INTEREST WHERE NONE EXISTS.
GL Quoting: GREY LENSMAN |
| Anonymous Coward
User ID: 326714
11/15/2007 7:56 AM | | Re: federal judge throws out foreclosures, bank sold mortgage, is not "owner" of mortgage | Quote |
I'd check the fine print. Quoting: Anonymous Coward 322710
I think the fine print says that Freddy Mac or Fanny Mae owns the house and the foreclosure will start over again. |
| MM
User ID: 272925
11/15/2007 8:30 AM | | Re: federal judge throws out foreclosures, bank sold mortgage, is not "owner" of mortgage | Quote |
Question.......
If a borrower say take a mortage out on the house for 50,000......but the house is worth 100,000.......he has 50% equity in the home.....and he defaults on the loan because of of an ARM....what about his 50,000.00 he has in the house........that would seem to be why they cannot sell your house out from under you......you hold just as much equity in the home as they have in a loan instrument...can someone comment on this scenario. |
| Anonymous Coward
User ID: 144626
11/15/2007 8:41 AM | | Re: federal judge throws out foreclosures, bank sold mortgage, is not "owner" of mortgage | Quote |
...snip
Then the real battle begins to get the mortgage or lien itself taken off the title to the house legally. That means NO MORTGAGE AND THE HOUSE IS YOURS FREE AND CLEAR!
BIG STAKES AND A HUGE BOGGIE IF YOU WIN! Quoting: Mark In NYC
Regardless if a fraud has been committed or not, the Fed will not allow "homeowners" to get a free and clear home and forgive them of their mortgages. They'll pass new laws and make them retroactive 30 years if necessary. The taxpayers will bail out the banks, and nobody will go to jail for the massive fraud that has been committed. |
| Anonymous Coward
User ID: 268412
11/15/2007 9:15 AM | | Re: federal judge throws out foreclosures, bank sold mortgage, is not "owner" of mortgage | Quote |
If they could sell the house for $100,000, they usually would give you back the difference, but in a foreclosure sale they seldomly get market value for the house. The lender sets a minimum price and the house goes to the highest bidder.
Question.......
If a borrower say take a mortage out on the house for 50,000......but the house is worth 100,000.......he has 50% equity in the home.....and he defaults on the loan because of of an ARM....what about his 50,000.00 he has in the house........that would seem to be why they cannot sell your house out from under you......you hold just as much equity in the home as they have in a loan instrument...can someone comment on this scenario. Quoting: MM 272925 |
| Anonymous Coward
User ID: 268412
11/15/2007 9:17 AM | | Re: federal judge throws out foreclosures, bank sold mortgage, is not "owner" of mortgage | Quote |
The fact that you have equity in the home does not prevent foreclosure.
Question.......
If a borrower say take a mortage out on the house for 50,000......but the house is worth 100,000.......he has 50% equity in the home.....and he defaults on the loan because of of an ARM....what about his 50,000.00 he has in the house........that would seem to be why they cannot sell your house out from under you......you hold just as much equity in the home as they have in a loan instrument...can someone comment on this scenario. Quoting: MM 272925 |
| Anonymous Coward
User ID: 291938
11/15/2007 10:38 AM | | Re: federal judge throws out foreclosures, bank sold mortgage, is not "owner" of mortgage | Quote |
It's in the NY times today.
[link to www.nytimes.com]
Mutual Funds My Portfolio Alerts Foreclosures Hit a Snag for Lenders
By GRETCHEN MORGENSON
Published: November 15, 2007
A federal judge in Ohio has ruled against a longstanding foreclosure practice, potentially creating an obstacle for lenders trying to reclaim properties from troubled borrowers and raising questions about the legal standing of investors in mortgage securities pools.
Judge Christopher A. Boyko of Federal District Court in Cleveland dismissed 14 foreclosure cases brought on behalf of mortgage investors, ruling that they had failed to prove that they owned the properties they were trying to seize.
The pooling of home loans into securities has been practiced for decades and helped propel real estate prices in recent years as investors sought the higher yields that such mortgage trusts could provide. Some $6.5 trillion of securitized mortgage debt was outstanding at the end of 2006.
But as foreclosures have surged, the complex structure and disparate ownership of mortgage securities have made it harder for borrowers to work out troubled loans, in part because they cannot identify who holds the mortgage notes, consumer advocates say.
Now, the Ohio ruling indicates that the intricacies of the mortgage pools are starting to create problems for lenders as well. Lawyers for troubled homeowners are expected to seize upon the district judge’s opinion as a way to impede foreclosures across the country or force investors to settle with homeowners. And it may encourage judges in other courts to demand more documentation of ownership from lenders trying to foreclose.
The ruling was issued Oct. 31 by Judge Boyko, and relates to 14 foreclosure cases brought by Deutsche Bank National Trust Company. The bank is trustee for securitization pools, issued as recently as June 2006, claiming to hold mortgages underlying the foreclosed properties.
On Oct. 10, Judge Boyko, 53, ordered the lenders’ representative to file copies of loan assignments showing that the lender was indeed the owner of the note and mortgage on each property when the foreclosure was filed. But lawyers for Deutsche Bank supplied documents showing only an intent to convey the rights in the mortgages rather than proof of ownership as of the foreclosure date.
Saying that Deutsche Bank’s arguments of legal standing fell woefully short, the judge wrote: “The institutions seem to adopt the attitude that since they have been doing this for so long, unchallenged, this practice equates with legal compliance. Finally put to the test, their weak legal arguments compel the court to stop them at the gate.”
A spokesman for Deutsche Bank declined to comment on the ruling. But the inability of Deutsche Bank, as trustee for the pools, to produce proof of ownership at the time of the foreclosures will fuel borrowers’ concerns that they are being forced out of their homes by entities that may not even hold the underlying loans.
“This is the miracle of not having securities mapped to the underlying loans,” said Josh Rosner, a specialist in mortgage securities at Graham-Fisher, an independent research firm in New York. “There is no industry repository for mortgage loans. I have heard of instances where the same loan is in two or three pools.”(SOUNDS LIKE FRAUD TO ME)
The process of putting together a mortgage pool begins when a home loan is originated by a bank or mortgage lender. That loan is typically sold to a Wall Street firm that pools it with thousands of others. Once a pool is packaged, it is sold to investors in different slices, based on risk. A trustee bank oversees the pool’s operations, ensuring that payments made by borrowers go to the appropriate investors.
Lawyers who represent troubled borrowers complain that trustees overseeing home loan pools often do not produce proof, usually in the form of a mortgage note, that their investors own a foreclosed property. And a recent study of 1,733 foreclosures by Katherine M. Porter, an associate professor of law at the University of Iowa, found that 40 percent of the creditors foreclosing on borrowers did not show proof of ownership. Such proof gives a creditor standing to foreclose against a borrower and is required by law.
“The big issue in all these cases, whether we are dealing with a bankruptcy court, a state court or a federal court, is who really owns the mortgage note, and that is allegedly what they securitized,” said O. Max Gardner III, a lawyer who represents borrowers in foreclosure in Shelby, N.C. “A collateral question is, has that mortgage note really been transferred and assigned to the securitization trust? If not, then they really don’t have standing. It’s Law School 101.”
When a loan goes into a securitization, the mortgage note is not sent to the trust. Instead it shows up as a data transfer with the physical note being kept at a separate document repository company. Such practices keep the process fast and cheap.
Because most foreclosures proceed without challenges from borrowers, few judges have forced trustees like Deutsche Bank and Bank of New York to prove ownership by producing a mortgage note in each case.
Borrower advocates cheered Judge Boyko’s ruling.
The plaintiff’s argument that “‘Judge, you just don’t understand how things work,’” the judge wrote, “reveals a condescending mindset and quasi-monopolistic system where financial institutions have traditionally controlled, and still control, the foreclosure process.” The cases could be filed again in state court, however.
April Charney, a consumer lawyer at Jacksonville Area Legal Aid in Florida, who has been practicing foreclosure law since the late 1980s, said she rarely sees proof of ownership in cases involving securitization trusts. Her group has 30 to 50 such cases and not one of the lenders’ representatives has produced proof of ownership predating the foreclosure action.
“We see a trend toward judges having enough of this trampling of the rules and procedure and care and reverence with which lawyers and litigants and participants in the judicial process should comply,” Ms. Charney said. “Hopefully this will convince everybody that the time to work out these home loans is now |
| Anonymous Coward
User ID: 204901
11/15/2007 10:45 AM | | Re: federal judge throws out foreclosures, bank sold mortgage, is not "owner" of mortgage | Quote |
This is fascinating. i wish the people would rally around this. If not, it will all just be overturned by a higher court, and we'll be back to business as usual. |
| Anonymous Coward
User ID: 79126
11/15/2007 12:13 PM | | Re: federal judge throws out foreclosures, bank sold mortgage, is not "owner" of mortgage | Quote |
I'm slow, help me out here. The banks sell lots of "bad" loans to china. When people can't pay the banks forclose.
The bank gets the house what does china get? |
| Anonymous Coward
User ID: 326808
11/15/2007 12:25 PM | | Re: federal judge throws out foreclosures, bank sold mortgage, is not "owner" of mortgage | Quote |
Where all the GLPers that speak bankster? I want to know more about this.
Lots of these sum prime loans were set-ups. Many people who qualified for prime loans were steered to sub primes because the brokers made more money (and the lenders).
Yes, brokers made money, but these were the only chance for people to buy a home because they could never get conventional financing.
No, that's not accurate. People who qualified for prime loans were steered into sub prime loans. There's some congressional investigation into this. Not saying ALL sub primes were that, but many were. Brokers mislead clients. They got higher commissions for the higher rate, no/low money down loans, especially if they had a clause for a penalty for early payoff. Some of those penalties are six months of interest! Quoting: Anonymous Coward 284299
Too true. I insisted on a fixed rate second mortgage and TWICE the bank came back with an agreement printed for an APR subprime insisting right back that I would save money and why don't I want to save money?
They came and set the paperwork to be signed in front of my husband and I without saying the loan was for subprime, knowing I wanted fixed rate, and it wasn't until I read the document that I saw what they were doing.
I always wondered why they were shoving their bogus loan down our throats. |
| Anonymous Coward
User ID: 142537
11/15/2007 12:44 PM | | Re: federal judge throws out foreclosures, bank sold mortgage, is not "owner" of mortgage | Quote |
I have a question,
What is the procedure, with a Mortgage, when a Mortgage payer finally makes that last payment and says, "I own the house free and clear" so ending that Mortgage.
The problem,
That free and clear owner now wants to sell the free and clear home to another person.
Does the Bank create a new Mortgage for another $200,000 or so, dollars to resell that home? Is this legal or is this another fraud by the Bank? |
| Anonymous Banker
User ID: 324898
11/15/2007 1:09 PM | | Re: federal judge throws out foreclosures, bank sold mortgage, is not "owner" of mortgage | Quote |
Before the meltdown I worked for big banks, not anyone important I'm just a programmer.
It twisted my brain when my bosses boss told me this several years ago. He said he prayed the loans never defaulted because the big banks DO NOT keep sufficient legal paper trails of titles and legal documents.
This has come about becaause of the banking consolidation. The small banks originate the loan, including the creation of all of the legal paperwork. At this point it is a rock solid loan. Then either the loan or the entire bank is sold to a bigger bank.
That's where it gets sticky. The big banks have a one-size-fits-all record system like everyone else, the small bank's records won't fit just right, so some of the paper is left behind...or lost.
Then....add in the good old cost/efficiency thing. The records are computerized. The loans can be cooked down to a line item in some computer database some where. This is the area where I work. The program kicks out a bill notice, registers a payment and calculates the new balance. None of which is connected to the legal paperwork.
It's like how many of us keep the CD case and the label art after we rip a CD?
This legal argument is also true for credit cards. If you write a letter to the the bank that has issued your card and demand the signature page for your card application and they can't produce it....well...the same thing. They have no legal hold on you.
Now, they are *never* going to tell you this. And they will fight tooth and nail against you. But you can prevail as in this story!
Expect to see more of this... |
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