Tweet
From the New York Times’ Gretchen Morgenson:
Guess What Got Lost in the Loan Pool?
WE are all learning, to our deep distress, how the perpetual pursuit of profits drove so many of the bad decisions that financial institutions made during the mortgage mania.
But while investors tally the losses that were generated by loose lending so far, the impact of another lax practice is only beginning to be seen. That is the big banks’ minimalist approach to meeting legal requirements — bookkeeping matters, really — when pooling thousands of loans into securitization trusts.
Stated simply, the notes that underlie mortgages placed in securitization trusts must be assigned to those trusts soon after the firms create them. And any transfers of these notes must also be recorded.
But this seems not to have been a priority with many big banks. The result is that bankruptcy judges are finding that institutions claiming to hold the notes that back specific mortgages often cannot prove it.
On Feb. 11, a circuit court judge in Miami-Dade County in Florida set aside a judgment against Ana L. Fernandez, a borrower whose home had been foreclosed and repurchased on Jan. 21 by Chevy Chase Bank, the institution claiming to hold the note. But the bank had been unable to produce evidence that the original lender had assigned the note, which was in the amount of $225,000, to Chevy Chase.
With the sale set aside, Ms. Fernandez remains in the home. “We believe this loan was never assigned,” said Ray Garcia, the lawyer in Miami who represented the borrower. Now, he said, it is up to whoever can produce the underlying note to litigate the case. The statute of limitations on such a matter runs for five years, he said.[...]
18 Comments
DIGG IS OPENpup34
Heah Come Da Judge!!! …prove your case or get outta my court (heh,heh)
I wish these cases would be blared far and wide so more unfortunate homeowners would fight it to the bitter end. There’s probably a lot of alleged mortgage holders who can’t produce the note.
PRODUCE THE NOTE
— Congreswoman Marcy Kaptur
A re-print from Amy Goodman.
*************
“[P]ossession is nine-tenths of the law,” Rep. Kaptur told me. “Therefore, stay in your property. Get proper legal representation … [if] Wall Street cannot produce the deed nor the mortgage audit trail … you should stay in your home. It is your castle. It’s more than a piece of property. … Most people don’t even think about getting representation, because they get a piece of paper from the bank, and they go, ‘Oh, it’s the bank,’ and they become fearful, rather than saying: ‘This is contract law. The mortgage is a contract. I am one party. There is another party. What are my legal rights under the law as a property owner?’ “If you look at the bad paper, if you look at where there’s trouble, 95 to 98 percent of the paper really has moved to five institutions: JPMorgan Chase, Bank of America, Wachovia, Citigroup and HSBC. They have this country held by the neck.”
http://www.kaptur.house.gov/in…..d=99999999
Yes, these are the loan tapes that people like Black and Galbraith have been talking about. The banks were so mad to set up the securities that they didn’t bother to make sure they had control of the paper trail for the mortgages. Many of these mortgages orginated with mortgage writing companies that later went bankrupt at which time many of their records were tossed. This issue of negligence has been wafting around the ether for a while and is part and parcel of the greater questions of fraud, lack of due diligence, and failure of fiduciary trust. Yet despite this many of the CEOs and top leaders of the banks who engaged in these practices or allowed them to happen remain in their positions of power. The truth is even the most cursory investigation of the banks’ books would show not only that they are insolvent but that their chief officers belong behind bars.
fair trials!
At this point, I don’t care if they are behind bars; I just want the U.S. to stop using taxpayer money to keep the zombie banks(and the 4 big ones ARE zombies) afloat for the purpose of saving foreign investors monies/assts.
The power of these people needs to be completely curbed; just look at how they are manipulating the legislation regarding ‘cram down’.
Well, but that is rather the point. As long as these guys are walking around pulling the strings of politicians, the money is going to keep flowing into the sinkholes their banks have become.
thanks boo, it’s about time i put morgenson on my google alerts list.
Morgenson is wrong to say that the transfer of the notes has to be recorded. A mortgage note is a negotiable instrument. It can only be transferred by negotiation. For a note payable to a specific person, only the named person can negotiate, or transfer, the note. That is done by endorsing it.
The endorsement is either to another named person, in which case we call it an order instrument, or in blank, in which case the person with actual possession can transfer it by delivery. This is a bearer instrument.
Mortgage notes are initially payable to the lender, and are order instruments. In most cases the original lender endorsese them in blank. This means only the actual holder can enforce them, and enforce the mortgage.
/lecture.
My daughter and I have a house in foreclosure. The note originator is long gone. Deutche Bank/Ocwen Loan Servicing is the foreclosure agent.
The loan was bad from the beginning and based on a fraudulent appraisal – but that isn’t the issue here.
We received an ‘offer’ to refinance or something from Ocwen. It was pretty bad terms, and the documents left a lot of stuff out. We declined.
We just received another offer – this time it was more specific. The payments were reduced another $40 from the previous offer, interest rate fixed at 6.35% and a 30-year term. Problems: Original mortgage $180,000. New one: $222,860. House value: $120,000. This new offer stated explicitly that there was a balloon payment due at the end of the 30 years, and that ‘the amount of the balloon payment would probably exceed the value of the real estate and would NOT be refinanced.’
Wow!
My daughter has already filed for Chap 7 and her case is closed so she actually has no interest in this property. I am in the middle of Chapter 13 myself.
But these offers – if this is what other people are getting in order to stay in their homes – it is no wonder the default rate on these so-called refinances is over 50% already. This is out of the frying pan and into the fire!
Does this mean the deeds also might have disappeared? If someone is able to pay off their mortgage, will they be able to get their deed?
Your deed should be on file at your county clerks office indexed by the parties names. Certified copies are available at minimal costs.
No, deeds are recorded and can always be found in the office of the Register of Deeds or whatever it’s called in your state. They are security instruments, not negotiable instruments, and are transferred under different and lenient rules.
So JP Morgan Chase (a.k.a. David Rockefeller) was tipped off in advance by its SEC division of the global bankster conspiracy, who was running interference rather than indicting Madoff for fraud – all while their rich overlords moved their bets and profits off the table before the inevitable revelations of the ponzi scheme became public.
If ANYONE actually believes that the timing of Madoff’s confession was somehow coincidental to have occurred just after Rockefeller Inc., moved their funds out of harms way, think again. They likely had a gun to the guy’s head the whole time, telling him not to say a word until they were in the clear.
The SEC is guilty of obstruction and conspiracy, in collusion with JP Morgan Chase, to keep the Madoff Ponzi Scheme secret – because Rockefeller himself demanded it.
IMHO, the government should simply let the existing banks go “belly up.” Stop trying to save them, and don’t bother to nationalize them. Meanwhile, the government should start some new banks that are well run from the beginning. Once established, the government should sell those banks to the private sector, see if they can do a better job this time.
Morgenson is on-target about bookkeeping. Dull and boring though it might be, such precision in number-management is always important and necessary. Way back when, the otherwise quite nutty Ross Perot stated it correctly when he said, “the devil is in the details”.
As regulators start boring in on the zombies, I predict they’re going to find a lot of this wild west accounting. I would also assert that the high-fliers who caused these problems were invariably compensated far in excess of the bookkeepers and accountants who were and are charged with the mind-boggling responsibility of cleaning up their considerable messes.
There is a dark side to this, as evidenced later in the same NYT story, where the owner of a house, apparently paying off the mortgage(s) properly, was unable to put his house on the market because nobody could trace the owner of his second mortgage. Rather a disgraceful dereliction of basic book-keeping on the banks’ part. The homeowner ought to have grounds to have that second mortgage annulled. THAT would serve the banking interests right. Actually, the reason I am so annoyed about this is because a next door neighbor’s house was foreclosed on, and the house has been vacant since last summer. It can’t be put on the market since nobody seems to know who holds title (this from a realtor who had a customer interested in the property).