So I was doing some Redditing tonight and found and interesting article on this blog called “web of debt“. In the post she talks about a judge’s ruling in Ohio that kept a bank from foreclosing on 14 properties.
“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.”
Apparently they are having trouble finding all the paperwork that shows who owns the properties in question. When you get a home loan, the bank then packages that with other home loans and sells it to investors on Wall Street as mortgage-backed securities. The problem arises because the mortgage notes are not sent to the trustees that buy the securities, they are kept in a repository run by another company. By not sending the actual note, the process goes faster and money can be shifted around a lot easier. When you make your payments, a trustee bank that manages the security makes sure the money gets shifted to the proper investors.
So since the holders of these securities can’t produce the actual notes, technically they can’t foreclose on you.
Now this doesn’t mean you can just stop paying on your house. This is apparently just in some cases. (but sadly, a lot of cases) Apparently this could cause a huge stir with the sudden rise in foreclosure on sub-prime mortgages. The case will surely be refiled and sent up to higher courts but it will definitely be interesting to see how this all pans out.
If you do wind up in a foreclosure situation, definitely fight it. Get a lawyer and make them produce the note. Now that there has been a case settled in the favor of the borrower, there is a precedent your lawyer can call upon in your case.
A good comment about this that I saw in another blog about this called “The Emperor Has No Clothes - And Neither Do Banks - Kiss your Mortgage Payments Goodbye!“, states some interesting things to remember about this whole thing:
“Read the whole post and read through the four comments to it.
At first glance, I can tell you that detractors make some good points, like the following (to name a few):
-
- this problem doesn’t affect all lenders, just the ones who will have trouble locating their notes,
- the case was dismissed without prejudice, which means as soon as the defect is cured, the banks can file again, and
- the struggle is by no means over
However, (1) lenders who potentially cannot find evidence that they own the note represent a good chunk of the market and the shadow that this ruling casts could be huge since the securities market is ALL about confidence; (2) some of the “cures” that they’re talking may not be something that they can do without getting the borrower to recommit to the obligation - and finally, (3) the struggle may not be over - but, we have to start somewhere - and this is a great place to start! ESPECIALLY if massive numbers of homeowners question their mortgage commitments all at once.”
So again, don’t just quit making payments. I don’t even want to think about what this could do to the strength of the American dollar. Even worse is what our whole housing problem could do to the global markets.
