patrick.net

I think I'm going on 3 years of stories like this that are supposed to be the game changer and lead to the downfall of the banking system. Still waiting...

Even if they can't foreclose that doesn't necessarily mean they can't collect - they may still be able to garnish your wages, seize your bank accounts, etc. Not the panacea that some might hope for, though why anyone would hope that people who bought homes they couldn't afford would get to keep them, effectively forcing the rest of us to pay for them - the responsible to cover the losses of the gamblers and irresponsible, yet again - is beyond me to begin with.

Garnish your wages?

Not likely That happens when the IRS comes after you. That doesn't happen in a foreclosure.

I recommend, everyone read my posting from ealier this year.

http://patrick.net/?p=28945

People should consider stopping their mortgage payment and saving up resources if it makes sense economically for them to do so.

Banks run this country, do you think they will ever let this happen?

larrypatrickmaloney says

Garnish your wages?
Not likely That happens when the IRS comes after you. That doesn’t happen in a foreclosure.
I recommend, everyone read my posting from ealier this year.
http://patrick.net/?p=28945

The scope of what they can do would vary state to state, and I don't know what the rules are for when they can get them directly from the employer (which again would vary state to state), but see, e.g., http://www.sun-sentinel.com/business/fl-bank-mortgage-garnish-20110107,0,5129126.story right from the front page - they are seizing funds directly from people's bank accounts, etc., and wage garnishment for a judgment is certainly a possibility. Other states are not like California, and even here, if you converted your loan to a recourse loan (through refinance, etc.), all kinds of badness may wait on the other side for you.

ChrisLosAngeles says

Banks run this country, do you think they will ever let this happen?

Apparently not. However, if public do something en-mass, make no mistake it can give the banks some real trouble. I still remember the bank run to Indymac in 2008, it was a phenomenon. The law is created to govern those who obey. When in chaos, the law is useless, only the force or military is the real power that governs.

JimAtLaw says

larrypa

Jim, apparently you are correct, in certain circumstances. I spoke with a mortgage broker yesterday (while spending the afternoon having fun looking at open houses).

Seems that if you have an equity loan (heloc), and you use the funds for something OTHER than house improvements, it can convert to a recourse loan) However, I'm not sure about the status of the first, I"m pretty sure the 1st is always a non-recourse.

The first converts to a recourse loan if it is refinanced or modified.

larrypatrickmaloney says

JimAtLaw says

larrypa

Jim, apparently you are correct, in certain circumstances. I spoke with a mortgage broker yesterday (while spending the afternoon having fun looking at open houses).
Seems that if you have an equity loan (heloc), and you use the funds for something OTHER than house improvements, it can convert to a recourse loan) However, I’m not sure about the status of the first, I”m pretty sure the 1st is always a non-recourse.

You mean use funds for things like a Hawaii vacation and a Porsche? That's what a lot of people did. I'd like it if that were recourse. Actually I'd like for HELOCs to be strictly limited to 'capital improvements' to the house.

It's unclear to me how many mortgages this applies to. You seem to be saying that ALL securitized mortgages are affected, but I really doubt that. I'm no legal expert, but it looks like all defaulters can still be foreclosed on, but they need the representative of the trust to foreclose, since the bank isn't the legal owner of the mortgage. Banks just screwed up lots of cases in the past.

Also seems to me the main ones in trouble are the ones that own the SECURIITIES. The banks are just the servicer. The suckers that bought the securities are the ones who lose when the bank can't foreclose.

@MarkInSF

My limited understanding was the securities have buy back clauses in them for exactly this case. The bank mishandled the title and incorrectly sold the rights. Thus, the banks would be screwed (after a lengthy legal battle ;).

This is out of my area and I haven't done the research, but I'm betting that even if the servicer can't foreclose, the note does not generally just disappear - *someone* is the obligee of the note, and if you think any material number of borrowers will just be allowed to walk away without paying because of recording errors I've got a bridge to sell you. (Google "unjust enrichment.") What could happen, I suppose, in what would become an armageddon of fiscal meltdown, is that the originator is forced to pay back the ostensible assignee (the "put back" scenario) and to chase the borrower themselves... and if this on a large scale pushed the originating bank into receivership, then perhaps the government or a successor bank that acquired the assets of the failed institution would be chasing the borrower.

One important issue is if the bank can really prove they own the note. For those securitized mortgage, some original docs may have been lost or accidentally destroyed. How the banks are going to prove they own the note in this scenario, can they ever foreclose the own legally? This is not a challenging statement, it is a question.

JimAtLaw says

if you think any material number of borrowers will just be allowed to walk away without paying because of recording errors I’ve got a bridge to sell you. (Google “unjust enrichment.”)

Don't know about "material numbers", but if I'm reading this article right, it appears that this is precisely what has happened in 2 cases:

http://www.nytimes.com/2011/01/08/business/08mortgage.html?source=patrick.net

Seems a scary precedent. Given that the government is bent on propping up Wall Street at ANY cost, I wonder who's going to take it in the ass if a substantial number of deadbeat borrowers are awarded free houses. The good old American taxpayers, perhaps? The middle class has been decimated, but I don't think the powers-that-be will be happy until it is completely annihilated. I don't think people get that bank execs are not going to be the ones who suffer. Trying to "stick it to the banks" will do absolutely no good, because they have an automatic lifetime get-out-of-jail-free card.

I'm not at all sure I read that article this way - it doesn't say the banks have no other remedies, merely that foreclosure did not work. To the extent they can still obtain a judgment for money owed (procedurally, they may have screwed up here and not be able to do that either, but that doesn't mean that will happen in future cases), they may yet be able to recover from the buyer, and if they can't, perhaps the originator can (and will have to). The law does not favor an outcome where the buyer gets the house for free without paying a debt legitimately incurred because of a paperwork foulup by the bank, and if that were to happen in more than a tiny fraction of cases, legislative change would follow faster than you can say insolvent FDIC.

JimAtLaw says

I’m not at all sure I read that article this way - it doesn’t say the banks have no other remedies, merely that foreclosure did not work.

Really? You're not reading it that way? Because the article says this:

"U.S. Bancorp, as trustee, will either have to pay Mr. Ibanez to buy a deed from him, Mr. Collier said, or walk away from the property, leaving it to Mr. Ibanez.

The loss on the property will be taken by investors in the trust that had claimed ownership of the mortgage. "

"Walk away"..."loss on the property taken by investors"... That seems pretty clear to me. Again, am I reading it wrong?

To the extent they can still obtain a judgment for money owed (procedurally, they may have screwed up here and not be able to do that either, but that doesn’t mean that will happen in future cases), they may yet be able to recover from the buyer, and if they can’t, perhaps the originator can (and will have to). The law does not favor an outcome where the buyer gets the house for free without paying a debt legitimately incurred because of a paperwork foulup by the bank, and if that were to happen in more than a tiny fraction of cases, legislative change would follow faster than you can say insolvent FDIC.

But if you can't foreclose because you can't prove title, how can you "obtain a judgment for money owed" if you still can't prove title? Home loans are non-recourse in most states, aren't they? The bank can't just take the money back; they have to take the HOUSE back.

I'd like to believe that legislative change would be enacted to prevent the huge can of worms that would be opened if this continues, but are you that sure it would? Does the government really care if the FDIC is insolvent? The entire banking industry has been nationalized and the banks are all zombie banks being supported by the taxpayers. I guess I have less confidence than you that the government would do the right thing. They don't seem to have any problem at all with being insolvent. I assume that if they need to continue bailing out banks, they will simply print more money as they have already.

The Massachusetts' case is more about the failure to properly assign the mortgage in subsequent transfers of the mortgage, including the right to foreclose. The MA court only said there was no valid assignment of the mortgages. Just because Wells Fargo and US Bank were not properly assigned the right to foreclose does not mean the right does not exist. You just have to trace the failed assignments back to last properly done assignment or the mortgage originator to find the entity who has the right to foreclose.

Once the you find that entity, they can 1) give notice under MA law and foreclose or 2) make a legally enforcable assignment to Wells Fargo/ US Bank who can then give proper notice under MA law and foreclose.

From a theoretical perspective, it's that easy. From a practical perspective, it's a pain in the ass. There are likely a minimum of four transfers and a maximum of God knows how many. But depending on the State your in, that's why they have a Recorder's Office to record real estate transfers. Ooops...banks (other than the originating bank) probably did not record the transfer of the mortgage. Why? They believe it was too costly? Well, you get what you pay for. They believe their own system of accounting was better than the Office of the Recorder? Well, they took the risk, they were wrong. You do a half ass job and you get a half ass result. They believed the courts would simply bail them out? Just what we need in a "free market"...banks that do a half ass job, crying about how important they are, and getting another bailout when the "free market" would send them to bankruptcy court.

Well, guess not this time. They are going to have to actually hire people and spend money to clean up their mess. They will have to go through the records of the transactions to find the last entity who got a valid assignment. Work out a deal with them or possibly clutter up our courts with lawsuits over contracts that failed to properly assign the mortgages. OR, THEY COULD WORK OUT A DEAL WITH THE HOME OWNERS. Wow, what a concept...banks having to actually talk to homeowners as equals.

Go Massachusetts. Let's hope other states finally get the gumption to protect their citizens. But, will it encourage mortgage holders to stop paying? Well, putting aside it is only one state so far, only 1) those who like to gamble that their mortgage was not properly assigned, 2) those who were going to stop paying anyway, and 3) those with enough smarts to ask the alleged trustee of their mortgage to prove they have the right to forclose would stop paying.

There are so many house owners are underwater nationally. They already don't pay their mortgage for months if not years. They have nothing to lose, especially those who really try to squat out to 60 months, then claim the house theirs legally if the banks do not try to foreclose them. Thinking about chasing all the notes and documentation, I can see one silver lining here: banks need to hire a lot, A LOT of human force to do it, which translates to the financial job market booming. Just like the RE construction job marketing booming few years ago. This can really help to bring down the unemployment rate and this time, BANKS are the SAVIORS!!!!

Ryan1781 says

The Massachusetts’ case is more about the failure to properly assign the mortgage in subsequent transfers of the mortgage, including the right to foreclose. The MA court only said there was no valid assignment of the mortgages. Just because Wells Fargo and US Bank were not properly assigned the right to foreclose does not mean the right does not exist. You just have to trace the failed assignments back to last properly done assignment or the mortgage originator to find the entity who has the right to foreclose.
Once the you find that entity, they can 1) give notice under MA law and foreclose or 2) make a legally enforcable assignment to Wells Fargo/ US Bank who can then give proper notice under MA law and foreclose.

The article didn't say anything about that. If the loan was divided up and bought by multiple investors, and there is no chain of custody, how exactly does "finding the last properly done assignment" work? If subsequent assignments were done improperly, that doesn't mean the loan wasn't bought. Just because a certain entity was the last one who did the paperwork right doesn't mean that entity owns the loan, does it? Doesn't make sense.

They believe their own system of accounting was better than the Office of the Recorder? Well, they took the risk, they were wrong. You do a half ass job and you get a half ass result. They believed the courts would simply bail them out? Just what we need in a “free market”…banks that do a half ass job, crying about how important they are, and getting another bailout when the “free market” would send them to bankruptcy court.

I agree that they should have done it right. But they didn't. Does that mean people should get free houses? I don't think it should mean that.

OR, THEY COULD WORK OUT A DEAL WITH THE HOME OWNERS. Wow, what a concept…banks having to actually talk to homeowners as equals.

That's all well and good to talk about homeowners getting all or part of their loan wiped out and getting a free or discounted house, but surely you don't think a certain class of people can be enriched without it costing ANOTHER class of people? You have to ask yourself, who is going to pay for the good fortune of deadbeat borrowers who default on their loans but then get off scot free (or get a special "deal")? And what I'm saying is, it's not going to be Wall Street. It's going to be the middle class taxpayer who gets the short end of the stick.

Gameisrigged,

I read a little more than just the one article. There are several articles out there in addition to the slip opinion that has the actual statements of the MA Supreme Court. Look...multiple investors did not try to foreclose on a property, Wells Fargo did and US Bank did. Multiple investors were not part of the court case. Wells Fargo and US Bank were. There is a difference between the mortgage and the security (backed by the mortgage) sold to investors. The mortgage backed security was not an issue in the case. Though it seems the banks tried to use the mortgage backed security as evidence of their right to foreclose. That's putting the cart before the horse. The banks should have had the mortgage assigned to them, then recorded the assignment with the County Recorder's Office before securitizing the mortgage and selling the security created. They did not.

The simple way to trace the assignment of the mortgage is to start at the County Recorder's office and look for the original mortgage. Believe it or not, when the originator of the mortgage gave the homeowner the money, they damn sure recorded it. So, you start with the originator, then look to see who they assigned it to and if the assignment was done correctly. If yes, move to the next assignee. If no, BAM...you know the originator has the right to foreclose. And, you keep doing that right down the line. Alternatively, you could work backwards from the last entity, which would be US Bank or Wells Fargo. See who tried (and failed) to assign it to them.

When you talk about the subsequent assignee "buying" the loan, you fail to realize a couple of things. Let's take the easiest...I sell you a piece of paper assigning you all my rights to all my ocean front property in Arizona for $10,000. Guess what...now I have $10,000 and you have squat. You'd have had to be a complete dumb ass to make that deal. A complete dumb ass or a bank. Now if our little contract said, I guarantee there is ocean front property in AZ, then I'm either lying to you or I am mistaken, either way you have a breach of contract action against me. But, I still have your $10K until some court tells me to pay you back or we work out a deal. Same here... US Bank and Wells Fargo have breach of contract actions against whatever entities said they had the right to assign the mortgage, but they still have their money. BUT, US Bank and Wells Fargo DO NOT HAVE THE RIGHT TO FORECLOSE on the homeowner (at least in MA). Make a little more sense?

Free houses? Hardly. US Bank and Wells Fargo have a contract right. They can choose to go after the entity that purported to assign them the mortgage and collect the money they paid. They can attempt to perfect the right to foreclose by getting a legally binding assignment. After that they just need redo the notice and foreclose. Since they presumably have the contractual right and the homeowner really only has a cloud on the mortgage, the bank could negotiate a deal with the homeowner to give up their claim to the property. (There is one drawback as there is some failed assignor out there who could claim US Bank and Wells Fargo do not have the right to strike a deal with the homeowner, but depending on where the break in the chain of title is, the bank could still have the contractual right to hold over the assignor for failing to properly do the assignment.)

Whoa there sonny. Last I checked, banks are foreclosing on middle class Americans, many of whom are taxpaying middle class Americans. So who is the "other class?" The middle class taxpayer has gotten the short end with the extension of the Bush tax cuts, which originally started when the US has a budget surplus, but that's another story.

Reality check...it will take longer for banks to prove chain of title. But, if the banks did everything they were supposed to do, they will be able to foreclose on a property. If the banks did a half ass job, then they have to go back and clean up their mess AND THEN FORECLOSE on a property. If they want sweep their mess under the rug, they can wheel and deal with the homeowner. You know that stupid capitalist thing called wheeling and dealing that banks don't like to do because the deck is not stacked in their favor. That thing, the rest of us have to do in our businesses. And, maybe, just maybe banks will start to think twice before giving $500,000 mortgages to families making $50,000 a year.

Ryan1781 says

The simple way to trace the assignment of the mortgage is to start at the County Recorder’s office and look for the original mortgage. Believe it or not, when the originator of the mortgage gave the homeowner the money, they damn sure recorded it. So, you start with the originator, then look to see who they assigned it to and if the assignment was done correctly. If yes, move to the next assignee. If no, BAM…you know the originator has the right to foreclose. And, you keep doing that right down the line. Alternatively, you could work backwards from the last entity, which would be US Bank or Wells Fargo. See who tried (and failed) to assign it to them.

The problem with your reasoning is, if it were as simple as you make it out to be, then we wouldn't have just had 2 court cases giving foreclosed homes back to the borrowers, now would we? Hmmm...they could have just done x, y, and z. Then why DIDN'T they? Yes, I have also done some reading, and all the experts seem to be in agreement that this is a huge mess, and no it's not going to be easy as pie to sort it out as you seem to think it is.

When you talk about the subsequent assignee “buying” the loan, you fail to realize a couple of things. Let’s take the easiest…I sell you a piece of paper assigning you all my rights to all my ocean front property in Arizona for $10,000. Guess what…now I have $10,000 and you have squat. You’d have had to be a complete dumb ass to make that deal. A complete dumb ass or a bank. Now if our little contract said, I guarantee there is ocean front property in AZ, then I’m either lying to you or I am mistaken, either way you have a breach of contract action against me. But, I still have your $10K until some court tells me to pay you back or we work out a deal. Same here… US Bank and Wells Fargo have breach of contract actions against whatever entities said they had the right to assign the mortgage, but they still have their money. BUT, US Bank and Wells Fargo DO NOT HAVE THE RIGHT TO FORECLOSE on the homeowner (at least in MA). Make a little more sense?

Actually, no. I don't see what your analogy has to do with the situation. If I loaned you money to buy property in Arizona, and I have the right to take back the deed if you don't pay me back, but I fucked up and never got the deed and can't prove that I have the legal right to take the house, then we have a big mess on our hands. What does that have to do with fraudulently selling land that doesn't exist? These are real houses we're talking about, not "beachfront property in Arizona".

And honestly, if you're saying, at this stage of the game, that people don't do things because they're stupid, well, I'd have to disagree.

Free houses? Hardly. US Bank and Wells Fargo have a contract right. They can choose to go after the entity that purported to assign them the mortgage and collect the money they paid. They can attempt to perfect the right to foreclose by getting a legally binding assignment. After that they just need redo the notice and foreclose.

But have you read the papers? They screwed up the paperwork so badly that it's going to be very difficult to sort out who owes what to whom and who has what rights. I guess we'll see what happens....

Since they presumably have the contractual right and the homeowner really only has a cloud on the mortgage, the bank could negotiate a deal with the homeowner to give up their claim to the property. (There is one drawback as there is some failed assignor out there who could claim US Bank and Wells Fargo do not have the right to strike a deal with the homeowner, but depending on where the break in the chain of title is, the bank could still have the contractual right to hold over the assignor for failing to properly do the assignment.)

Huh? Why would the bank want to "negotiate a deal", if it's as simple as you claim it is for them to sort out who the mortgage is assigned to. Why wouldn't they just do that? And if they can't, then why would the borrower want to negotiate with them. If the bank can't foreclose on me, then I would just stop paying them. Why would I want to negotiate? And if they CAN foreclose on me, why would they want to negotiate with me?

Whoa there sonny. Last I checked, banks are foreclosing on middle class Americans, many of whom are taxpaying middle class Americans.

Well yes, when you borrow money, you are supposed to pay it back, or you get foreclosed on. Do you have a problem with people being expected to pay their debts?

So who is the “other class?” The middle class taxpayer has gotten the short end with the extension of the Bush tax cuts, which originally started when the US has a budget surplus, but that’s another story.

I don't follow. The middle class is getting screwed, and yes, tax cuts for the wealthy are part of that process. The other class is the wealthy, who are enriching themselves and increasing the gap between rich and poor. Having to pay back money that you borrowed is perfectly reasonable, but having your tax money taken from you to pay the debts of OTHERS is not reasonable. You honestly don't understand that?

Reality check…it will take longer for banks to prove chain of title. But, if the banks did everything they were supposed to do, they will be able to foreclose on a property. If the banks did a half ass job, then they have to go back and clean up their mess AND THEN FORECLOSE on a property. If they want sweep their mess under the rug, they can wheel and deal with the homeowner. You know that stupid capitalist thing called wheeling and dealing that banks don’t like to do because the deck is not stacked in their favor. That thing, the rest of us have to do in our businesses. And, maybe, just maybe banks will start to think twice before giving $500,000 mortgages to families making $50,000 a year.

Again, your "stick it to the banks" mentality would be fantastic, in a perfect world. And I would totally agree with you. Here, for the third time, is the problem. The ones who LOSE in this case are honest, hardworking middle class citizens who did not default on loans, did not game the system, did not cheat or steal or commit fraud. Do you think the banks give a shit when they know they'll just get bailed out whenever they're in trouble? No, they don't give a shit. Here's what would be great: Everyone who is underwater on their mortgage gets absolved, but every last cent of the money required to do that comes straight out of the paycheck of a Wall Street executive. You KNOW there is absolutely zero chance of that ever happening. The Wall Street execs will continue to be fat and happy, and responsible middle class citizens will pay the price.

Nomograph says

OMIGOD WERE ALL GETTING A FREE HOUSE

Nope. We're not ALL getting a free house, only irresponsible people get free houses. Responsible people get f*cked.

gameisrigged says

Responsible people get f*cked.

Sad but love it.

"The problem with your reasoning is, if it were as simple as you make it out to be, then we wouldn’t have just had 2 court cases giving foreclosed homes back to the borrowers, now would we?"

From a theoretical standpoint it is that simple. From a practical standpoint it is going to cost a lot of money to trace the title of each mortgage. Just like flying. Sure we all understand the concept now days. But, it takes so much money, specific knowledge, skill and time to build a plane that we individuals rarely do it. That's the difference between understanding and putting things in practice. Now, the banks thought it would be cheaper to try to get the MA courts to simply give them title to the houses in those two cases. They were wrong. Now, they actually have to clean up their messy, half ass practices. Now, they will have to spend the money to look at the title transfers and find out where the break in title was before they were assigned the mortgage. Guess what...homeowners do a Grantor-Grantee search all the time before purchasing a property. Why should a bank be any different?

"But have you read the papers? They screwed up the paperwork so badly that it’s going to be very difficult to sort out who owes what to whom and who has what rights."

So the banks screwed up the paperwork and you want who to fix it? The courts by by simply saying "oh, you really don't have title, but will give you the property anyway." Please. How about I go to court and say, I really don't have title, but I paid so-and-so for a deed on Gameisrigged's house, can you just give it to me, pretty please. Come on….get real. I have to prove chain of title, why should a bank be any different? Or, as I say, do you force the banks to pay the money to find the break in the chain of title and correct the situation. By the way, if they had recorded these transactions with the County Recorders' office like most normal people do when dealing with real estate, it would not be so hard to trace the assignments. But, corner cutting in the name of cost savings, laziness, stupidity leads to you getting what you paid for.

"I don’t see what your analogy has to do with the situation. "

It's the contractual aspect of what the banks did. Just because they do not have a clean transfer of title for foreclosure doesn't mean they do not have any remedies. They can always go after the entity (probably another bank or banks subsidiary) for breach of contract. The failure to properly assign the title per the contract. Of course this has nothing to do with the homeowner.

"Why would the bank want to “negotiate a deal”, if it’s as simple as you claim it is for them to sort out who the mortgage is assigned to."

Like I said, theory and practice are two different things. In practice, it cost money to hire someone to do a title search. Add to that the complication that banks probably did not record their transfer with the County Recorder (stupidity). That cost more money because you know have to track contracts assigning rights with your own poorly kept records. Then, tack on the securitization process that probably did not list all the mortgages backing that mortgage-backed security (sloppy). Mo' money to spend. The choices: 1)Spend all that money trying to track everything down so you can properly foreclose, 2) Simply sue the other party to the assignment contract for your damages because they did not properly assign title. 3) Since you have the contractual right to the mortgage, but not the mortgage, negotiate with the homeowner to release their claim on the property.

"If the bank can’t foreclose on me, then I would just stop paying them. Why would I want to negotiate?"

Because the bank can foreclose on you. It would just take the bank that actually has title to do it because the homeowner is still in breach of the mortgage. There's your motivation to negotiate.

"Do you have a problem with people being expected to pay their debts?"

I have more of a problem with banks making loans to people they know will not have the ability to pay it back because it raises prices for those who have to compete with foolishly loaned money, i.e. a housing bubble. If Ryan1781, makes $45K a year and a stupid bank gives him a mortgage of $600,000 with no money down, all housing prices go up because there is an idiot with a lot of money to spend. Now Gameisrigged who makes $145K a year has a choice: 1) Borrow stupidly to compete with Ryan1781. 2) Borrow responsibly and get a crappy lower priced house in the bad part of town. 3) Rent.

In answer to your question...NO, I DON'T expect a person who knows nothing about how financing works to pay back a huge debt that is beyond their means. And, if I had access to their income records when they came to me with a request for a huge debt, I would have told them to hit the road, you're a bad credit risk. A fool and his money are soon parted. Would you make that loan?

"Again, your “stick it to the banks” mentality would be fantastic, in a perfect world."

Agreed.

Sheesh, Ryan. I just don't have the time or inclination to wade through your mess of strained analogies and strawmen. You don't seem to be getting my point at all. You act as though I am defending the banks, when I have written the exact OPPOSITE. You obviously see it as "justice" if hardworking taxpayers who pay all their bills have to cover the debts of irresponsible people who spent beyond their means. I don't think that's fair at all, so I guess we will have to agree to disagree.

Hey Ryan, here's another article about more court cases where houses were awarded back to the borrowers, who now do not have to pay their mortgage off:

http://dailybail.com/home/man-beats-bank-and-creates-mortgage-banking-mers-bomb-lost-p.htm

"Lost Paperwork Means Free Homes For Borrowers"

"The award of a title free of liens means that whoever owns the promissory note on the Draper property — likely a group of faraway investors — no longer has the right to foreclose to collect on a delinquent loan. Indeed, the townhouse owner has sold the property and kept the money. Those who own the promissory note probably don’t even know what occurred."

"The attorney for the man in Draper, Utah, says he has won two other cases this way, and another attorney in Utah got a default judgment giving title to borrowers who owed $417,000 on a home."

"That could mean in these cases that no one is in a position to try to collect because the actual notes are lost or destroyed, potentially making some promissory notes investors think they hold worthless."

Apparently this author doesn't believe it's going to be easy to collect on these loans - perhaps impossible. Still think it's going to be easy as pie? Because I haven't heard of any lenders getting any of these houses back yet after they've been awarded to the borrower, have you?

Everybody still having a chuckle over the idea of "free houses"? Not so funny anymore, is it?