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Poetic Justice strikes Banksters: Judges say, "No tickee, no forclosee."


               
2008 Feb 22, 5:08am   27,241 views  146 comments

by HARM   follow (0)  

Judge Smales
Judge Smales: "You'll get nothing and like it!"

Banks Lose to Deadbeat Homeowners as Loans Sold in Bonds Vanish

Some highlights:

Feb. 22 (Bloomberg) -- Joe Lents hasn't made a payment on his $1.5 million mortgage since 2002.

That's when Washington Mutual Inc. first tried to foreclose on his home in Boca Raton, Florida. The Seattle-based lender failed to prove that it owned Lents's mortgage note and dropped attempts to take his house. Subsequent efforts to foreclose have stalled because no one has produced the paperwork.

...Judges in at least five states have stopped foreclosure proceedings because the banks that pool mortgages into securities and the companies that collect monthly payments haven't been able to prove they own the mortgages.

...Each time the mortgages change hands, the sellers are required to sign over the mortgage notes to the buyers. In the rush to originate more loans during the U.S. mortgage boom, from 2003 to 2006, that assignment of ownership wasn't always properly completed, said Alan White, assistant professor at Valparaiso University School of Law in Valparaiso, Indiana.

"Loans were mass produced and short cuts were taken,'' White said. "A lot of the paperwork is done in the name of the original lender and a lot of the original lenders aren't around anymore.''

...When the mortgage servicers and securitizing banks that act as trustees of the securities fail to present proof that they own a mortgage, they sometimes file what's called a lost-note affidavit, said April Charney, a lawyer at Jacksonville Area Legal Aid in Florida.

Nobody knows how widespread the use of lost-note affidavits are, Charney said. She's had foreclosure proceedings for 300 clients dismissed or postponed in the past year, with about 80 percent of them involving lost-note affidavits, she said.

"They raise the issue of whether the trusts own the loans at all,'' Charney said. "Lost-note affidavits are pattern and practice in the industry. They are not exceptions. They are the rule.''

"Lost-note Affidavits". Add that to "Bandos" as a nominee for best new bubble buzzword of the year.
HARM

#housing

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1   Claire   @   2008 Feb 22, 6:00am  

Well, on the one hand you feel some glee that the greedy banksters are being forced to produce the paperwork and get their acts in order,

but on the other hand I am pissed that the guy bought a $1.5 million house and is welching on the deal he made when he borrowed the money

- it's not like it's a little old lady in a $100,000 property or a family of four near the proverty line that is trying to hold onto their property.

At some point in time, could he claim the property free and clear as in "homesteading"?

2   HeadSet   @   2008 Feb 22, 6:14am  

At some point in time, could he claim the property free and clear as in “homesteading”?

I would be in favor of a 100% tax on any gains from acquiring a house free and clear because you stopped paying on a loan. Tax due as 100% of the unpaid balance of the welched loan. Use the proceeeds to help fund the inevitable bailout.

3   HARM   @   2008 Feb 22, 6:15am  

@Claire,

I've got no love for obvious system-gaming sleazeballs like Joe Lents. However, the idea that it's A-ok to be so f**in irresponsible and cavalier to lose the deed to a house, then expect to be able to foreclose & evict the occupants at will is ludicrous.

Banksters have been playing fast and loose with the rules for years because it was so (short-term) profitable for them. Now, the "efficiency above all else" chickens have come home to roost and it's creating real headaches for them.

Tanta over at CalculatedRisk has been beating this drum for some time now, but to see it play out in real time is just priceless.

4   HARM   @   2008 Feb 22, 6:27am  

I had a friend a couple years back who got a NOD on his house, despite having dutifully paid up his mortgage by the 1st of each month. Took him a little investigating, but it turns out the originating lender had sold it downstream and it changed hands several times among various MBS servicers.

The note-holder is required by law to notify the mortgagor of the change and provide a new mailing address to send the checks to, but --surprise, surprise-- they played fast and loose, cuz' due diligence would cost them money 'n cut into profits 'n stuff.

Funny thing is, his checks were still being cashed by the old servicer, not returned uncashed as they should have been. So, all the while he thought he was current, the new servicer was marking him delinquent. Even better, it dinged his credit rating and he had to hire a lawyer in order to fix things and recover his wrongly-cashed mortgage payments.

Joe Lents and these corporate sleazebags deserve each other.

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