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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.
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.
"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 dealâ€, 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?
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http://www.palmbeachpost.com/money/real-estate/court-rules-against-banks-in-pivotal-mortgage-case-1171822.html
With most of the residential mortgage were securitized, most lenders will have difficult time to prove their ownership of the mortgage. If banks cannot prove they own the mortgage, there is no point to pay since one can get the home free. With most of the court rule the case base on precedence, the banks can be in trouble. It is a moral hazard but nowadays, not much moral value are left when confronting with $$, especially in the US.
This really spell a big big future trouble for banks.
#housing