Huff: WHo Owns My Mortgage

[Scotteq]

You guys have *got* to look at this - A gentleman put together a chart while trying to figure out who in hades owns his mortgage.


http://www.huffingtonpost.com/2010/11/16/mortgage-security-chart_n_784274.html

 

[werepossum]

I'm pretty sure that would be impressive except that even on a 24" monitor I can't read text that small.

 

[her209]

Hahaha... black hole.

 

[Scotteq]

Hahaha... black hole.

Yah! Hysterical!

There's even a Legend for the arrows! :awe:

 

[Uhtrinity]

I just got a mortgage last spring and it as already changed hands 3 times since then. Fortunately the terms are locked in.

 

[LegendKiller]

It's actually not that difficult to decipher.

The basic premise of securitization is that the isolation of loans from the bank's (or lender's) balance sheet will allow pricing of *only* those loans, rather than the bank in general. This has reduced risk-spreads on mortgages over the last 40 years and has streamlined financing. The last 5 years aren't the greatest indication of how well the system works, the prior 35 years is.

Ultimately, the payments are being routed correctly and people are paying down their mortgages or are being foreclosed upon.

This bunk about the note not following the mortgage is bunk. It hasn't largely been supported by case law. The banks can (and do) prove that they own the note, or the trust does, in many different ways. The note doesn't need to be an original.

As far as the robosigners, the people didn't pay. They know they didn't pay. The banks know they didn't pay. If you don't pay your contract says the bank can take the property.

 

[Jhhnn]

Heh. If I want to take something, anything, from somebody else that I claim to be mine, I must prove ownership, and the means required to do so vary from state to state. If state law requires that the original note must be produced to do so, that was known by the lenders or their agents prior to lending the money and securitization of the note. If they haven't preserved that note, then they're in violation of their fiducuary duty to the investors in the MBS in question.

This exists outside of all other considerations, particularly the usual moralizing about people not paying their mortgages. Defaults are and always have been part of the equation, something securitizers need to properly account for if they're to offer an honest product to investors.

Hmmmm.... maybe I've hit on something important, the whole idea of an honest product...

 

[LegendKiller]

Heh. If I want to take something, anything, from somebody else that I claim to be mine, I must prove ownership, and the means required to do so vary from state to state. If state law requires that the original note must be produced to do so, that was known by the lenders or their agents prior to lending the money and securitization of the note. If they haven't preserved that note, then they're in violation of their fiducuary duty to the investors in the MBS in question.

This exists outside of all other considerations, particularly the usual moralizing about people not paying their mortgages. Defaults are and always have been part of the equation, something securitizers need to properly account for if they're to offer an honest product to investors.

Hmmmm.... maybe I've hit on something important, the whole idea of an honest product...

Jhnnn...the number of foreclosures overturned due to a lost note are few and far between. Many times, a lost note affidavit with supporting evidence can provide proof for a claim. Other ways can be alternative documentation or payment proof.

This is a very complex situation that cannot be solved by internet wannabes, shady attorneys, or demagogues. There is significant case law, common law, and UCC that supports the securitization, payment, and ultimate foreclosure (if non payment) of mortgages, whether inside our outside of the MERS system and with/without the original notes.

That chart looks difficult to understand but I could sit down and explain it in lay-terms within 30min. I could then run down how many ways the internet crackpots are wrong about mortgages.

 

[bfdd]

Jhnnn...the number of foreclosures overturned due to a lost note are few and far between. Many times, a lost note affidavit with supporting evidence can provide proof for a claim. Other ways can be alternative documentation or payment proof.

This is a very complex situation that cannot be solved by internet wannabes, shady attorneys, or demagogues. There is significant case law, common law, and UCC that supports the securitization, payment, and ultimate foreclosure (if non payment) of mortgages, whether inside our outside of the MERS system and with/without the original notes.

That chart looks difficult to understand but I could sit down and explain it in lay-terms within 30min. I could then run down how many ways the internet crackpots are wrong about mortgages.

So all you're saying is I need a picture of the house note and me holding it and I can own any house out there? Awesome. I really don't see how a bank or financial institution can prove they own anything if they can't actually pony up a house note.

 

[LegendKiller]

So all you're saying is I need a picture of the house note and me holding it and I can own any house out there? Awesome. I really don't see how a bank or financial institution can prove they own anything if they can't actually pony up a house note.

Yeah, ok, that's your spin on what I said. There is quite a bit more involved, including several levels of review. They can prove it in many different ways.

 

[Jhhnn]

In normal times, courts have been entirely lax wrt the conduct of plaintiffs seeking foreclosures, and those plaintiffs didn't resort to the kind of practices we've seen recently, either. Defendants have discovered that plaintiffs sometimes can't prove standing, due to their own negligence, and therefore have no right to foreclose. The existence of the MERS entity, designed primarily as a tax dodge and a way to rapidly transfer theoretical obligations from one entity to another complicates the plaintiffs' positions in no small way.

Complicated? You bet, even more so than you represent-

http://www.scribd.com/doc/38654717/...Nation-Star-Aurora-Bac-Citi-Us-Bank-Lps-Et-Al

 

[LegendKiller]

In normal times, courts have been entirely lax wrt the conduct of plaintiffs seeking foreclosures, and those plaintiffs didn't resort to the kind of practices we've seen recently, either. Defendants have discovered that plaintiffs sometimes can't prove standing, due to their own negligence, and therefore have no right to foreclose. The existence of the MERS entity, designed primarily as a tax dodge and a way to rapidly transfer theoretical obligations from one entity to another complicates the plaintiffs' positions in no small way.

Complicated? You bet, even more so than you represent-

http://www.scribd.com/doc/38654717/...Nation-Star-Aurora-Bac-Citi-Us-Bank-Lps-Et-Al

Let me know when you're done with this. Then we can debate this a bit better.

http://www.americansecuritization.com/story.aspx?id=4492

These types of cases get pressed all of the time. MERS has been upheld in case after case and its legal foundations are OK.

 

[Jhhnn]

From the whitepaper referenced in your link, way down at the bottom-

The transfer and legal effectiveness of mortgage notes and mortgages are not diminished by the fact that the enforceability of mortgages, including the right to foreclose, is subject to the conditions precedent and requirements that are set forth in the particular mortgage itself and in the laws of the state in which the mortgaged property is located.

Which was what I offered in the first place. The disclaimer as introduction pretty much reveals hired guns trying to make their case, as well.

The results will vary state by state and case by case, but it's important to remember that the problems that exist are there because MBS originators created them in their haste to take their cut off the top and to put Loser! mortgage revenue streams into the hands of investors, rather than themselves. Even though MBS originators operate in the computer age, many state courts do not, and the statutes will sometimes demand plaintiffs produce things they simply do not have. MBS originators attempted to ignore state law, and that's now coming around to bite them in the ass. The conduct of their agents, foreclosure mills, have only made that worse.

Obviously, attempts to paper that over will meet with resistance.

There's a lot of spin from a lot of different positions, not all of which serves investor interests at all. Take this piece-

http://www.realclearmarkets.com/art...-gate_is_quickly_spinning_out_of_control.html

The foreclosure fiasco isn't so much institutionalized fraud as it is the product of (1) an unintended collision between the electronic world of Wall Street and the paper world occupied by our courts and (2) the sheer volume of foreclosure cases. If a fix is what we're after - and not taking a page from Saul Alinsky's Rules for Radicals in order to achieve a massive redistribution of wealth (that is, another failed effort at modifications, this time with massive principal writedowns) - Foreclosure-Gate can be resolved through thoughtful changes to state laws, increased lender vigilance and clamping down on foreclosure mill abuses. But for incumbents whose goal is not to let this latest crisis go to waste, keeping it going seems to be the order of the day.

The reference to principal writedowns is a dead giveaway, because those writedowns will occur in any case, once the market is truly flooded with foreclosed properties, with the only difference being who ends up with the property and who profits. Clearly, servicers and their lawyers profit more from foreclosure than from modifications, likely at the expense of investors.

 

[ebaycj]

Hmmmm.... maybe I've hit on something important, the whole idea of an honest product...

Honest products don't maximize profits. Ask Spidey.

 

[Darwin333]

It's actually not that difficult to decipher.

As far as the robosigners, the people didn't pay. They know they didn't pay. The banks know they didn't pay. If you don't pay your contract says the bank can take the property.

And what if the law states that something is required that the bank can not provide?

Personally, I am willing to make the banks a deal. They can forgo our due process if we can in turn do the same to them. Deal?

Betcha a few of the bastards will be "swinging" before the end of the week and as long as its in the contract its all on the up and up, right?

And for the record, some states DO require original wet ink notes. Your contract does not allow you to break state law, unless of course the banks agree to the above which I am perfectly fine with.

 

[Thump553]

It's actually not that difficult to decipher.

The basic premise of securitization is that the isolation of loans from the bank's (or lender's) balance sheet will allow pricing of *only* those loans, rather than the bank in general. This has reduced risk-spreads on mortgages over the last 40 years and has streamlined financing. The last 5 years aren't the greatest indication of how well the system works, the prior 35 years is.

Ultimately, the payments are being routed correctly and people are paying down their mortgages or are being foreclosed upon.

This bunk about the note not following the mortgage is bunk. It hasn't largely been supported by case law. The banks can (and do) prove that they own the note, or the trust does, in many different ways. The note doesn't need to be an original.

As far as the robosigners, the people didn't pay. They know they didn't pay. The banks know they didn't pay. If you don't pay your contract says the bank can take the property.

Good post (along with the later posting of the white paper) which I mostly agree with in principle, but the bolded part above is a substantial overstatement. A mortgage note is a negotiable instrument and as such it is transferred by negotiation and physical transfter. Think of cashing a paycheck, you transfer it by endorsing the back and handing it to the bank teller. That instrument now belongs to the bank.

There is an exceptional to the physical possession rule under the UCC for lost, stolen or (inadvertantly) destroyed notes. From personal experience, quite a few lenders have grossly abused this exception for decades in foreclosures in seeking to excuse their duty to prove to the court why they can't produce the physical original note.

Given the huge dificulty many people have these days confirming either which entity actually owns their note and mortgage-or more importantly, which entity is servicing them (ie, collecting the payments and negotiating forebearance agreements) it is my view that the courts should take a strict view on requiring the lender to produce the original note or a very good reason why they cannot.

Try to get a replacement for a bank check you inadvertantly destroy sometime and see the hoops the bank makes you jump through (usually including posting a bond) and tell me why what is good for the goose shouldn't be good for the gander.

In theory, the MERS system is a great idea to avoid unnecessary recording expenses, which can be quite big. But in practice it's way too vague right now.

BTW I had a lot of involvement in representing lenders in foreclosures in the late 70s and early 80s. The whole robosigning thing is nothing new by a long shot-but as LegendKiller correctly points out, it is nearly always meaningless and causes no harm to the homeowner.

 

[Genx87]

I never really understood the big deal about this topic nor why people are up in arms about robo signers. The news pieces I watch on this all have a common theme. The people stopped making payments on their mortgage and they admit they still arent paying. Why does it matter who owns the note or if somebody down in an office signed off on starting foreclosure proceedings?????

 

[WHAMPOM]

I never really understood the big deal about this topic nor why people are up in arms about robo signers. The news pieces I watch on this all have a common theme. The people stopped making payments on their mortgage and they admit they still arent paying. Why does it matter who owns the note or if somebody down in an office signed off on starting foreclosure proceedings?????

Legal procedure?

 

[spacejamz]

Legal procedure?

Will these legal procedures still allow these deadbeat mortgagors who haven't made a mortgage payment in quite some time (in over a year in most cases) to keep the house?

The answer to this rhetoric question is NO by the way...

 

[Darwin333]

I never really understood the big deal about this topic nor why people are up in arms about robo signers. The news pieces I watch on this all have a common theme. The people stopped making payments on their mortgage and they admit they still arent paying. Why does it matter who owns the note or if somebody down in an office signed off on starting foreclosure proceedings?????

That "due process" thing?

 

[Darwin333]

Will these legal procedures still allow these deadbeat mortgagors who haven't made a mortgage payment in quite some time (in over a year in most cases) to keep the house?

The answer to this rhetoric question is NO by the way...

Why is that relevant to the question "should banks be exempt from following the law and have the ability to deprive people of due process"?

 

[Genx87]

Legal procedure?

What about it? What is illegal about iniating foreclosure proceedings on a property that hasnt had a payment made on it?

 

[Genx87]

That "due process" thing?

How is their due process being hampered by a robo signer and not knowing who owns their note?

 

[Darwin333]

Yeah, ok, that's your spin on what I said. There is quite a bit more involved, including several levels of review. They can prove it in many different ways.

Yup, we have seen some of those "reviews". In one case some schmuck was a VP of 7 or 8 banks at the same time. I can see why he was in such demand though, given his extensive experience as a food server prior to working for the banks.

Serious question, what do you think would happen to me if I brought a bunch of papers to the court and swore that I personally verified that A, B, and C was included in those papers and after it was found that none of the above was how I swore it to be I told them that I didn't even bother to look?

I'll even make it multiple choice for you, do you think the judge would:

A. Laugh it off and grant me the decision I was seeking
B. Tell me to go back and really look this time and reschedule the court case
C. Throw me the hell out of his/her courtroom and rule in the other persons favor
D. Instruct the bailiff to arrest me for perjury

 

[spacejamz]

Why is that relevant to the question "should banks be exempt from following the law and have the ability to deprive people of due process"?

What due process is being taken away? By the time these robo signings are being done, these homeowners have already seriously defaulted on their loan and probably have no chance of coming up with the money to bring it current so they can move back in.

This whole 'who owns' the mortgage BS just boils down to which investors really got shafted by the homeowner who didn't make their payments...They can deliberate that amongst themselves. The homeowner is out of the picture at this point so please don't cry that these homeowners are not being treated fairly...