Choose Your Lifestyle




Foreclosure Issues – Who has the real note?

Bloomberg article points out a new crisis in the mortgage world: judges in at least 5 states have stopped foreclosure proceedings because the lender has been unable to produce an original mortgage note.

Once upon a time, loans were made by local banks to people that they knew and trusted, for properties that they could see and touch. If the loan went bad, the local bank suffered. Scroll forward to the 2000s: many loans are sold as soon as the mortgage is closed. It may change hands several times, and ultimately wind up in a massive bundle of loans that are "securitized" and sold to thousands of investors.

Who owns the mortgage note?  Where is the original mortgage note? Loans were being given out so loosely and so quickly  that the paperwork often didn’t go with it. Many companies were sold, closed or have filed bankruptcy. Where’s the original paperwork?

Plaintiffs (those initiating the foreclosures) are often been successful by filing a "lost-note affidavit" or a copy of the note. Homeowners who have objected have often successfully staved off the foreclosure. Now many judges are becoming proactive and telling plantiffs – don’t bother trying to foreclose without producing the original mortgage note.

Bloomberg reports that "more than $2.1 trillion, or 19%, of outstanding moretgages have been bundled into securities."

How now, brown cow?

Print Friendly, PDF & Email

Comments are closed.

Copyright © 2007 Florida Simms     Agent Login     Design by Real Estate Tomato     Powered by Tomato Blogs