Federal court ruling stems foreclosure cases

[Robbien]

Source: Thomas Ott, Plain Dealer Reporter

A Cleveland federal court ruling that has the potential to block foreclosures across the country looks as if it is already doing that in the court where the decision was written.

And the bandwagon may be just starting to roll.

The federal court averaged 100 new cases a month before judges recently started insisting that banks provide up front a document giving them authority to collect loans made by other lenders and held by investors. As of Friday, the number of new filings in December was two.

Foreclosures are rare in federal courts but zoomed in Cleveland's in the last two years as banks seized a quicker alternative to a clogged Cuyahoga County system. Foreclosures are mounting nationwide, and filing could get tougher throughout the country if state courts adopt the federal ruling. Judges in three Ohio counties followed the federal court's lead without being asked, said Nadine Ballard, chief of Dann's consumer protection unit.

Forcing banks to get the paperwork, known as an assignment, could hamstring a high-volume industry that prefers to transfer loans electronically, said Cleveland State University Law Professor Kathleen Engel.

Read more: http://www.cleveland.com/news/plaindealer/index.ssf?/base/cuyahoga/1198575170251740.xml&coll=2

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If a bank is trying to grab someone's home they should have the paperwork to back it up. It is strange that courts are awarding damages without such proof.

[salin]

1. Interesting twist.

The whole process of bundling the mortgages and selling them in batches as securities still boggles my mind (in terms of fully understanding who owns what) - where does the paperwork go/land when they have traded hands so many times?

[PSPS]

2. And there's the rub

When required to provide real documentation of these "loans," very few can be provided. Once they're bundled and funneled into the pyramid, they practically vanish. In a way, these loans are really "owned" by potentially thousands of different "investors." When this scheme was put together, it certainly wasn't with any kind of recourse in mind. The up-front profits from the bundlers has long since been scurried away in offshore banks.

I've heard that if this demand for proof gains traction, many of these loans could simply be retired.

[papau]

3. Not retired IMO - but bank last holding loan before Securitization will be only one able to foreclos

this is the standard "other party risk" (meaning putting your trust in the Bank selling the loans in a Securitization) that folks pretended did not exist - despite literature fully describing the risk.

The investors can not pretend they were not aware of the risk.

[jwirr]

4. Too bsd they couldn't have retired them as bad debt when the

buyer was losing their home.

[customerserviceguy]

5. This would be rare

I used to be in title insurance, and I don't ever recall any Federal proceeding to foreclose on real property. Also, this gimmick won't work in states that use non-judicial foreclosures under the terms of a Deed of Trust, there's no court involved in the process.

[Sen. Walter Sobchak]

6. here is a list,

Both processes are available in Alabama, Arizona, Maryland, Michigan and South Dakota depending on the loan.

Judicial Forclosure States:

Alabama
Arizona
Arkansas
Connecticut
Delaware
Illinois
Indiana
Iowa
Kansas
Kentucky
Lousiana
Maryland
Michigan
Montana
Nebraska
New Jersey
New Mexico
New York
North Dakota
Ohio
Oklahoma
Pennsylvania
South Carolina
South Dakota
Utah
Vermont
Washington
Wisconsin

Non-Judicial Forclosure States:

Alabama
Alaska
Arizona
California
Colorado
Florida
Georgia
Hawaii
Idaho
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Nevada
New Hampshire
North Carolina
Oregon
Rhode Island
South Dakota
Tennessee
Texas
Virginia
Washington
Washington (District of Columbia)
West Virginia
Wyoming