" homeowners may have been making payments to the wrong party."

[dixiegrrrrl]

Testimony of Katherine Porter
Professor of Law, University of Iowa College of Law
to
Congressional Oversight Panel Hearing on TARP Foreclosure Mitigation Programs

full quote:

The implications of problems with transfer are serious.
If the trust does not have the loan, homeowners may have been making payments to the wrong party.

If the trust does not have the note or mortgage, it may not have standing to foreclose or legal authority to negotiate a loan modification.

To the extent that these transfers are being completed retroactively, it raises issues about honesty in creating and dating the assignments/transfers and about what parties can do, if anything, if an entity in the securitization chain, such as Lehman Brothers or New Century, is no longer in existence. Moreover, retroactive transfers may violate the terms of the trust, which often prohibit the addition of new assets, or may cause the trust to lose its REMIC status, a favorable treatment under the Internal Revenue Code.
Chain of title problems have the potential to expose the banks to investor lawsuits and to hinder their legal authority to foreclose or even to do loss mitigation.

Links:

1. Market-ticker.org which outlines the issue in the testimony:
http://market-ticker.org/akcs-www?post=170468

2. http://cop.senate.gov/hearings/library/hearing-102710-foreclosure.cfm
where you can download pdf of all the testimonies and where you can see a clip.

[rfranklin]

1. Time to put the screws to them...

Seems like all the D.C. and Wall Street types are so worried about keeping these bankers afloat. Yet, they have not and probably never will solve our unemployment problems.

I believe it is time to lance the boil, clean out the infection and start the healing.

[Curmudgeoness]

5. Disgusting analogy. I love it. nt

[Bigmack]

15. How about "drain the anal cyst..... " nt

[Uben]

2. So they should return all monies.....

...at least until the rightful party is determined.

[dixiegrrrrl]

3. Not highly publicized is that a very few homeowners have done just that.

Suing for back payments, using the courts for escrow until the servicer fails to produce the note.

I have been busy collecting information in a folder and I really need to sit down and read thru it all, but I do remember glancing at one court case.
Unfortunately, courts and judges vary from being accessories to needing education on the law, so the court results are mixed.Another type of lawsuit risk is that consumers are able to sue the current holder of their note for violations that occurred at origination. Normally, these complaints fail because the holder of the note is thought to be a "holder in due course," a person that receives protection from most of the claims that someone could bring against the originator of the note. However, if the notes do not meet the requirements of negotiable instruments, there cannot be a holder in due course. The person with the note merely is the possessor "bearer paper," and can be sued for all wrongs associated with that note contract.

added:

As the Market-ticker article reports: homeowners CAN sue:

Another type of lawsuit risk is that consumers are able to sue the current holder of their note for violations that occurred at origination.
Normally, these complaints fail because the holder of the note is thought to be a "holder in due course," a person that receives protection from most of the claims that someone could bring against the originator of the note. However, if the notes do not meet the requirements of negotiable instruments, there cannot be a holder in due course. The person with the note merely is the possessor "bearer paper," and can be sued for all wrongs associated with that note contract.

[JDPriestly]

4. I'm wondering what will happen if some lucky person pays off their loan?

Will they receive a good title? How will this work? How can a homeowner know, when he or she receives a reconveyance of the title to his or her home, that the title is good. I know all about title insurance, but I have also heard a rumor that some title insurance companies are refusing to insure certain reconveyances at this time.

And then, the question arises as to just how solvent the title insurance companies really are. How good is the title insurance?

I am wondering because if the liens on our houses were chopped up and sold to various parties, how can anyone be sure that every single one of the lienholders has been paid off satisfactorily prior to reconveyance?

[dixiegrrrrl]

8. We can't be sure anymore WHO has the right to give us the payoff note.

That is the problem.
The "trail" has been broken.
Nobody knows WHO the legal owner is, who owes what to who.

Right now, people facing bankruptcy or foreclosure where a court is involved, have the right to get their creditor to produce the note, to prove the foreclosure is valid or the bankruptcy court can add that creditor to the bills to be paid off.
NO note, no proof, no debt.

Those of us who are dutifully paying off our mortgages have a different issue: what grounds can we sue on?
Unjust enrichment?
Calls for a savvy lawyer and a willing judge.

Right now, the foreclosure issue is getting all the attention, and the trusts are suing the banks.
But those of us paying our monthly nut, have no guarantee we will get a valid note at the end of the payment schedule.

[Blue Meany]

6. Something similar happened in the Depression...

I have researched bank failures in one state during the Depression and found that banks were slicing up deeds and repackaging them and selling them then too, though not to the same degree or with fraudulent intent. Still, when banks went into receivership, it often took until well into the 1940s before the govt. appointed receivers could unravel who owned what and who was entitled to what. That was with comparatively simple and relatively honest transactions and complete records. I suspected much of this will never be sorted out by the courts and will require some kind of legislative remedy.

[dgibby]

7. I recently received a letter from Fannie Mae,

stating that they had bought my 2nd mortgage from Citibank, but that Citibank would continue to service my mortgage, and that all payments should be sent to Citibank.

I've never been late/missed any payments, and in fact, have an automatic deduction sent to Citibank from my credit union every month. Neither of my mortages are in arrears, and my house is not "under water". I also have a VA loan(first mortgage)with BoA.

No reason was given for why the mortgage was sold to Fannie Mae, but the whole thing makes me jumpier than a long-tailed cat in a room full of rocking chairs. I'm definitely keeping the letter in a safe place and scanning it into my computer.

[tridim]

9. My servicer did the same, and submitted the WRONG ADDRESS to Fannie.

I have no legal recourse (because I'm broke), but I'm sure now that they did that on purpose.

Fannie bought a mortgage that doesn't exist. Before that my servicer "bought" the same mortgage from WaMu for zero dollars.

The lawyers I've talked to think all of this evidence will present no problem whatsoever for my servicer's legal department. Said I will definitely lose my case because I don't have any money.

[dgibby]

13. So sorry to hear that.

Hope you find help somewhere, and soon.:hug:

[dixiegrrrrl]

10. Most mortgages have been sold to Fannie Mae.

Remember TARP?

The "mortgages" went to Fannie Mae, who paid the TBTF banks with TARP money.
Or rather, the Mortgages Backed Securities went to Fannie Mae.
And, as it turns out, to a whole bunch of other "investors" who now find they are holding worthless bonds backed by illegally signed over mortgages.
Yep, the banks sold more than one person the same "mortgage", and when person A is told that mortgage has defaulted,
it never occurs to him that person B is told the same thing about the same mortgage.

[Andy823]

11. Yep...

My nephew hasn't made a payment on his house for 3 years! His payments went up to over $2500.00 a month and he tried to refinance, get help from some of the programs they were running, and couldn't get anything done, so he just stopped paying. He figured they would reposes the house, but they never did! He got a lawyer last year to look at what he could do, and the lawyer told him to just stay put till they found out more about the loan and who had the mortgage. BOA bought out Country wide, his original mortgage holder, and he was told they would foreclose in August, but nothing happened. The lawyer says they can't produce the proper paper work so until that happens they can't foreclose! He is still there, but has moved most of his things into storage and is still waiting for them to foreclose! It's amazing just how messed up this whole housing thing has gotten when banks can't produce he proper papers in order to foreclose!

[dgibby]

12. My 1st mortgage was with Countrywide, now with BoA.

Just keeps getting worse and worse, doesn't it?

[OlympicBrian]

14. Uhoh

I thought some big names were just giving the "all clear" signal?

[dixiegrrrrl]

16. The take away message in this

is that ALL of the information about mortgage fraud was presented to the Congressional Oversight Hearing in April.!

thus, Congress KNEW at that time more than we did about the fraud, and the only "solution" was a hastily passed bill with secret votes ( the Notarization bill) which would have enabled the fraud even more.

Actions speak louder than words.

After the elections you can bet some more "helpful" solutions will be passed.