Archive for the ‘Subprime Mortgage Market’ Category

Make Certain The Bank Owns Your Loan If It Is Suing For Foreclosure

Thursday, September 29th, 2011

Among the a lot more creative defenses to a foreclosure lawsuit that has surfaced in the past year is that of requesting the foreclosing bank to prove that it owns the mortgage note and has standing to sue the homeowners. In the vast majority of foreclosure actions, banks do not produce the original note, instead relying on the ignorance of homeowners not to challenge the bank’s positions.

But using the and investing that went on during the boom years of the subprime mortgage market, several of these loans have already been sliced up and sold off piece by piece, packaged into mortgage-backed securities and sold to hedge funds, pension funds, as well as other investors. Actually, the originating mortgage corporations may possibly now be absolutely out of company, with the collapse with the subprime industry claiming more than 250 lenders so far.

So the loans were originated by a company that is now out of small business, and then it was sliced up as well as the rights to numerous parts of the mortgage were sold to other organizations. But so that you can sue for foreclosure, the bank initiating the lawsuit must have been assigned the mortgage, and investors in the mortgage-backed securities are not even assigned ownership in a distinct property unless and until the homeowners fall behind on the payments. They have simply been bundled up into one massive pool of mortgages with no particular owners of any particular note.

Therefore, the businesses that invested in these mortgage securities had been not parties to the original transaction — they never ever participated directly inside the origination with the mortgage nor its subsequent sale. Investors are merely assigned to certain mortgages right after the reality, and there was no true sale of the security to the investors, which is an element of a valid securities sale. Investors and banks, it seems, can not prove the own the mortgages, can not prove that they had been assigned a particular mortgage that they are now suffering harm from its default, and can not show that they even bought a legitimate security.

And these are the corporations which are presuming to sue homeowners for foreclosure! Right after performing every little thing they could to induce folks into fraudulent loans and limit their very own exposure to the inevitable defaults, banks are discovering that all of these shenanigans have only insulated them against actual ownership of the loan. So, due to the fact lenders rely on the ignorance of homeowners to foreclose anyway, this really is the defense they’ve turned to for the majority of foreclosure instances.

Several lenders are now submitting an affidavit towards the courts that they do not own the original loan but they swear they have standing to complain against the homeowners. Essentially, they are just requesting that the judge take it on their word that they’re able to sue for foreclosure and are counting on homeowners not challenging this position. Regrettably, few homeowners read the foreclosure paperwork or hire an attorney to defend them, so they do not understand just how shaky the bank’s lawsuit truly is.

This is just one far more vitally important reason that homeowners really should read the paperwork they are sent by their lenders and challenge every thing that appears unfair to them. Especially if the mortgage corporation is claiming that they’ve the proper to sue but can not prove they’ve that suitable, borrowers could wish to consult a contract attorney who can assist them defend against the . Such a legal defense might only for a short time frame, but it is as much as the banks to prove homeowners ought to lose their homes — not for homeowners to supplicate themselves in the feet of predatory banks and corrupt judges.

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