Mortgage Nightmare Deepens--"Who Owns Your Note?"
Thursday, October 14, 2010 at 11:42AM Tom Ice Part 1
Tom Ice Part 2
A record 1.2 million U.S. homes are expected to be taken over by banks this year, up from 1 million last year and 100,000 in 2005, real estate data company RealtyTrac Inc. says.
Faced with a rising tide of foreclosures, lenders employed so-called "robo-signers" -- middle-ranking banking executives who signed thousands of affidavits a month claiming they were knowledgeable of the cases.
However, some lenders, prodded by legal challenges, now say officials were not aware of details in all of the cases and vow to resubmit them. It is unclear how many cases are involved but it is believed to be in the tens of thousands.
The securitization of home loans meant many have been sold off to other investors. Banks still own some, but frequently serve as loan servicers on behalf of the actual owner, whether it is another bank or an investor pool.
Some mortgages can be tracked in an electronic system known as MERS, or the Mortgage Electronic Registration Systems, that traces transfers among member banks. But the mechanism is not fully reliable, Ice said.
A recent sample among some 400 foreclosure cases Ice's law firm is handling revealed 71 percent with possible discrepancies in detailing the owners of clients' loans.
Scott talks with Florida attorney Tom Ice who has been involved in some of the legal challenges.
Reader Comments (2)
does the homeowner hold title?
Homeowners think they do. I hesitate to say that, because of the shenanigans, NO ONE holds title. But that's more and more what it is looking like. "Homeowners" may continue paying mortgages--even to the wrong entity--if they think they are at least "doing the right thing" to preserve title in themselves.
But I don't think they have title. If I were an investor in a REMIC, I would argue that homeowners do not have title and that it is the REMIC which holds title. I would argue this if I were trying to get money out of the REMIC because the homeowner is no longer paying on the mortgage. OK fine, but I don't want to sue a gazillion homeowners. I want to sue REMIC, arguing that the homeowner, the entity to whom the mortgage payment was being made, and REMIC conspired to vest title in REMIC. So I, the investor, want the property, and the REMIC holds title to it as a matter of law.
In short, look at things from the point of view of a REMIC investor who is suddenly not getting income anymore.
This is the next big shoe to fall.