Where are the Mortgage Notes?

[TJ_98370]

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This situation is almost funny -



Feb. 22 (Bloomberg) -- Joe Lents hasn't made a payment on his $1.5 million mortgage since 2002.

That's when Washington Mutual Inc. first tried to foreclose on his home in Boca Raton, Florida. The Seattle-based lender failed to prove that it owned Lents's mortgage note and dropped attempts to take his house. Subsequent efforts to foreclose have stalled because no one has produced the paperwork.

``If you're going to take my house away from me, you better own the note,'' said Lents, 63, the former chief executive officer of a now-defunct voice recognition software company.

Judges in at least five states have stopped foreclosure proceedings because the banks that pool mortgages into securities and the companies that collect monthly payments haven't been able to prove they own the mortgages. The confusion is another headache for U.S. Treasury Secretary Henry Paulson as he revises rules for packaging mortgages into securities.

``I think it's going to become pretty hairy,'' said Josh Rosner, managing director at the New York-based investment research firm Graham Fisher & Co. ``Regulators appear to have ignored this, given the size and scope of the problem.'' ......
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[rose-colored-coolaid]

[sniglet]

As I've mentioned on other threads, what happens to these homes now that the lenders have failed to provide any proof they hold the mortgage note? Can't the borrowers have the court vacate their mortgage?

Some people I have talked with have suggested that the documentation does exist, and that it will just take the servicers more time to put it together. I really wonder if this is true. Many of the articles we are now seeing on this problem seem to show the lenders have went to quite a bit of effort to try and demonstrate they own the note, to no avail. Hey, if some of the key documentation has been destroyed as the note changed hands, and some parties in the chain of custody went bust, then maybe it will be utterly impossible for lenders to ever demonstrate legal ownership of the note in some cases.

Which brings me back to my original point: what happens to homes where the lender is incapable of proving ownership of the mortgage note? I can't believe these places are forever to be stuck in perpetual limbo, unable to be sold, or anything, since the mortgage is owned by some otherworldly entity that can never be located.

I definitely think this could be a great opportunity for entrepreneurial laywers, who contact all the people who have mortgages in pools that are prooven to be poorly documented, and sign them up for contigency fees if the lawyer can successfully get the mortgage vacated. Why wait until you go into foreclosure to call the lender's bluff, and make them prove they own the note? If you already know your lender most likely doesn't have good documentation (e.g. because there have been other cases in your mortgage pool where the lender failed to provide adequate information), then why not force your lender to prove their bona fides immediately?

Stay, don't pay! That's the new mantra. There is no need to walk away if your lender doesn't even have legal ownership of your mortgage.

[rose-colored-coolaid]

[biliruben]

As usual, quells the hysteria.

She makes a good point that it's hard to root for the deadbeat in this case.

And it sounds like legitimately losing the note has a fix. You just attest that you looked real hard for it, couldn't find it, and send a copy instead.

The problem here is that they lied about looking real hard for it and the dude has too much time his hands, a background is scumbaggery, and the resources to hire a good lawyer.

This is not an every-man solution.

[TJ_98370]

biliruben,

Thanx for the link. Tanta really put the story in a different light.