Their own dealings may come back to haunt them

[evince]

http://www.nytimes.com/2008/07/27/bu...16b&ei=5087%0A

Many of the foreclosing Cos dont have proper documentation to prove they own the note.

[TRGLDTE]

That's true. The holders of the Collateralized Debt Obligations are holding derivatives based on the mortgages* held in the pool. What we are really talking about here is the promissory note and the security deed (deed to secure debt); very few states operate under a true mortgage.

The only way to transact (legally) a promissory note is to have the original signed "pen on paper" note. In a pure legal sense, only the holder of the physical note can foreclose. So, for instance, Deustche Bank, as the holder of a pass through certificate, (a CDO) does not have the same legal rights of foreclosure as would a bank that holds the note in its portfolio.

The reason that the State of Georgia added the proof of ownership requirement is because it is a non-judicial foreclosure state. "Do it right" up front rather than have to remedy through the court later.

[evince]

So the repackaging is coming back to haunt the intities that bought them.

Boy does deregulation cause big messes.

[uscitizen]

So we need to push to be sure our states all have real forclosure laws.

This is one of the little hidden aspects of this whole thing that the mortgage companies do not want us to know.

[TRGLDTE]

So the repackaging is coming back to haunt the intities that bought them.

Boy does deregulation cause big messes.

Yes, it is. The entity holding the original promissory note needs to do the foreclosure. That part has not changed. The 'new' problem is - where is the original note? Unless you have a really good cataloging system, which I doubt the 'bundlers' have, then there is a huge problem finding the requisite paperwork.

[evince]

Maybe that is one of the reasons the old laws worked so much better?

[TRGLDTE]

Maybe that is one of the reasons the old laws worked so much better?

The old laws matched the 'old' banking system from the days when local banks wrote and held the mortgage. Assignments were fairly rare until the depression, then the laws were revised to allow easier transfer from a defunct bank to its successors. Still, they were not designed for the current system.

I would not want to see these laws changed to validate the current bundling / swapping system. When that system breaks, it will need court actions to remedy on a case by case basis. Imagine the expense!

The practice of business should have been set-up to conform to the law from the start. That's not hard to do with bar code generators, bar code readers, and computers. It's a fairly simple logistics, storage, inventory tracking problem.

Run a bar code for each original and label it. Pack originals in boxes and seal: code and label box. Store box: scan in bin location. If you pull a document from a box - scan document, scan box, use 'remove/ edit content' function. These applications are OTS.

[TRGLDTE]

So we need to push to be sure our states all have real forclosure laws.

This is one of the little hidden aspects of this whole thing that the mortgage companies do not want us to know.

The current laws are fine. The onus of proof of 'ownership' of the debt instrument is on the party trying to foreclose. That's as it should be.

[evince]

[ame]http://en.wikipedia.org/wiki/GLBA[/ame]

[uscitizen]

The current laws are fine. The onus of proof of ownership is on the party trying to foreclose.

Only in some states if the one being foreclosed on knows their rights and can afford to fight it.
did you read the entire article ?

[evince]

The repackaging of the debt allowed by the repeal of these portions of Glass Steagal has proven to be a huge mistake and is the biggest underlying factor in this whole mess.
Well that and the Bush refusal to head off the mess with new regulations.

[uscitizen]

From Desh's link.

Meanwhile, consumer lawyers fear that borrowers are being pushed out of their homes by companies that have no right to do so. Such a prospect is particularly worrisome for residents in states that allow lenders to foreclose without court supervision, known as nonjudicial foreclosure states.

Georgia is one; its borrowers can lose their homes on the courthouse steps less than a month after foreclosure notices have been posted.

To try to protect its borrowers, Georgia just instituted a law requiring that lenders moving to foreclose on a borrower must file proof in county records that they own the underlying property before the home goes to foreclosure sale.

[TRGLDTE]

Only in some states if the one being foreclosed on knows their rights and can afford to fight it.
did you read the entire article ?

Yes, I read the whole thing. In most cases, it's a moot point to fight it. It's a technical issue in the law - the wrong party has brought suit. It is neither an absolution of the debtor from their obligation nor does it negate the fact that the loan is in default.

This is why Georgia added the 'proof' part to the law (reference to the article). There was a specific weakness there. I can only assume, without delving into each state's specific laws, that each state has some provision that there is proof of 'ownership' of the promissory note. That proof could be as simple as walking into the County Assessor's office and producing the original signed papers (and any assignments showing chain of ownership) before being allowed to file. The security deed and the assignments of the note are part of the public record of the county. Maybe a $25 fee for a 'chain' check or require a form of title search back to the origins of the note? it's pretty simple to enact / enforce.

[TRGLDTE]

From Desh's link.

Meanwhile, consumer lawyers fear that borrowers are being pushed out of their homes by companies that have no right to do so. Such a prospect is particularly worrisome for residents in states that allow lenders to foreclose without court supervision, known as nonjudicial foreclosure states.

Georgia is one; its borrowers can lose their homes on the courthouse steps less than a month after foreclosure notices have been posted.

To try to protect its borrowers, Georgia just instituted a law requiring that lenders moving to foreclose on a borrower must file proof in county records that they own the underlying property before the home goes to foreclosure sale.

There is nothing wrong with non-judicial foreclosure. It has worked well for decades in Georgia.

What they have to file is not proof of ownership of the property, but proof that they own the promissory note. You don't foreclose on property, you foreclose on the defaulted note. The security deed (deed to secure debt) is the instrument by which the noteholder takes possession of the property to satisfy the note. It it ties the note to the property.

In a Non-judicial state, you do not need a court order to take possession once the legal steps of foreclosing the note have been followed. Sometimes there is a need to file an ejection suit and get assistance from the sheriff's office.