"Dave" wrote in message
...
On Wed, 24 Sep 2008 11:14:53 -0600, "Charles Momsen"
said:

With whom would you propose to negotiate the price?

The one holding the mortgage. Merrill Lynch just sold their mortgages for
22
cents on the dollar.

Demonstrating, of course, that you know nothing about the mortgage backed
securities market.

The sword has 2 edges:
Contesting a Foreclosure Lawsuit -- Who Owns the Mortgage?
April 22, 2008, 10:41 am
Posted by Admin in Legal Information
Rating: 0/5 Votes : 0

There has been such a backlash against the subprime mortgage market that
even homeowners in foreclosure have realized the fraud that has been
perpetrated on them. In such times of economic crisis and blatant
corruption, government representatives have little choice but to pretend
they are protecting the public from greedy mortgage companies and bad loan
products.
It is in this environment that some homeowners have begun to contest their
foreclosures and have actually had some lawsuits thrown out of court until
the bank can prove its case. The two most publicized cases have involved the
ownership of the mortgage paperwork and the lender having standing to sue
for foreclosure, and the underlying fraud of the loan contract invalidating
the entire agreement.

The first type of case, in which the homeowners ask for proof that the
foreclosing bank has the ability to sue, has certainly been a temporary blow
to the banks. One of the main reasons for inflating the subprime market was
so that loan originators could sell the mortgages to financial institutions
or other banks which could then sell the rights to the monthly mortgage
payment income to investors and transfer the responsibility to collect these
payments to specialized mortgage servicing companies.

The problem with this approach is that it has resulted in the slicing up of
the mortgage contract, with no party really having ownership of the original
paperwork. When homeowners fall behind, the servicer or trustee tries to
initiate lawsuit proceedings to sell the house at a foreclosure auction, but
judges are beginning to realize that neither of these parties originated the
mortgage and can not prove that they own the loan.

In order for a second bank or financial institution to have standing to
bring a foreclosure lawsuit into court, they must have been assigned the
mortgage. Because this was not done in many cases where mortgages were
originated and quickly sold off in large loan packages, banks do not have
signed assignment paperwork; and with the collapse of the housing market,
many of the subprime lenders have gone out of business, making it impossible
to contact the originating mortgage company.

This puts these mortgage loans into a kind of limbo, where the homeowners
are not making their payments but the banks can not prove they have any
rights to those payments anyway. Homeowners who argue this case have met
with some level of success so far, with the banks being forced to stop
foreclosure proceedings on the house until they can prove they were assigned
the loan from the originating company.

The only drawback to this victory for the homeowners is that these cases are
being dismissed without prejudice, meaning that the bank can begin the
lawsuit again if they can prove ownership of the mortgage. The judges are
not ruling on the merits of the case (whether the owners are behind and
their home must be auctioned to satisfy the debt), but only on the lack of
standing to sue -- if the bank can get an original assignment, they can
begin to foreclose again.

But in a mortgage environment where so many homeowners were given bad loans
that they did not deserve and banks are being bailed out by the public for
bad loans they never should have made, it is only fitting that the owners
should score a handful of victories in the courts. In the future, there is a
good possibility that judges will argue that banks do not need to own loans
to foreclose on houses, thereby erasing the legal standing defense of people
against corporations; but for now, homeowners have one more defense they can
use to stop foreclosure.