It seems chain of title issues are rearing their ugly head in foreclosures now (ohio ruling)

VexatiousLitigant · 11-15-2007, 10:14 AM

Quote:

A federal judge in Ohio has ruled against a longstanding foreclosure practice, potentially creating an obstacle for lenders trying to reclaim properties from troubled borrowers and raising questions about the legal standing of investors in mortgage securities pools.

Judge Christopher A. Boyko of Federal District Court in Cleveland dismissed 14 foreclosure cases brought on behalf of mortgage investors, ruling that they had failed to prove that they owned the properties they were trying to seize.

The pooling of home loans into securities has been practiced for decades and helped propel real estate prices in recent years as investors sought the higher yields that such mortgage trusts could provide. Some $6.5 trillion of securitized mortgage debt was outstanding at the end of 2006.

But as foreclosures have surged, the complex structure and disparate ownership of mortgage securities have made it harder for borrowers to work out troubled loans, in part because they cannot identify who holds the mortgage notes, consumer advocates say.

Now, the Ohio ruling indicates that the intricacies of the mortgage pools are starting to create problems for lenders as well. Lawyers for troubled homeowners are expected to seize upon the district judge’s opinion as a way to impede foreclosures across the country or force investors to settle with homeowners. And it may encourage judges in other courts to demand more documentation of ownership from lenders trying to foreclose.

roybean · 11-15-2007, 11:38 AM

If I am understanding correctly, this consists of one entity buying property and then quick deeding (or by other means) the property over to someone else, right? Then when a party tries to claim that they own the property it has exchanged hands so many times it is hard to distinguish who actually owns the home???

drivel · 11-15-2007, 11:44 AM

Quote:

Originally Posted by roybean

If I am understanding correctly, this consists of one entity buying property and then quick deeding (or by other means) the property over to someone else, right? Then when a party tries to claim that they own the property it has exchanged hands so many times it is hard to distinguish who actually owns the home???

No you aren't understanding correctly. Only the property owner can deed the property. The mortgage companies are defacto owners of the property by virtue of the mortgage lien and can only take title subsequent to the foreclosure.

The problem here is exactly the same thing with a multi-purchased debt. The debtor has no idea who to contact to attempt to work out the repayment of the obligation.

Hedwig · 11-15-2007, 01:15 PM

As I understand it, the mortgage companies sell portfolios of mortgages as investments, right? I believe they are packaged much like mutual funds, where you buy a share of the pool, and gains and losses are shared.

But since they are packaged and owned by numerous people, it's hard to tell who actually owns what.

Or am I confused, too?

VexatiousLitigant · 11-15-2007, 02:52 PM

Quote:

Originally Posted by Hedwig

As I understand it, the mortgage companies sell portfolios of mortgages as investments, right? I believe they are packaged much like mutual funds, where you buy a share of the pool, and gains and losses are shared.

But since they are packaged and owned by numerous people, it's hard to tell who actually owns what.

Or am I confused, too?

That seems to be what the problem is, more or less.

jlynn · 11-15-2007, 03:47 PM

I thought that was the whole purpose of mortgage servicers. They service your individual mortgage - accepting payments, escrow duties, etc.

Why would someone not know whom to contact in case of a foreclosure issue?

Loan Doctor · 11-29-2007, 08:57 AM

The current servicer of the loan is the company to deal with. That is the company that will arrange for the NOD (Notice of Default) to be sent/served.

You should first contact the company that you have been sending your payments to. If they have sold the servicing rights they have 30 days to notify you by mail of who the new servicing company is.

Charles

Hedwig · 11-29-2007, 09:07 AM

I don't think this issue is who is SERVICING the loan, but who OWNS the paper. Loans are bundled and sold as securities, so you could buy part of a portfolio. The problem, as I understand, is that the portfolios were sold like funds are, with many people each owning a piece. So, when the property is foreclosed, who actually OWNS the rights to the property.

I'm sure there is no question as to the servicing of the loan, only the ownership. They aren't the same.