Since late 2006, 241 banks have either shut down or been absorbed by another bank. When some of these banks shut down it was the same day they ran out of money to fund loans. For whatever reason, maybe an investor backed out or something, but there were many times there was no warning. It happened a lot last Spring when guidelines changed.
Because of quick closures and banks selling loans to each other, not all of the banks have all of the paperwork. One case in point is a man from Boca Raton. (Every once in while my Spanish comes back. Boca Raton means rat’s mouth. Nice.)
Joe Lents hasn’t made a payment on his $1.5 million mortgage since 2002.
Hey, what about foreclosure you say?
“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.
WaMu couldn’t find the actual note that gave them legal control over the house. Without the note they could not do anything and he gets to keep the house for no payment. Talking to someone in the “know” he says that the banks will eventually find the paperwork most likely and this is a rare circumstance. But as they say in the story,
Each time the mortgages change hands, the sellers are required to sign over the mortgage notes to the buyers. In the rush to originate more loans during the U.S. mortgage boom from 2003 to 2006, that assignment of ownership wasn’t always properly completed, said Alan White, assistant professor at Valparaiso University School of Law in Valparaiso, Ind.
Some more interesting points,
- One lawyer had 300 client’s foreclosure dismissed or postponed in the past year, with about 80 percent of them involving lost-note affidavits.
- Lost-note affidavits are pattern and practice in the industry. They are not exceptions.
- Federal District Judge Christopher Boyko dismissed 14 foreclosure cases in Cleveland in November
- For about half of U.S. mortgages, there is no tracking mechanism.
There are some ethical question which you can ponder and peruse in the comment section of the article. As far as the legality of it, I am not sure especially since I am not a lawyer. Any lawyers want to weigh in on this?
A couple of questions I just thought about,
- How does he sell with the lien on the house?
- Does the lien still stand if the bank can’t prove the note?
I have to assume there is some lien or he would just sell, take his money and walk into the sunset.photo via http://www.flickr.com/photos/artchick2004/
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