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Old 10-18-2010, 03:16 PM   #81
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I think itís a giant PITA and greatest benefit will be to lawyers and deadbeats, but the banks will manage.
Luckily many of those fine institutions have already employed platoons of people who can sign paperwork really quickly...
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Old 10-18-2010, 06:33 PM   #82
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"To repeat: if the chain of title of the note is broken, then the borrower no longer owes any money on the loan."


This is the sort of arrant nonsense that lands the gullible in a heap of trouble. Typically, there are two separate instruments involved when one obtains a loan secured by a mortgage -- the first is the promissory note, which says essentially "I owe Bank X $1000". The second is the mortgage deed, which says essentially "to secure my obligation under the promissory note, I grant a mortgage on my house". Typically, they are both owned by the same party. When things are screwed up, they can become separated.

Hence, one seeking to enforce the promissory note may find they are not the owner of the mortgage deed. The noteholder can remedy the problem through the means suggested above and, once it obtains the mortgage deed, commence a foreclosure. But, importantly, the holder of the defaulted note need not do so. It can instead, commence an ordinary contract action against the borrower and obtain judgment on the note itself. It may then enforce that judgment by executing on any unencumbered property of the borrower. This is not the best result for the lender, but it is possible. Importantly, the borrower always owes the money to the current holder of the note, whoever that may be.* It is dangerous to give people the impression they are off the hook when there is a defect in the chain of title. They are never off the hook.

It is also important to note that even a mortgage that has never been filed on the land records can still be enforced against the borrower. Filing merely protects the lender against subsequent lienors by establishing priority in time. Again, the borrower is never off the hook.

I don't know what would possess someone to peddle such garbage. It is really dangerous.

* Note: this assumes the current holder is the holder in due course. If not, the last legitimate holder in due course can enforce the note. In any event, it will eventually be sorted out and, as noted, the obligation never just disappears.
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Old 10-18-2010, 07:19 PM   #83
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I don't know what would possess someone to peddle such garbage. It is really dangerous.
John Mauldin used to write useful stuff, but now he's passing on hearsay from his fishing buddies... and asking them to check in with him if they want credit?!?
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Old 10-18-2010, 07:34 PM   #84
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I don't know if this has already been posted, and I'm too lazy to check, but this was kind of interesting. Don't know if all, or any, of it is true. Hope not.

The Subprime Debacle, Act II -- Seeking Alpha
This is just a cleaned up version of the link I posted.
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Old 10-18-2010, 07:39 PM   #85
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John Mauldin used to write useful stuff, but now he's passing on hearsay from his fishing buddies... and asking them to check in with him if they want credit?!?
Yeah, I'm really shocked that John Mauldin would peddle such obvious garbage. It didn't sound right to me when I read it.

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Old 10-18-2010, 08:39 PM   #86
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Well, luckily BofA has taken the initiative to get things rolling in Hawaii again, as well as 22 other states.

Bank of America resumes Hawaii foreclosures | Pacific Business News
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Bank of America Corp. said Monday that it has completed reviewing its foreclosure process in 23 states, and has begun preparing 102,000 foreclosures to be resubmitted in the courts. The company said in a statement that it expects to resubmit the first of the foreclosure affidavits by Oct. 25.
I wonder how long it took their reviewer to sign off on all those foreclosure packages?
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Old 10-18-2010, 10:16 PM   #87
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Originally Posted by Gumby View Post
"To repeat: if the chain of title of the note is broken, then the borrower no longer owes any money on the loan."


This is the sort of arrant nonsense that lands the gullible in a heap of trouble. Typically, there are two separate instruments involved when one obtains a loan secured by a mortgage -- the first is the promissory note, which says essentially "I owe Bank X $1000". The second is the mortgage deed, which says essentially "to secure my obligation under the promissory note, I grant a mortgage on my house". Typically, they are both owned by the same party. When things are screwed up, they can become separated.

Hence, one seeking to enforce the promissory note may find they are not the owner of the mortgage deed. The noteholder can remedy the problem through the means suggested above and, once it obtains the mortgage deed, commence a foreclosure. But, importantly, the holder of the defaulted note need not do so. It can instead, commence an ordinary contract action against the borrower and obtain judgment on the note itself. It may then enforce that judgment by executing on any unencumbered property of the borrower. This is not the best result for the lender, but it is possible. Importantly, the borrower always owes the money to the current holder of the note, whoever that may be.* It is dangerous to give people the impression they are off the hook when there is a defect in the chain of title. They are never off the hook.

* Note: this assumes the current holder is the holder in due course. If not, the last legitimate holder in due course can enforce the note. In any event, it will eventually be sorted out and, as noted, the obligation never just disappears.
Mostly agree except that state law may require an election that to proceed on the note alone discharges the security. Otherwise the anti deficiency statutes would be ineffective. More often the nonrecourse provisions are written into the note, which makes it unenforceable in an ordinary in personnam contract action
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Old 10-19-2010, 05:48 AM   #88
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Mostly agree except that state law may require an election that to proceed on the note alone discharges the security. Otherwise the anti deficiency statutes would be ineffective. More often the nonrecourse provisions are written into the note, which makes it unenforceable in an ordinary in personnam contract action
The election of remedies issue was what I was hinting at when I said that it was less than ideal for the holder to proceed on the note alone, but my post was already filled with enough jargon to choke a horse. I must admit that I speak from the perspective of living and practicing in a recourse state, so I didn't consider that last point.
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Old 10-19-2010, 12:02 PM   #89
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What is it about the 23 states that allows them (BofA) to proceed?
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Old 10-19-2010, 12:07 PM   #90
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And it might really help the folks trying to sell their houses that NEVER had a foreclosure, because buyers might not want to touch foreclosed properties for a while until title issues are well settled. So non-deadbeat homeowner/sellers might be helped temporarily.

Audrey
It may be that title insurance will be unavailable for foreclosure properties until this mess is settled. Absent a clear court-approved title on a foreclosure a Title-insurance company would be nuts to write a new policy. The liability otherwise would be tremendous.
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Old 10-19-2010, 12:19 PM   #91
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What is it about the 23 states that allows them (BofA) to proceed?

United States Map of Title Theory States and Lien Theory States; What's the difference between a Title and a Lien State? Like politics and real estate, all foreclosures are local. BofA is restarting foreclosures in judicial foreclosure states. Actually, I think the problem is more acute in nonjudicial foreclosure states, where sloppy practices and MERS issues might be more problemmatic since a judge is not involved in deeding the property by foreclosure sale in those states. I wouldn't want to provide title insurance in those nonjudicial foreclosure states until a lot of the dust has settled!
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Old 10-19-2010, 12:40 PM   #92
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What is it about the 23 states that allows them (BofA) to proceed?
You mean the states where B of A is claiming it can start submitting affidavits next week?
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Old 10-19-2010, 11:45 PM   #93
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They can start submitting affidavits any time, whether or not the judges accept them is another matter.
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Old 10-20-2010, 05:13 AM   #94
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They can start submitting affidavits any time, whether or not the judges accept them is another matter.
Maryland Court Approves New Foreclosure Rule

Updated: Tuesday, 19 Oct 2010, 10:56 PM EDT
Published : Tuesday, 19 Oct 2010, 3:16 PM EDT
BY MELANIE ALNWICK/myfoxdc
ANNAPOLIS, Md. - The Maryland Court of Appeals has approved a new rule for dealing with foreclosure cases.
The rule could require lenders to prove the facts in their foreclosure documents, if a judge has reason to doubt their accuracy.
Last week, the Maryland Judiciary Rules Committee sent a letter to the Court of Appeals asking for the emergency ruling because evidence of robo-signing on foreclosure documents, "has shaken the confidence that the courts have traditionally given these kinds of affidavits.
The plan is to set up special masters or examiners (qualified Maryland lawyers) to review the suspect cases. Court costs will be paid by the lender or person who brought the case.
Court testimony revealed that lenders have been scrambling to cover their tracks. In Prince George's County alone, 4400 corrective affidavits have been filed, which essentially admit to the court that the original signatures were not accurate.
"The use of bogus affidavits,..." the letter reads, "...constitutes an assault on the integrity of the judicial process itself."
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Old 11-03-2010, 03:23 PM   #95
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I agree... and I don't think my post said otherwise...

I am just guessing here, but I would think that SOMEONE filed a lien at some point in time.... I think the problem is that Bank A filed the lien, then put the loan in MERS... sold it to Bank B who did not file, sold to Bank C who did not file, sold it to consolidator Z who did not file, who sold it to Trust ABC who did not file... and now the trust wants to foreclose and the courts say 'you don't own this mortgage... Bank A does...'



As for people who say that there was a foreclosure on a paid off mortgage... can you give links I still have not seen any proof of this.
OK>>>>> finally saw one... someone who has all the docs to show he refinanced and still the bank tried to foreclose...

Hope he gets a decent settlement for his troubles...

Loren Steffy: Texas case shows truth about mortgage issues | Business: Loren Steffy | Chron.com - Houston Chronicle
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Old 11-03-2010, 07:30 PM   #96
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OK>>>>> finally saw one... someone who has all the docs to show he refinanced and still the bank tried to foreclose...

Hope he gets a decent settlement for his troubles...

Loren Steffy: Texas case shows truth about mortgage issues | Business: Loren Steffy | Chron.com - Houston Chronicle
I agree he needs to get a nice big check and apology from BofA. This situation is just so ugly. I am still holding on 3 banks stocks (WFC, USB, BBT) because I think they are the best of bad lot. I am seriously wondering though if Banks aren't going to take another huge hit as reality set in and we find they idiots lost the paperwork on billions of dollars worth of houses and now can't foreclose.
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Old 11-04-2010, 07:02 AM   #97
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...we find the idiots lost the paperwork on billions of dollars worth of houses and now can't foreclose.
I don't think foreclosure will be an issue. It is just the extra costs of processing the paperwork that will further erode their income.
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