Sliced, Diced and Flipped Mortgages May be a Blessing in Disguise for Consumers
The prevalence of flipping mortgage loans and chopping them up into securitized pools is providing an unexpected benefit for many homeowners facing foreclosure proceedings. As April Charney and other attorneys across the country have discovered, many mortgage lenders and purchasers, in their haste to flip notes, failed to attend to some little details like...maintaining records. Forbes reports that in an increasing number of foreclosure cases, mortgage holders are unable to demonstrate that they are the legal note holders.
Charney, a legal aid lawyer in Florida, has been able to stop many foreclosures because ownership wasn't properly documented. But Charney only discovered the problem after noticing that a large number of recent foreclosure cases had involved affidavits of lost notes--requests that the judge take the "owner's" word for the fact that it owns the loan, since documentation isn't available. That, it seems, is not a safe assumption, and consumer attorneys fighting foreclosure should carefully scrutinize the paper trail that proves ownership on the part of the plaintiff.
In addition to sloppy paperwork that makes ownership unclear, Charney and her colleagues across the country have also discovered that in some cases, notes were purchased illegally after the mortgage notes were already in default. In those circumstances, some courts may refuse to recognize the purchaser as the legal owner of the note.
In the lender-friendly state of NJ, a judge would not require the bank to provide documents which might hinder a foreclosing entity. The Fair Foreclosure Act was written to protect lenders and the foreclosure rescue scam operators are waiting in the wings. My house went to a scam operator by Order of the Court!!!