WHO'S ON FIRST?
(with apologies to Abbott and Costello, who's famous routine
is the only comedy routine in the Baseball Hall of Fame)
Commentary by Tom Brodersen
Paradise News May 2011
It's pretty clear that the banks have a problem. In the words of the Congressional Oversight Panel, it’s impossible to say who really owns many of the mortgages currently being foreclosed on. This is an amazing statement to make, but it's true. And yet, foreclosure is still the first choice these banks take, even though, on the face of it, they lose more that way than if they modified the loans to make them affordable.
The reality is, most Americans in foreclosure are being sued by people who can't demonstrate ANY RIGHT TO SUE THEM, the very same people who destroyed our economy and put us in this awful position in the first place. I believe that is a very big deal.
Suppose John Smith buys a car from Ford Motor Company. He sells the car to his Uncle Louie. Louie sells the car to you, for payments. You fall behind, and a bit later, your car is repossessed by Ford! What business is this of Ford's, when they were paid off by Smith? That is about what is going on here.
In a typical case, a mortgage broker sold you the mortgage, which closed under the name of some small local lender (LocalMortgageCo). That mortgage was sold, perhaps the same day, to NationalMortgageCo. They collapsed, and their assets were purchased (at a huge discount) by HugeBank, including your mortgage. HugeBank securitized your mortgage, that is, they sold it to the Trustee of an RMBS (residential mortgage-backed security) Trust (which, incidentally, was guaranteed by AIG). Then "triple-A" rated bonds were sold to a group of Asian investors.
The only problem with this story is, perhaps, that it’s an over-simplification!
Who is losing here? The investors aren't, as AIG (and the American people) paid them off. The Trustee got the original price of the bonds. HugeBank was paid off by the Trustee. NationalMortgageCo doesn’t exist anymore. And LocalMortgageCo was paid off the day of closing.
Now, if you read the pleadings, affidavits, and assignments filed in Court against you by HugeBank, they claim that they bought the mortgage directly from LocalMortgageCo, under an assignment from LocalMortgageCo . That’s the theory under which HugeBank claims they have every right in the world to sue you. But the money to cover your payments really came from… the American taxpayer.
HugeBank’s claims UNDER OATH in verified pleadings may well be a fraud on the Court, which the judges are starting to notice.
The truth is, everybody in this dizzy daisy chain made money off the deal. The only losers (besides YOU) are the American People, and they aren't suing you, HugeBank is. HugeBank may recover twice from this scenario. But that's a story for another day...
Tom Brodersen, Esq.
Mortgage Foreclosure Terminology
Service of Process is the act of a process server, often a deputy sheriff, locating the defendant in a lawsuit, and personally presenting him or her with process papers, that is, a Summons and Complaint.
The Summons is a command from the Court to appear and answer the accusations in the Complaint, usually within 20 days in Florida.
The Complaint is the basic document which starts every lawsuit. It is a recitation of the facts (that is, the Plaintiff’s version of the facts), arranged in numbered paragraphs, which the Defendants, usually through their attorney, must admit or deny.
MERS is the abbreviation for Mortgage Electronic Registration System. MERS is an entity set up by the lending industry to facilitate the process of securitization, that is, turning your and my home mortgage into a security that can be bought and sold on the financial markets. More than anything else, securitization has crippled our economy and put millions of Americans in danger of losing their homes. Using MERS, the mortgage industry sought to avoid the cost of recording assignments of mortgages in the public records, and destroyed transparency in the relationship between borrowers and lenders. If your mortgage is a MERS mortgage, there may be defenses to foreclosure based on that fact alone.
RESPA is a federal consumer protection statute, the Real Estate Settlement Procedures Act. It required the use of the HUD-1 Settlement Statement in residential transactions, and certain procedures in the process of closing residential real estate transactions to protect you, the consumer.
TILA is another, even more important federal consumer protection statute, the Federal Truth in Lending Act, which requires certain disclosures to borrowers. While many of its require- ments are very technical, it is often critically important to protecting the interests of borrowers who find themselves in the mortgage foreclosure system.
FDCPA is a federal consumer protection statute, the Federal Debt Collection Practices Act which restricts the behavior of debt collectors.
