Request for original mortgage note and additional information
Hat tip comments in Economic Populist:
Where is the note offers a way to check on your house!
Request for original mortgage note and additional information
To whom it may concern:
This is a qualified written request under Section 6 of the Real Estate Settlement Procedures Act (RESPA). I own the property at the address listed above, and your bank services my mortgage.
Over the last several weeks there have been many stories documenting the problem that banks are foreclosing on homes without proof that they own the loan. I have learned that in many cases, banks like yours do not even know who owns the loans you service. Employees at several leading banks have admitted to rubber stamping tens of thousands of foreclosures every month, without even checking to make sure that the bank had a legal right to proceed with foreclosure. In some cases, banks allegedly falsified mortgage documents to cover up their mistakes. There have been reports of two banks trying to foreclose on the same home, banks foreclosing on homeowners who were current on their payments, and even of a bank foreclosing on a home where the homeowner had never taken out a mortgage to begin with. This is not merely a “technical problem”–it is the difference between having a warm bed at night and being out on the street.
…
To protect myself and my family, I need to know who owns my mortgage. Within sixty days, I would like to know the name, address, and phone number of the bank or investor that owns my mortgage. Furthermore, in light of the recent allegations of foreclosure fraud, I demand to see the original mortgage note proving ownership over my home loan. If you fail to produce a mortgage note proving that you have a right to collect my mortgage payments, I will be forced to consider all options available to me to ensure that my family and my home are protected.I ask that I receive my response in writing. I understand that under Section 6 of RESPA you are legally required to acknowledge my request within twenty business days and must try to resolve the issue within sixty days.
Thank you for your attention to this matter.
And follow up by Michael Collins at Economic Populist on the states attorney general responses to the MERS record keeping versus municiple/county titles to property is worth a read.
Also see Denninger’s piece on a an alternative to a general suspension of foreclsure activity, and a way to address concerns on proper ‘title to property’ for any house owner. Remember that while chances are small, there is at least one owner with NO mortgage who wound up in foreclosure proceedings.
A not so crazy thought.
Say a bank sold off your loan and it got handed around several times before becoming a CDO or some nonsense. Then the value of that security stock went belly up, say sometime back in 2008.
Is it quite possible that banks have been ‘servicing’ tens or hundreds of thousands of loans or more that don’t have an owner anymore? What happens when the value of the loan to the dispersed owners on the markets and the finanical firms that dealt with those physical papers have all gone belly up and out of business?
If the bank sent along the money and it came back from the now defunct owners with lost paperwork…does anyone think the banks who service the loans wouldn’t just keep the money; or pass part of it along into the void minus their fees. All for loans that don’t even exist anymore?
I think this is a strong possibility. People are underwater on the full value of a loan and now wall street traders are writing off the low low value of the big combined loan CDO abominations. I think this thing is going to be extremely ugly, people are paying for loans that don’t exist in any financial sense or ownership sense anymore. Normally when an investment goes south the real investors, i.e. the homeowners paying their mortgage, would stop putting money into a failed investment.
Food for thought
Cheers,
Spiritkas
Well, Spiritkas, what a cheery thought. Oh, my. I’m gonna go lie down now. NO
I recomend everyone do this as a consious exercise in harrassment to raise bank costs and reduce profits. They are fighting you fight back.
Silly Spiritkas, the payments received that cannot be transferred to defunct entities become salaries and bonuses for the brass of Bank A.
China knew what to do with business criminals dealing with toxic materials, let the US apply the same.
“To repeat: if the chain of title of the note is broken, then the borrower no longer owes any money on the loan.”
Nope! At best the loan becomes unsecured, the note remains.
If you want to be in the land of could be, then consider the possibility that a court may order a forclosure and hold the funds in escrow until the tile clears up or even issue a new title and hold the funds for a legitimate title holder.
However the following facts are known. The borrower has defaulted, there is a mortgage, the current property holder cannot get a title for the property by defaulting and there is a real owner somewhere.
Well, so far it is local and state judges who will decide, and I imagine there will be many different rulings.
The objection appears to be that a defaulting borrower cannot wind up with a house without a valid title, but also cannot be held responsible for a mortgage secured by the house suddenly becomes unsecured. Hmmm…is this philosophical or legal??
But it does appear possible in the press to say that a company who claims to have valid title can have a judge declare them valid to clear up a mess.
Seems to me somehwere in there is the power of a judge in some states to declare winners and losers.
So then do senior or junior bondholders play a role? Or should be silenced since they own nothing secured? What role do servicers play….before it was comparatively simple, but now looks like decisions have big legal as well as financial impact in many cases.
Can the eventual real and actual owner negotiate a new deal irrespective of the stuff in the middle?? With anyone of their choosing, and new money be required?
And who owes title fees in the chain of ownership? Or non ownership? Small potatoes, but given the country and municpal money already spent to maintain abandoned homes because ‘banks’ are also not maintaining houses, maybe defaulters can be paid to maintain the premises by the banks in the interim?
This gets to be wierd.
re: this question: ” Say a bank sold off your loan and it got handed around several times before becoming a CDO or some nonsense. Then the value of that security stock went belly up, say sometime back in 2008.”
There isn’t a “security stock” there are bonds. The notes are (allegedly) owned by trusts that issued the bonds. The trusts are REMICs, which means they dont’ have to pay income tax on the earnings (interest payments). The bonds vary – some are higher interest rate bonds that are assigned what is called the “first loss.” This means that if payments stop on a mortgage, the holders of the lower interest rate higher rated tranches of bonds get paid first, and the holders of the first loss tranche bonds get paid less than is due to them. The only way all the bondholders would lose all their money is if the loan servicer was unable to collect any money on any of the notes.
Title fees are paid to title companies to issue the lender’s title insurance.
About maintaining houses – the owner is responsible. If the loan servicer forecloses on behalf of the REMIC, the loan servicer must keep the grass mowed, cover the pool with a deck to prevent the chance of a child falling in the pool, winter proof the house in the fall, etc. The servicer must hire companies to do this until the servicer sells the house. Once the house is sold payment of the proceeds goes to the bondholders.
Practically speaking, the loan servicers are going to continue to send payments to the bondholders until and unless some lawsuit is filed and then a temporary restraining order is filed within that case that requires the loan servicers to stop making those payments. Then the payments will just sit in a bank account until the issues are resolved.
I find it highly unlikely that any court will rule that the note and deed of trust were not properly transferred to the REMIC/trust and that as a result the bondholders should not get the money each month.
Well this is again where it gets wierd. If the servicer does not maintain the house, or even mow the lawn, which has happened in certain areas more than others, it has fallen to government to try to pick up the slack as part of our commonwealth. This has been reported as a major expense in the MSM. If a servicer fails to do so does the county or city put a lien on the house?? Hence supposed to and does appears to have a gap in the millions.
Loan servicers are paying, for the front end load is high on foreclosures…so with whose money are they paying as cash flow can be a serious problem. Regular cash flow from uncontested loans and different bondholders. As a practical matter yes, but as a legal matter remains to be seen.
Why you can’t imagine that a transfer not proper and has consequences is beyond me. The procedures for such are clear and well defined.
The small potatoes got bigger. When I bought my house in CA the county registrar fee was $50, when I sold it was $500.
This is a major part of the reason the industry invented MERS. A mortgage is the lien on a property, and the lienholder must be recorded somewhere with the state, since property rights are a state thing. My understanding is most states have some sort of registry for liens, and there is a fee charged for recording and changes. At any rate, the lien must be recorded, for some sort of fee. The whole securitization chain avoided multiple recording fees by naming MERS as the mortgage owner.
Now real estate law says there is a promissory note(borrowers promise to pay an entity) and a mortgage(lienholder). The two are legally inseparable for clear and kosher chain of title. That’s so these entities don’t get mixed up, with all the silly problems one may imagine.
At the moment it seems that these thing have got mixed up thru MERS, the servicers, and the trust funds set up for MBS and CDO investors.
The law does allow for certifying lost docs, and that is a lot of the reason behind “foreclosure gate”.
But “certify” does not mean “defraud”. And you are not allowed to loose everything.
The trust funds give legal guarantee that they have mortgage backed securities, and the originals of mortgage and note are held in the trust fund. These are set up as a REMIC structure for which the IRS gives a corporate tax waiver. If these things aren’t complied with it is called securities fraud. One remedy is to “push back” the fraudulent securities on the issuer (investment bank) and have original value returned to investors.
Yves Smith has spent much more time on this than John Mauldin. John doesn’t completely get it yet. (and I read his newsletters, which are generally good.) So read Yves archives for better info.
P.S. Also CDOs do not “go under” and do not declare bankruptcy. They are a trust fund set up in NY under NY, Federal, and IRS securities and tax law. They end whenever they stop paying the database administrator and he wipes the hard drive.
Yves answers that one today. Well, not the lawn mowing part maybe…but HOAs are starting to place liens on title. These get eaten by someone in the chain….also known as a “foreclosure cost”….
http://www.nakedcapitalism.com/2010/10/investor-alert-it-isnt-just-borrowers-that-are-suffering-at-servicer-hands.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29
Yes the county/city does put a lien on the house. I recall reading about lawn mowing ordinances that do this. (mow your yard or the city will do it and charge you for it). Of course the first question is does the bank pay the property taxes, if not counties should get agressive and foreclose on the banks.
Update: Homeowners are sending us reports of banks responding with threats and intimidation. It is your legal right to demand to see your original, signed mortgage note. It is illegal for banks to negatively report to your credit file during the 60 day period after requesting your note simply because you made a request to see it. If you received a response that you feel is threatening or intimidating in nature. In so many words, you are correct! It starts from, A-Z. The sick part is, your debt most likely, has been sold to wall street, thus! locate those of ownership. Wont Happen.
Correction!
If! The home owner, fails, or, has fallen behind on payments, they are, should have the option for a trial mediation. (Each state has there own laws)***, most cases the banks will make some outrages offer for the home-owner to re-pay, or (trial period). But! what the Banks Do not tell you! Yes like anything else, you have every legal right to request a copy of the origonal note!, and,or the validation of all and any charges, fees, etc…(FDCPA), is there to regulate bogus collections of debt, that, may, or not be fact.
The Bank does need to proove you owe what they say! The Bank does need to provide each owner with a copy of the note. If they do not! The Bank has (in most states) 60 days to provide proof in writting the amount of debt owed, where, when, & how. If they do not!
The Bank, Can not collect the debt claiming you owe. (ftc.gov).
Respa section (6). (Tilla). Etc…
Do your home work, don’t take my word as Law.