$461,263 mortgage debt dimissed

[dawp]

http://www.nytimes.com/2009/10...ml?partner=rss&emc=rss


I think, with the way mortgages have been handled, that it's only fair if the mortgage holder can't provide proof of the mortgage, due to poor record keeping, that it happened. it will force better accounting on the part of banks that hold these securitized mortgages.

 

[JSt0rm]

lol now I really wish I bought in the bubble

 

[IronWing]

The mop up phase of the bust will be with us for a long time. The investors haven't really weighed in yet. Of course, since the investors don't seem to have a clue what they bought, this isn't surprising. Tainted titles will leave properties stranded.

 

[Lemon law]

I have no sympathy with the loan holders, if they can't prove they own the property, they deserve nothing and hence have no legal standing to foreclose. They then need to go back and sue the pants off the banks who sold them the notes backed by nothing.

I may not be able to see a delinquent borrower being the beneficiary, but its still the way the cookie crumbles.

The only other way is to make you and I liable for the bail out and I will not buy that stupidity. Any investor who does not insist on clear title is a fool that deserves to have their money parted from them.

Its somewhat laughable that the American people have bought the myth that bankers are whip smart people who deserve to be highly compensated, when their behavior would get them fired from a minimum wage job.

 

[Genx87]

Hahaha idiots didnt keep their paperwork in order. What the judge did was correct as they didnt provide proof they are owner of the mortgage. At the same time the deadbeat who stopped paying may have a problem taking posession of the property. Somebody will have to show up with some paperwork showing who owns what.

 

[Jhhnn]

I'm sure this has set off a great deal of scuttling about among mortgage servicers, rightfully so. They'll need to exercise due diligence to seek judgement in that judge's courtroom, anyway...

It seems unlikely that the defendant will ultimately retain possession as the appeals unfold. Meanwhile, they can live in the home rent and mortgage free- the whole process could take years...

It just shows how shoddy the whole lending game has become on a multiplicity of levels...

 

[dawp]

As often as these mortgages change hands during the life of the loan, it wouldn't suprise me if there are a shitload of homeowners in the same situation and could have the same thing happen to them. I have no sympathy for any company that has lousy book keeping.

 

[dawp]

another thing interesting about this story is this:

Mr. Shaev then asked for proof that U.S. Bank was indeed the holder of the note. All that was provided, however, was an affidavit from Tracy Johnson, a vice president at PHH Mortgage, saying that PHH was the servicer and U.S. Bank the holder.

Among the filings supplied to support Ms. Johnson?s assertion was a copy of the assignment of the mortgage. But this, too, was signed by Ms. Johnson, only this time she was identified as an assistant vice president of MERS, the Mortgage Electronic Registration System. This bank-owned registry eliminates the need to record changes in property ownership in local land records.

Another problem was that the document showed the note was assigned on March 26, 2009, well after the bankruptcy had been filed.

with that last line standing out.

 

[Vic]

Mr. Shaev said he was shocked when the judge expunged the mortgage debt.

?We are in uncharted territory,? he said. ?Right now I am in bankruptcy court with a house that has no discernible debt on it, yet I have a client with a signed mortgage. We cannot in theory just go out and sell this house because the title company won?t give a clear title on it.?

There are no winners here, nor was the debt actually forgiven. What the court determined was that PHH did not prove sufficiently its right to service the debt. It didn't dispute the debt and the lien on the property. So until the lien is satisfied, the property now has fatal title, making it unmarketable. At best, the borrower will get to live in the home a few years rent-free, during which time they'll trash it and it will become the most blightest house in the neighborhood until the local govt finally seizes it for non-payment of property taxes and wipes out all other liens.

 

[Jhhnn]

Originally posted by: Vic

Mr. Shaev said he was shocked when the judge expunged the mortgage debt.

?We are in uncharted territory,? he said. ?Right now I am in bankruptcy court with a house that has no discernible debt on it, yet I have a client with a signed mortgage. We cannot in theory just go out and sell this house because the title company won?t give a clear title on it.?

There are no winners here, nor was the debt actually forgiven. What the court determined was that PHH did not prove sufficiently its right to service the debt. It didn't dispute the debt and the lien on the property. So until the lien is satisfied, the property now has fatal title, making it unmarketable. At best, the borrower will get to live in the home a few years rent-free, during which time they'll trash it and it will become the most blightest house in the neighborhood until the local govt finally seizes it for non-payment of property taxes and wipes out all other liens.

Lots of attribution there, Vic. It may not work out that way at all. The occupants likely have more self respect and respect for their neighbors than that. Not to mention that marketability is a non-issue if the occupants don't intend to move, or that the court ruling may provide the occupant with the means to have the lien lifted. Or the whole thing may prompt the parties to renegotiate, reach an amicable settlement. Way too many variables to jump to your conclusions.

 

[Vic]

Sorry, but I live in this world and see it everyday. I'm not making any unfair character assumptions or jumping to any conclusions. The occupants of the house are now essentially tenants without a landlord. They will NEVER own the home now and they know it. So if something in the house breaks or needs repair, why should they fix it? Except that they live in it, it's not their house, so why would they pay for a new roof or a new coat of paint? Or go through the work involved? Hell, I wouldn't be surprised if it's the bank's agents who already mow the lawn.

The most likely scenario IMO will be that mortgage servicers get a needed wake-up call out of this about record keeping, but no other real legal precedent. Eventually, this will likely unfold like most similar bankruptcy cases where the debtor is discharged of the debt but the bank gets the right to foreclose on the property. It'll just take a little longer than usual (which in Southern NY is saying a lot given that it already has the longest foreclosure timeframe in the country).

 

[GroundedSailor]

Originally posted by: Jhhnn

Originally posted by: Vic

Mr. Shaev said he was shocked when the judge expunged the mortgage debt.

?We are in uncharted territory,? he said. ?Right now I am in bankruptcy court with a house that has no discernible debt on it, yet I have a client with a signed mortgage. We cannot in theory just go out and sell this house because the title company won?t give a clear title on it.?

There are no winners here, nor was the debt actually forgiven. What the court determined was that PHH did not prove sufficiently its right to service the debt. It didn't dispute the debt and the lien on the property. So until the lien is satisfied, the property now has fatal title, making it unmarketable. At best, the borrower will get to live in the home a few years rent-free, during which time they'll trash it and it will become the most blightest house in the neighborhood until the local govt finally seizes it for non-payment of property taxes and wipes out all other liens.

Lots of attribution there, Vic. It may not work out that way at all. The occupants likely have more self respect and respect for their neighbors than that. Not to mention that marketability is a non-issue if the occupants don't intend to move, or that the court ruling may provide the occupant with the means to have the lien lifted. Or the whole thing may prompt the parties to renegotiate, reach an amicable settlement. Way too many variables to jump to your conclusions.

Absolutely correct. If that happened to me I would happily live in my house and, like I do now, maintain it properly. Frankly it would be easier to do so as I would have more spare money every month. Even if I had to move I could easily rent the place for a nice little profit.

Fortunately (or unfortunately depending on how you want to look at it) my mortgage note is held by the bank even though servicing is done by Wells Fargo.

 

[blackangst1]

I remember a grass roots org here in Phoenix spinning this up about a year ago. I wondered when it would finally get to court .

 

[Vic]

Originally posted by: GroundedSailor
Absolutely correct. If that happened to me I would happily live in my house and, like I do now, maintain it properly. Frankly it would be easier to do so as I would have more spare money every month. Even if I had to move I could easily rent the place for a nice little profit.

Fortunately (or unfortunately depending on how you want to look at it) my mortgage note is held by the bank even though servicing is done by Wells Fargo.

Terrible logic. What YOU personally believe you might do in a given situation is not necessarily what everyone else would do in the same situation. I suggest you look at it from the standpoint of actually being there instead of where you're standing right now.

 

[Vic]

Originally posted by: blackangst1
I remember a grass roots org here in Phoenix spinning this up about a year ago. I wondered when it would finally get to court .

That's usually just ambulance chasing lawyers on fishing expeditions. Record keeping at most mortgage servicers is state of the art imaging databases with every document in the file just a click or 2 away. This time a lawyer finally got lucky and found one where the docs had been misplaced.

 

[GroundedSailor]

Originally posted by: Vic

Originally posted by: GroundedSailor
Absolutely correct. If that happened to me I would happily live in my house and, like I do now, maintain it properly. Frankly it would be easier to do so as I would have more spare money every month. Even if I had to move I could easily rent the place for a nice little profit.

Fortunately (or unfortunately depending on how you want to look at it) my mortgage note is held by the bank even though servicing is done by Wells Fargo.

Terrible logic. What YOU personally believe you might do in a given situation is not necessarily what everyone else would do in the same situation. I suggest you look at it from the standpoint of actually being there instead of where you're standing right now.

True, personal viewpoint is anecdotal at best, but I would like to believe if someone has an unexpected windfall - if one could call it that - they would take advantage of it. It's a poor mentality to trash something because you are no longer paying for it.

 

[blackangst1]

Originally posted by: Vic

Originally posted by: blackangst1
I remember a grass roots org here in Phoenix spinning this up about a year ago. I wondered when it would finally get to court .

That's usually just ambulance chasing lawyers on fishing expeditions. Record keeping at most mortgage servicers is state of the art imaging databases with every document in the file just a click or 2 away. This time a lawyer finally got lucky and found one where the docs had been misplaced.

No, it was more than that. Several cases I know were filed in district court, but I didnt care enough to follow them. I remember seeing threads in here too about it.

Anyway.

 

[Darthvoy]

Unbelievable. I can't believe banks are that incompetent.

 

[Darwin333]

Originally posted by: GroundedSailor

Originally posted by: Vic

Originally posted by: GroundedSailor
Absolutely correct. If that happened to me I would happily live in my house and, like I do now, maintain it properly. Frankly it would be easier to do so as I would have more spare money every month. Even if I had to move I could easily rent the place for a nice little profit.

Fortunately (or unfortunately depending on how you want to look at it) my mortgage note is held by the bank even though servicing is done by Wells Fargo.

Terrible logic. What YOU personally believe you might do in a given situation is not necessarily what everyone else would do in the same situation. I suggest you look at it from the standpoint of actually being there instead of where you're standing right now.

True, personal viewpoint is anecdotal at best, but I would like to believe if someone has an unexpected windfall - if one could call it that - they would take advantage of it. It's a poor mentality to trash something because you are no longer paying for it.

You should see some of the section 8 rental houses around here. People generally take much better care of something that has their sweat and blood in it. Not to mention the financial aspect that Vic was talking about. Would you really spend thousands of dollars to replace the roof on a house you are going to be evicted from in the near future? Or would you save that money for down payment on the new place you will be moving into?

I have seen houses with all of the light fixtures, sinks, stove, cabinets, and just about everything else that can be detached ripped out and taken. The worst part is they don't exactly remove them with the intent of replacing it so they will just rip stuff off the walls and out of the ceilings causing even more damage. Some ex homeowners even ripped out the copper plumbing for a quick buck.

 

[waggy]

Originally posted by: GroundedSailor

Originally posted by: Vic

Originally posted by: GroundedSailor
Absolutely correct. If that happened to me I would happily live in my house and, like I do now, maintain it properly. Frankly it would be easier to do so as I would have more spare money every month. Even if I had to move I could easily rent the place for a nice little profit.

Fortunately (or unfortunately depending on how you want to look at it) my mortgage note is held by the bank even though servicing is done by Wells Fargo.

Terrible logic. What YOU personally believe you might do in a given situation is not necessarily what everyone else would do in the same situation. I suggest you look at it from the standpoint of actually being there instead of where you're standing right now.

True, personal viewpoint is anecdotal at best, but I would like to believe if someone has an unexpected windfall - if one could call it that - they would take advantage of it. It's a poor mentality to trash something because you are no longer paying for it.

windfall? what windfall? sure they get rent free place to live.

but i do n ot beleive at all you (or anyone) would mantain the house knowint they won't live there in a year or two. just not going ot happen.

 

[ElFenix]

Originally posted by: dawp
another thing interesting about this story is this:

Another problem was that the document showed the note was assigned on March 26, 2009, well after the bankruptcy had been filed.

with that last line standing out.

security interests can be bought and sold even after the obligor is bankrupt. the major thing that bankruptcy does is make attempting to collect a violation of the automatic stay.

Originally posted by: Vic
There are no winners here, nor was the debt actually forgiven. What the court determined was that PHH did not prove sufficiently its right to service the debt. It didn't dispute the debt and the lien on the property. So until the lien is satisfied, the property now has fatal title, making it unmarketable. At best, the borrower will get to live in the home a few years rent-free, during which time they'll trash it and it will become the most blightest house in the neighborhood until the local govt finally seizes it for non-payment of property taxes and wipes out all other liens.

uh, no, they're going to have to file a quiet title suit or similar to get everyone before a state court to determine title to the property.

 

[Thump553]

There is a lot of misunderstanding in this thread, but then again there is a lot of apparent errors in the underlying NY Times article as well.

Basically the burden of proof is upon the claimant to establish the validity of their claim in bankruptcy court. Here the bankruptcy judge ruled that PHH failed in its burden of proof because it could not satisfactorily prove it was the legal holder of the mortgage note, that the mortgage debt was vaildly assigned to PHH. I think the NY Times article is almost certainly wrong in claiming the bankruptcy judge wiped out the mortgage-it doesn't make any sense under bankruptcy law nor have I ever heard of anything like that being done in bankruptcy court. That would be done in state court, in a quiet title lawsuit.

Most likely end result? PHH failed to prove it has an enforceable mortgage and is barred from foreclosing on it, at least for now. But-in my view-there is still a cloud on title-any potential buyer of this property would demand either a quiet title action successfully brought or some other valid release of this mortgage on the land records. I wouldn't quite celebrate yet if I was the debtor.

BTW this was nothing to do with the housing bubble, it has more to do with lenders failing to preserve necessary chain of ownership evidence in the rush to bundle and sell mortgages on Wall Street. The bankruptcy judge would have reached the same conclusion 100 years ago if the same fact situation presented itself.

Note-I do not practice NY law, the above is my educated guesses.

 

[StageLeft]

Originally posted by: Jhhnn

Originally posted by: Vic

Mr. Shaev said he was shocked when the judge expunged the mortgage debt.

?We are in uncharted territory,? he said. ?Right now I am in bankruptcy court with a house that has no discernible debt on it, yet I have a client with a signed mortgage. We cannot in theory just go out and sell this house because the title company won?t give a clear title on it.?

There are no winners here, nor was the debt actually forgiven. What the court determined was that PHH did not prove sufficiently its right to service the debt. It didn't dispute the debt and the lien on the property. So until the lien is satisfied, the property now has fatal title, making it unmarketable. At best, the borrower will get to live in the home a few years rent-free, during which time they'll trash it and it will become the most blightest house in the neighborhood until the local govt finally seizes it for non-payment of property taxes and wipes out all other liens.

Lots of attribution there, Vic. It may not work out that way at all. The occupants likely have more self respect and respect for their neighbors than that. Not to mention that marketability is a non-issue if the occupants don't intend to move, or that the court ruling may provide the occupant with the means to have the lien lifted. Or the whole thing may prompt the parties to renegotiate, reach an amicable settlement. Way too many variables to jump to your conclusions.

Maybe probably not. It's amazing but it's more than occasional--a vast number of foreclosed and seized homes are actively destroyed by occupants. These people SHOULD go to jail if they do it knowing they lack the money to pay up in a civil court but it happens all the time.

For good measure before they get finally kicked out they can rip all the walls off and grab the copper, grab some toilets, the appliances, whatever.

but i do n ot beleive at all you (or anyone) would mantain the house knowint they won't live there in a year or two. just not going ot happen.

This is a given. People don't always maintain the homes they do own/have a mortgage with. Paying to maintain a house you don't own and know you could be booted at any time is a silly thing to do. If you get a leak leak you'll just ignore it. Crack in the siding, ignore it.

 

[Ausm]

Originally posted by: Darthvoy
Unbelievable. I can't believe banks are that incompetent.

Big banks are just checkout Wall Street