If the Lenders Say, "The Dog Ate The Mortgage"..New York Times

[Stuart G]

http://www.nytimes.com/2009/10/25/business/economy/25gret.html?_r=2&partner=rss&emc=rss
Fair Game, If the Lender's Cannot Find the Mortgage

By GRETCHEN MORGENSON
Published: October 24, 2009

FOR decades, when troubled homeowners and banks battled over delinquent mortgages, it wasn’t a contest. Homes went into foreclosure, and lenders took control of the property.


On top of that, courts rubber-stamped the array of foreclosure charges that lenders heaped onto borrowers and took banks at their word when the lenders said they owned the mortgage notes underlying troubled properties.


But if our current financial crisis has taught us anything, it is that many borrowers entered into mortgage agreements without a clear understanding of the debt they were incurring. And banks often lacked a clear understanding of whether all those borrowers could really repay their loans.

Even so, banks and borrowers still do battle over foreclosures on an unlevel playing field that exists in far too many courtrooms. But some judges are starting to scrutinize the rules-don’t-matter methods used by lenders and their lawyers in the recent foreclosure wave. On occasion, lenders are even getting slapped around a bit.

One surprising smackdown occurred on Oct. 9 in federal bankruptcy court in the Southern District of New York. Ruling that a lender, PHH Mortgage, hadn’t proved its claim to a delinquent borrower’s home in White Plains, Judge Robert D. Drain wiped out a $461,263 mortgage debt on the property. That’s right: the mortgage debt disappeared, via a court order.
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It is not the newest story, but it merits discussion. I used to teach high school and recall a number of "The Dog Ate My Homework" excuses. Food for thought and for the dog.

[Hugin]

1. KnR

[dixiegrrrrl]

2. Apparently there are taxes due that are not being paid by lenders, either.

Deninnger pointed out that every transfer of a mortgage from one lender to another generates a tax, and since the "chain of custody" is essentially not being recorded in all cases, the taxes are probably not being paid to the Feds, either.

[xchrom]

3. oh. now that's very interesting. nt

[izquierdista]

4. Keep your eyes on the tax rolls in a couple years

By that time, counties will have a lot of "inventory" to sell at their tax sales. And I think a deed from the county pretty much wipes out any other liens.

[xchrom]

5. will do -- because i think this part

is really interesting.

a diffrent side to these mortgages with no home, so to speak.

[safeinOhio]

6. I just love it

Banks get away with all kind of stuff based on the fine print. Now the fine print is going bit them in the ass.