Another Foreclosure Denied

Awesome.

So what happens? The “homeowner” would get a brief reprieve and a moment to snicker at the foreclosing entity, but they aren’t off the hook. Is it simply a matter of the bank having to dig through records and trace the provenance of the loan to resubmit the foreclosure motion? Or is there more to it? This will delay matters and waste a lot of court time, but it’s just chocolate sprinkles on a giant poopcake.

As for Billary, she couldn’t fix breakfast, much less a worldwide debt bubble. I don’t envy anyone vying for captain of the Titanic when the bow’s already underwater. Whoever wins is a one-termer.

This is an odd duck. In the short term it only delays the inevitable so as a “solution” it is poppycock. But I suspect in the longer term it will force the mortgage industry to dot all the I’s and cross all the T’s in this type of stuff so that is probably as it should have been all along. But make no mistake, the overhead of the business will rise because of all the extra work needed for the red tape.

I agree Hillary or Edwards are about the last people we need in a weakening economy, but I can’t say I’m having a better time with the Bush talk of “tax breaks” for these folks. Nothing against the so-called poor and middle-class, but given the historic success by the GOP of getting their tax rates so low (and in many cases zero) what the the hell kind of tax break to them is going to juice up the economy? How does that math work? NFW.

Still, Edwards/Clinton’s gift of $ from the gov’t isn’t the solution either. The problem doesn’t need a fiscal solution, it needs a monetary policy solution. Cut corporate taxes, don’t double tax foreign earnings of US companies, and make Bush’s tax cuts permanent.

Just my $.02 (Read it now because in 10 years it’ll only be about $.015!)

more proof the answer is ‘yes.’

Repeat after me, “there’s no place like home, a tranche is not a bond…”

These relatively quiet judicial pronouncements are even more esoteric than spreads, CDO re-pricing, and other events but no less important.

Thanks for shining some light.

“Yup!! That’s got to be happening all over the country – if not the world at this point…”

uhh these never happened before all over the country, if not the world? Let’s put this in perspective.

Poor Jennifer Wong. This is her second wiff in front of Adler.

She was the attorney on the first one here:

http://bigpicture.typepad.com/comments/2007/12/another-loan-se.html

Sucks to be her right now.

Joe Klein’s conscience :

It hasn’t been a much talked about issue so far so I am assuming that until they put forth some specific plan that they plan on letting the market work. And yes indeed, that means that some people who took on loans they had no business having are going to feel some pain. As are the idiots that lent them the money. As are the mortgage insurers who insured the mortgages. So you see, the pain gets spread just as the benefit of the ridiculous mortgage did. You may be one of those people who thinks the vast majority of subprime lenders were somehow snookered into these loans at the point of a gun. I have no such illusions. Do I enjoy their current hardship? Of course not. But if they all get a pass now for their collective stupidity then are you really going to be surprised when they do something equally or even more stupid down the road? I say we help them by letting them reap the consequences of a bad decision. Is that so heartless? If so, explain how. Are you not expected to suffer/benefit from your decisions, especially in investments? I am!

The solution needs no presidential candidate’s plan, which may be why I’m not hearing one from the GOP. The solution is already taking place. Loan criteria is tightening up drastically. Applicant-provided data is being checked. Mortgage insurers are getting re-funded by those who have money to risk. If those investors are correct, they got in at what are no doubt firesale prices. Kudos to them. If they are wrong and take a bath, well, that’s the “risk” part of risk/reward now, isn’t it?

” But the homeowner is equally responsible for taking on a debt burden he/she should have known is above his/her means.”

The homeowner can only get him or herself in trouble, but the business idiots and sleazeballs screwed over thousands if not millions.

The businesses screwed up, and they don’t have any excuse – they can afford good lawyers and MBAs and finance experts.

That, IMHO, is why the hammer should come down harder on the financial industry than on people stuck with bad loans and at risk of losing their only place of residence.

I’m less concerned about people who were speculators or flippers that got caught, or people at risk only of losing a second home or a convenience condo apartment near the kids’ school or something.

CDO’s had the effect of spliting loan risks in tranches. A pool of mortgages would be split into 10 tranches and an investor would buy a tranch…what I am getting at is that the borrower owes the debt but the lien on title may not belong to the investor. It may belong to Goldman or Merrill but not joe investor Barclay.

Phoc Yu, you never met anyone who voted for Bill Clinton??? where do you live exactly? my experience is the exact opposite.

i live in a city on the east coast. everyone i know, live nearby or work with voted for clinton if they were old enough at the time. i only know a handful of republicans and they are either relatives of my wife who live in out in the country or white blue collar types like the security guard or the maintenance staff.

i am always curious about that stuff.

k2163,

I think your observations are reasonable. I did not object to your prior assessment except that it was being offered by someone you quoted seemingly as evidence of BK judge advocacy for the benefit of debtors.

All of this continues to support my contention that a National Ombudsman Program is needed to facility a sorting out of these problems.

It’s time for Congress and the administration to act.

this environment and the Deed/Title Mortgage true holder has got to be a nightmare

except for paper pushing laborers (and it is for them too, but all in a days work)

if the 2nd in line financier buys the company that originated the mortgage to climb the ladder to the #1 position (BoA & CW) … what about the next 10 (100 1000 10,000?) ladder positions

but haven’t things always been sort of like this? Larry Ks montra is let each rung fold up shop and sell – till the Deed/Title Mortgage Holder is One vs. Joe/Jane6pack Home Mortgage Requester

I guess what we have here is if BoA jumps over all the 1(to the umtenth power) investors and right them off well we have sour grapes

reminds me a line in the Jaycee Creed “Government should be of laws rather than of men”

in this case “men” should be replaced with an act found profucely in LasVegas

Larry:

Blaming one party or the other is irrational. Last time I checked, the dems won control of both houses last election. Where was the great insight and action for the last 2 years?

The housing market is helped by keeping people employed so they can make the mortgage and hopefully make the ARMs even when they reset. So anything that can help the economy grow and keep a paycheck coming into the household and keep interest rates down so that when the ARMs reset, they reset to something reasonable is what the goal is. Keeping the tax cuts helps, lowering corporate taxes to make us more competitive helps. At the same time, they don’t want to just lower rates too low or print too much money because eventually inflation will be a problem. But a the moment, the ecnomy is a bigger problem than recession, so they need to do things to juice the economy.

In any case, giving people $500 “prebates” or other token aid isn’t the answer to anything. Kudlow and his guests (Laffer?) have talked repeatedly how a one-time infusion doesn’t change spending patterns. Increased cash-flow to the household by lower taxes or other measures do, and that’s what we need. More purchasing power followed by a little more purchasing and hopefully some savings going on!

Eclectic wrote, “It’s time for Congress and the administration to act.”

Surely you don’t mean t-h-i-s Congress and t-h-i-s administration, do you?

I mean, I’ve been known to take a gamble from time-to-time, but even I am not crazy enough to make that bet.

>>sebs – none of the people I interact with regularly are lazy, poor, gay or Canadian.

I don’t comprehend the whole Democratic platform. Anyone who wants to take money from me is an adversary. Period.

But this whole guvmint thing is bigger than Democrat or Republican. The ENTIRE SYSTEM is broken and we need to hit the reset button and get back to the original framework. What we have now is poised to become tyrannical in a flash and I have a sinking feeling we are about to enter that predestined era.

Perhaps we have a window to change things before what is setup to happen – happens.

I see it this way. The three million renters who became homeowners never really had the mentality of homeowners. I see them every day in my office. The never had a plan to be able to pay the fully ammortized, fully adjusted mortgage. They just thought about how to pay the entry rate teaser mortgage.

They come to my office and say “what do I do now?” It is clear to me, the never thought deep into this mortgage and they were treating their payments like rent.

And that’s what is was–just rent.

No one should be surprised by the result.

Many say that the securitized mortgage industry could never have perceived what would happen to it much as if it had been an accident, but I don’t agree. It appears to be ever so much like the recently reported accident in which foolish and willfully optimistic drivers piled themselves into a fiery deathtrap on a fog-enveloped Florida superslab. You have to be a willful optimist to drive at any speed over a mere crawl in fog so thick you could stick a post-it note on it.

My readers, particularly Winston, will acknowledge that I’ve often used the interstate fog-driving metaphor as an example of willful optimism in its most aggressive form. It’s like when supply-siders are all liquored-up and leveraged-up and barrel along in pro-forma pretended ignorant bliss, when in reality they all know very well that they’re exceeding the speed limits of common sense… and then when the accident inevitably comes, the state troopers line up the survivors to write them tickets for doing just exactly what they knew they were doing. “But officer, everybody else was doing it,” they’ll say.

Ah, yes… but both metaphorical and real drivers would be safe now instead of being locked in twisted metal, or worse, burned alive, had they only taken the time to examine their own willfulness… or to read about and discover it here on TBP.

In Kudlowvia all the superslabs are presently fog-enveloped. On the G.S.N.T. Show all but a few of the drivers are on your bumper so close you can see their burning eyes in the rear view fog, honking their horns and flashing their lights for you to get out of their way. When you have the rare luxury of a few precious feet of safe margin to move over, you’ll then watch them speed ahead zigzagging in between lanes and around traffic, running up on other bumpers, flipping fingers at stunned drivers and honking and flashing their way to another sort of potential fiery destiny. As is often the case the traffic finally slows to a grinding halt and becomes a giant elongated parking lot, and then the ambulances and fire engines also come weaving in and around the stand-still traffic, racing ahead to use the jaws of life to free the willful from their own over-zealousness.

Back to the BP topic at discussion:

As I see it the subject of this current topic presents a peculiar situation regarding the two associated parties who negotiated the mortgage loan transfer, the mortgage originator who made the loan and possibly still technically possesses title to it (transferred unofficially by a promissory agreement of some sort), and the subsequent true owner of the mortgage who now files to recover the property in BK court.

I’m not an attorney but I suppose there are two substantial ways to make errors when filing motions. One way is to simply look foolish when filing an incomplete document and thus run only the risk of having the motion denied on that basis and possibly being somewhat chided by the judge. This appears to be the case here since I simply can not imagine that the attorney did not realize this was a possibility.

I’m not suggesting that if the title had not been formally transferred to the current owner by the date of the filing that the originator should (or even would) therefore make the motion itself covertly at the behest (or as agent) of the rightful owner. That would be a far worse mistake than just filing an incomplete document. It would represent a material misstatement in BK court, possibly earning a contempt citation, or worse.

However, the reality is that the mirror reverse of this ad hoc relationship probably should be recognized for the purpose of qualifying the rightful owner and movant. The movant is in a strange sense also acting as something of an agent for the originator by evidencing the performance of an executed prior promissory agreement, and thus assuming both the original mortgage (absolving the originator of an obligation) along with a legal right and responsibility to protect its own equity in BK court. Were it not so, the rightful owner would have foisted upon it a burden of forfeiture, and a uniformly observed principle of the law is that it abhors a forfeiture. Isn’t that right, Winston?

That promissory agreement’s perfection IS a valid substitution for the claim’s perfection. I can’t understand why the movant didn’t provide that document to the court, unless somebody screwed up and never even executed it in the first place. Even then the error is easily corrected, but I don’t think it would be wise to attempt to submit one to the judge with a current date. I think the confusion over that date is possibly the motivation for attempting to foreclose with incomplete documentation.

k2163 spoke of the importance of perfecting proof of ownership as of the date of BK filing. If a BK judge chooses to accept some alternate form of proof of that perfection of claim, title, deed, or whatever you want to call it, I believe he or she can do so and not violate BK procedural rules.

Although absurdly simplistic in our world of starched white shirt legal formality, even something so prehistoric as a handwritten note, a cave drawing or perhaps a forehead tattoo, not to mention of course a well-written typeset document inclusive of the standard 8-ply boilerplate legalese, exchanged by the official titleholder and its rightful assignee would probably be acceptable to a BK judge (they are often needful of the forensic) to identify and authorize the movant. In any event the debtor couldn’t successfully contest it even if he elected to do so. The only party that could contest it, the originator, never would because of its known and understood relationship with the subsequent true owner.

That’s all the judge appears to be asking for in this case, just acceptable evidence of ownership to prove the authority of the movant.

I may be reaching but isn’t it possible that the subsequent mortgage owner in many (if not most) of these cases never intended in the life of the mortgage to actually hold the title in its own name, but rather to simply rely on some promissory/servicing agreement with the originator to continue to hold it and service the mortgage as a conduit for interest and principal until payoff?

At such payoff the warranty deed would simply be transferred fully paid to the mortgagee and all three parties would’ve accomplished just what they’d intended from the start, even if the mortgagee never knew of the opposite third-party relationship.

Again, this all clearly supports my contention for the requirement for a National Ombudsman Program to dedicate itself to resolving these issues. Establishing one now, before the situation gets even worse, can only work to the benefit of the economy, even if the situation does not worsen from here.
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BTW, it’s also been claimed that one difficulty presented in this BK/foreclosure process is that the mortgages are fractionally held, and thus it would be near impossible to foreclose a fractional interest.

Well, no, that’s not the case. It’s just bogus noise generated by those who wish to foment greater difficulty than what already exists. The mortgages are each wholly owned by some ENTITY that is i-t-s-e-l-f fractionally divided. When the entity takes action to recover property, it does so likewise as a conduit to represent all the fractional interests of its subdivided ownership, no differently than in the manner of its initial creation as a fractional collection of investment capital.

and ShortMan maybe they understood they were helping out the local economy by signing on the line