Posted on 11/15/2007 7:10:13 PM PST by givemELL
I won't, but you might review this: See False security? Corporate insolvencies are testing whether securitization is a stable structure or a flimsy facade - Bankruptcy 2003
Thank you for an informative post.
By the way, the decision in post #121 decrees that the attorney who flied this will be sanctioned if he ever files another case like this one again - enjoy.
It just proves my point. Wacky judge.
Yeah, I know all about securitizations. I’ve worked on them, given opinions on them. I’ve always thought they were an accident waiting to happen.
There are a lot of cases dealing with the issue of who owns the mortgage. Too many cases...
In general, there is little need to worry about it because the record owner of the mortgage is not the real owner anyway. He’s just a representative of the real owner, i.e. the bondholders. So what we’re arguing about is who has the right to be the bondholders’ representative. It should not be a big issue, and it certainly should not be grounds for letting the mortgagor avoid his just debts.
I agree that such arguments should not be an excuse, in the end, for someone to get his house for free, but I see a point in the Court's dismissing the case on the grounds that it cannot identify who has the exclusive ownership of the claim. Folks were betting on the come on both sides of the recent subprime mortgage mess. Lenders foolishly lent money that supported prices that in the long run turned out not to be sustainable while borrowers borrowed it. As some folks have pointed out, one of the problems with not knowing who owns the mortgage is not having a party with whom one can negotiate working the deal out. All the mortgagee is dealing with is the trustee of the trustee of a unidentifiable pool of bonds.
As a consequence of not having an identifiable institution, all that can happen is that a process goes forward to its inexorable conclusion, with the mortgagor now possessing a large number of houses, after expensive legal fees, that must be dumped, eventually, onto a market that cannot bear the prices.
So, a former homeowner is on the street without a place to live, a house is empty and deteriorating, bond holders are not getting paid, and except for the attorneys in the middle, everyone is losing.
He predicts it will force the back office paperwork guys to get on the ball, thus a win - win situation.
I agree that it gives additional ammo to someone like me who keeps pointing out to the $1000 per hour NY attorneys that their documents are ambiguous. But I still think that that the judge’s remedy for this ambiguity is like Muslims cutting off hands for shoplifting. It’s not necessary. All the judge has got to do is make sure that the money goes to the guys who hold the bonds. The question of whether it’s Bank #1 or Bank #2 who collects it and pays it to them is academic.
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