Posted on 12/03/2007 6:54:12 AM PST by shrinkermd
Who owns your home?
That seems like a pretty straightforward question. But the answer might not be as clear-cut as you think.
A U.S. District Court judge in Cleveland tossed out 14 foreclosure cases Oct. 31 on the grounds that the bank suing to repossess the properties, Deutsche Bank National Trust Co., didn't actually own them. Deutsche Bank held debt securities that were linked to the mortgage loans on the properties, not the mortgages themselves. And the judge ruled that a security backed by a mortgage is not the same as a mortgage.
...Overall, the development of mortgage-backed securities has been a boon for Americans. By reducing the risk of writing mortgages, lenders have been encouraged to offer more loans, enabling countless people who'd previously been shut out of homeownership to get financing.
As a result, we've seen an explosion in mortgage securities. In 1981, there were $367 billion of these debt instruments outstanding; by the end of last year, there were roughly $6.5 trillion. Mortgage-related securities account for nearly a quarter of today's total U.S. bond market, more than any other debt sector, including Treasuries and corporate bonds.
Naturally, as the number of mortgage securities has increased, so has their complexity. There are simple "pass-through" securities, where the payments on the mortgages in a pool go directly to the investors. There are more complicated collateralized mortgage obligation securities, which essentially are bonds that carry different maturity dates and repayment rates based on the quality of the loans in each pool. Then there are "strips," or stripped mortgage securities, which intricately tear apart the loans and create separate payoffs based on the interest and principal payments generated by the pool.
(Excerpt) Read more at latimes.com ...
Another layer for risk for the companies holding mortgage backed securities. They can’t foreclose, but can only sue the actual holder of the mortgage (if that!). Sounds like a mess.
Sounds like a "calling Captain Obvious" moment.
The Foreclosure company never owns the home, until they actually FORECLOSE... the owner is the name on the deed, the note is the loan and the mortgage is a document that says the note holder may take the home for non payment.
This article is misrepresentative from the get go. The bank does not OWN your house until the foreclosure occurs.
And wait until major banks start marking their balance sheets to that amount.
Those same "countless people" didn't think that they were going to have to pay for those loans? The lenders "low risk" encouraged them to make highly questionable loans?
Seems to me that one side wants to be paid and the other doesn't want to pay so "someone" is going to have to do something. After all the government has a lot of money. Maybe they could step in.
Mortgage backed securities = the equivalent of heroin for Wall Street.
That’s true in most states, but in some, the mortgage is not a security instrument, its is a deed conveying a defeasible fee to the bank. Thus, when someone in one of those states says, “I don’t own my house, the bank does.” they’re right.
But I should add that mortgage backed securities have improved liquidity in the mortgage market.
The whole problem is because the companies who ISSUED the loan KNEW they could resell it to Wall Street where the mortgage was bundled and repacked into these CDO’s. The credit ratings agencies were just as guilty because they gave this crap AAA Bond ratings so it could be sold to unwitting investors. My 401k just anounced they are changing their money market account to one which is 100% invested in Treasuries because they were uncertain whether the current money market fund was vulnerable because of this subprime mess. That tells me there is much more of this crap hidden on balance sheets and the sh!t will hit the fan soon. A lot of mortgage brokers and bankers and wall street types made a lot of money selling this subprime crap to people who did not have to even provide proof of income in order to get a loan. The taxpayer will be left holding the bag, as usual.
“its is a deed conveying a defeasible fee to the bank. Thus, when someone in one of those states says, “I don’t own my house, the bank does.” they’re right.”
In California that’s the case, when the mortgage is paid off the bank files a re convayence and sends it to you. Until that time the bank holds the title.
Are you suggesting using tax dollars to make good on bad investments for the security companies?
Not to mention all the middle-class with their nest eggs in mutual funds which are at least partially invested in these securities. As usual, the gel-haired geldings on Wall Street have made their billions and left the middle class holding the bag.
Some things never change.
Like you say, it depends on state law.
Not sure which way Arkansas falls, but in the Clinton Whitewater/Casa Grande investment scandal, I understand that if you missed a house payment all your payments, including your principal payments, were considered
to be nothing more than rent. Upon a missed payment the property would revert to Whitewater land development and the house could be seized. In any subsequent sale you lost any right to proceeds that exceeded what was needed to satisfy your outstanding past due principle and interest payments. After all, you were just a renter in the eyes of the law, and the Clintons were just one more example of greedy wrack-rents.
Moral for Freepers; read those contracts, or have a lawyer to do it for you, and don’t be afraid to say no if it looks like BS.
Not my idea nor would I approve. But, if you don't think that is being considered you don't know how the big money companies keep being big money companies.
To wit, knowing they could sell the mortgage paper to be securitized, they bought cheap property, found a sucker to pay way more than it was worth, underwrote a bogus loan and sold the property.
They made money a) from the sale of the property; b) from real estate commissions/title fees/etc. etc.; c) mortgage fees; and d) fees/profit from the sale of the paper.
Must have been a nice deal when you could do it, garnering a huge profit with someone else's money.
AMEN. Back in the olden days, when loans were kept by the local lender, a loan officer knew that the bank or S&L board met once a month, and were handed a list of nonperforming loans. If an inordinate number of his loans were on that list, the chairman of the board had better be his daddy on father-in-law, else he would be fired. His job performance was graded not on making loans, but on making good loans. If the loan officer was making bad loans, the bank was losing money.
With modern loan brokers, the exact opposite is true. All the loan officer's boss know is how many mortgage loans he has made, and for how much. If the loan officer isn't loaning money, the mortgage broker isn't making money. If the loans go bad in six months or two years, the mortgage broker doesn't care -- someone else will own them by then.
And people wonder why so many middle and upper class voters vote for socialist laws and big government. It's because they'd like to get something for their money besides a sharp stick up the ass. I'm all for capitalism, but when the CEO of United Healthcare 'retires' with more than $1 Billion in company money something is desperately wrong in this country.
Nah, you are wrong. In all states the government owns it, we just buy (and take notes out) to put our names on a piece of paper to get the right to pay a yearly rent to build and or stay on the property. Fail to pay the yearly rent and you are kicked out of the property, this takes precidence over your note. So the correct statement would be that you do not own your house, the government does.
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