How this plays out in the end, who knows. I suppose if the sale of the mortgage was improper, than the original mortgage holder still holds the rights to foreclose and I suppose ultimately they just unwind these transactions and then foreclose.
So, let me get this straight:
Bank A sold the mortgage to Bank B. Bank B then [tried] to file via MERS, but that does not comply with the law. Bank B then collected mortgage payments [if the homeowners made them], but ultimately tried to foreclose on a home that they DID NOT own.
Now, I have questions:
Given that Bank A sold the mortgage to Bank B and was paid for it, but Bank B DID NOT get the title legally transferred:
1. Does Bank A STILL own the original mortgage?
2. If Question 1 is true, does Bank A owe the money it was paid for the mortgage back to Bank B?
3. If Question 1 is true, does Bank B owe any money it collected in mortgage payments [prior to attempted foreclosure] back to Bank A?
4. If question 1 is true, is Bank A now due mortgage payments under the original mortgage?
1. Does Bank A STILL own the original mortgage?
IMHO, yes they do. I used the car analogy up-thread. Say for example I sell you my car, you pay for my car, but I forget to sign the pink slip. Then you sell the car to Jim and Jim agrees to pay you $100 a month for 5 years. After a few months Jim realizes the pink slip you gave him did not have my signature on it. He can not take ownership of the car because you never really owned it. Technically speaking I still own the car. Even though we had an agreement and I got paid, I made a mistake. I didn't do it maliciously it was just a mistake. In the real world we would work this out. I would sign it. Or, you would sue me for the money you paid and I would probably lose in court. But Jim is right to stop paying you as agreed until you could honor your end of the agreement. HOWEVER, this does not mean that Jim gets the car for free!
2. If Question 1 is true, does Bank A owe the money it was paid for the mortgage back to Bank B?
IMHO, ultimately yes they could but really both parties knew what they wanted to do, agreed to do it, and executed the agreement. They just made a paperwork error. Bank A, imho, shouldn't have to pay Bank B back, and Bank B really doesn't want the money back. Both parties just want to close the agreement they made. So they should make another agreement to fix the paperwork to finalize the transaction both parties intended to make.
3. If Question 1 is true, does Bank B owe any money it collected in mortgage payments [prior to attempted foreclosure] back to Bank A?
IMHO, no, unless they unwind the entire transaction. Again, Bank A and Bank B both knew what they wanted to do, and both agreed to it, they just didn't do it the way the law requires them to do it.
4. If question 1 is true, is Bank A now due mortgage payments under the original mortgage?
Not sure what will happen, and again I am no expert and no lawyer - but IMHO no. I think what Bank A did was sell the right to collect payments to Bank B. So Bank B can collect the payments, they just cannot foreclose because Bank A did not give the right to foreclose to Bank B.
It would be like if I sold the car to Jim for 60 payments of $100, and I signed the pink slip and gave it to Jim with myself as the lien holder until the payments are all made in full. Jim owes me $6000 total. Then you come to me and offer me $5000 in cash right now for the right to collect Jim's 60 payments of $100. I agree and take your money. Now Jim owes you, but, you do not have the pink slip or the lien so if Jim stops paying you cannot do much about it. You'd have to ask me to do something. But as you imply, I have been made whole, sort of... Complicated, huh?
“So, let me get this straight:”
Here what went down:
Bank A sold the mortgage to Bank B with the agreement to collect the payments and sent them to Bank B. Bank A and Bank B failed to notify the county that that Bank B are now holds a lien on the property and Bank A is no longer the lien holder. Deadbeat stops paying mortgage. Bank A tries to foreclose. Courts says Bank A you sold your interest and have no right to foreclose. Courts says to Bank B you are not on record with the county of having a lien on the property you can’t foreclose either. The Lie is Mortgage Back Securities had NO PROPERTY AS COLLATERAL TO BACK UP THE SECURITIES.