Example: You buy a home for $300,000 in 2005. Your income is $30,000. The teaser rate is 3%. The broker puts down $60,000 for your income. Countrywise holds the loan.
In 2008 you lose your job. You try to sell the house. Find the going rate in Florida is $120,000. Ask bank for permission to short sell. Bank is already bankrupt. Contact clerk to find out who owns the loan. No sale of loan on file. You don’t get any payment strips for six months. When you do, it is MERS. You send in payments, but they say you are already six months behind and say you must pay $4,500 in back payments, plus penalties of $3,500, and by the way the teaser rate is over so your interest rate has gone from 3% to 8% and your payment has doubled to $2,500 per month ($2,000 on the loan, and $500 for taxes and insurance). You go to court to verify whether the MERS info is correct.
MERS files foreclosure, even though they sold your loan in seven tranches in securities owned by seven different companies, including two in Europe. The buyers were told by MERS that this was all legal. However, although MERS is no longer the legal owner of the mortgage, they keep servicing the loan, and do not tell you the loan was sold, or file the legal papers with the county clerk where you live. Furthermore, MERS has lost or misplaced all original records proving they owned the loan in the first place.
Your lawyer asks for proof MERS owns the loan (which they don’t). MERS hires a company that forges the necessary papers. They barely needed to bother, as the judge will be going to work for the foreclosure law firm next month. At least one felony, and possibly four, have been committed. none by you.
Sadly, this is typical - although Florida judges are looking more closely in some counties.
BTW, perhaps you can toss me some advice on this matter: I have two mortgages on two different properties (one main residence, one rental), and both are with WF.
Here in Florida insurance, as you probably know, is a problem unto itself on several levels. My rate just got upped 30%. I am thinking of simply bailing on home insurance and 'go bare', as they say. What are the practical and legal ramifications of this? I know the banks won't like it, but if they aren't going after people who paid their mortgages in over a year, I'm thinking they aren't going to waste time going after me over just the insurance requirement. Thoughts?