Posted on 06/06/2010 6:42:28 AM PDT by Chunga85
No loan should be adjusted!!!!
Nothing. The point is that the contract was first broken by the “lender” upon the securitization of the property and the separation of Deed of Trust from the Note.
“Do you realize that there are still some broad legal questions (with enormous implications) about whether these things should be subject to real estate law or to securities law?”
Oh we agree....however, there ought to be some way for a revenue stream (like a mortgage) to be securitized in an honest and financially sound manner by the owner of said revenue stream, if there is an informed and willing buyer.
We know that Wall Street couldn’t do it honestly, but that doesn’t mean it can’t be done. I don’t have the answer to CMO’s or CDO and if they can or should be made financially sound, honest, and legal - but the way it was done previously obviously was not sound, honest - and the legality has yet to be cleared up.
This is one of the areas BofA has been really bad in. Of course getting away with it too since their customers are now broke and defenseless.
Right. One interesting point to remember is that a lot of these legal questions go back the 1970s when CMOs were still in their infancy. If these issues couldn’t be addressed in the last 30+ years, then I can’t imagine why anyone would expect this nonsense to be fixed anytime soon.
Very thoughtful contribution. Thanks!
Did you read the article? Assuming the article is truthful, BOA is refusing to obey the state law.
The second part of the motion, Barlow filed, claims that neither the lender, nor MERS*, nor Bank of America, nor any other Defendant, has any remaining interest in the mortgage Promissory Note. The note has been bundled with other notes and sold as mortgage-backed securities or otherwise assigned and split from the Trust Deed. When the note is split from the trust deed, “the note becomes, as a practical matter, unsecured.” Restatement (Third) of Property (Mortgages) § 5.4 cmt. a (1997). A person or entity only holding the trust deed suffers no default because only the Note holder is entitled to payment. Basically, “[t]he security is worthless in the hands of anyone except a person who has the right to enforce the obligation; it cannot be foreclosed or otherwise enforced.” Real Estate Finance Law (Fourth) § 5.27 (2002).
It sounds to me like the plaintiff is claiming that a re-packaged mortgage becomes unsecured and the original collateral is no longer tied to the loan. Is that a correct reading?
The right to foreclose is contained in the note and the deed of trust. They cannot be separated; when they are the debt becomes an unsecured loan. When it is turned into a security and bundled there ceases to be one holder of the note; the homeowner must negotiate with a cabal of unknown investors to get a loan modification. Alternativly they can try to get a modification with the “debt collector claiming to have authority, but really doesn’t”. These attempts are 100% unsuccesful by design.
Without a secondary mkt how do Banks recapitalize to make more loans?
But that just means those property values never should have been so high in the first place. They were just artificially inflated by the increasingly lax lending terms that have been extended to homeowners over the last few decades.
All this is true and the incredibly low interest rates, with little or no money down pushed prices up. Until the pricing drops to 35-38% of gross income for PITI the pressure will be down. However, once the pricing for residential real estate returns to it's natural level it won't matter if Banks can't sell their loans to recapitalize.
I’m sorry - but that’s a sorry excuse for reasoning.
The law says that in-person negotiation must be accommodated.
Bank of America has to abide by the laws of each and every state it does business in when doing business in that state.
You seem to believe that Utah has the responsibility to abide by Bank of America’s rules, instead of the other way around.
Or, perhaps you prefer the idea that Bank of America should be bailed out of their obligation to abide by the laws of the states they do business in?
Your post helped me understand some of the baffling parts of the article. But I have two problems today: I'm a victim of public education, and I'm on pain pills today. So I haven't deciphered this one point. Thanks, FRiend.
An interesting point about CMOs is that one of the underlying forces behind the development of the CMO concept was the major demographic change in the U.S. that took place during the 1960s and 1970s. The original purpose of the CMO was to provide a mechanism for banks in the Northeast and Rust Belt states (where banks had large deposits and the demand for new housing was lower than other parts of the U.S.) to effectively extend mortgages to home buyers in the Sun Belt states (where demand for new housing was high but banks didn't have sufficient deposits to cover those loans).
So the CMO, in effect, was originally designed to abrogate state banking laws!
Are you saying BOA sold the loan, yet they are foreclosing on the property? (Forgive my ignorance. I’m struggling with this one.)
Chunga85: Could you explain this part of your post? Then, millions of homeowners shrewdly conned the “lenders” into dismissing all agency and fiduciary responsibility in the underwriting process....going so far as to force the “lenders” into forging documents.
Your post helped me understand some of the baffling parts of the article. But I have two problems today: I’m a victim of public education, and I’m on pain pills today. So I haven’t deciphered this one point. Thanks, FRiend.
“Lenders” basically did not care if the loan would ever be paid back..in fact..a “situation” was created in which a non-performing loan was worth MORE than a performing loan.
The video below explains this much more concisely than I can do here.
http://www.youtube.com/watch?v=nZ6lPaiKmwg
For mountains of evidence of FRAUD go here:
http://www.foreclosurehamlet.org
“I’m sorry - but that’s a sorry excuse for reasoning.”
Perhaps. But the point remains that Utah was happy for the investment from Bank of America when they decided to loan money to citizens of Utah. Only when they decide that a citizen of Utah should pay their mortgage does the judge step in and make this ridiculous ruling that only entities that are registered to do business in Utah can assert property rights there.
I’m not defending BofA (or any other) bailouts - they are a separate issue from this that you and I probably agree on.
That is a small part of the thinking behind not foreclosing. The biggest consideration from the Bank's view is their balance sheet. Once they start foreclosure on that commercial property the loan goes from an asset to a liability and they have to increase their reserves to compensate for it. Also, the Bank's know commercial real estate is in a depression and if the current owner in default manages the property well they have a chance to restructure the loan.
Most of the discussion focuses on foreclosure following a homeowner’s failure to make mortgage payments. Since this issue first became prominent, I have had a related question.
What happens if your mortgage and promissory note were properly issued and recorded along with a lien on the property. The mortgage was subsequently sold and collateralized and payments collected by a loan servicing company with no ownership in the actual note. When the final note is paid, what entity is responsible for and has the legal authority to release the recorded lien? Is there a real possibility that when many homeowners think they have paid off their mortgages, they will have problems receiving clear title to the property?
It seems the lack of a proper paper trail poses a risk for both homeowner and mortgage holder.
You refer to an exciting new process called “Title-Washing”.
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