136,481 New Listings - November 2009 - Last update November 7, 2009 12:30 PM EST 
Creditors Without Proof Of Ownership Face Foreclosure Delays
Foreclosed homeowners in Ohio are getting a surprise break from the courts these days and the judge’s rulings may set a nationwide precedent and give troubled homeowners more time. It’s all happened because a federal judge in Ohio has ruled against a long-time practice and created an obstacle for lenders who are attempting to reclaim properties that are in default due to payments that have been missed.
On October 30th of this year , Judge Christopher Boyko of the Federal District Court in Cleveland, Ohio, dismissed fourteen foreclosure action that were before him on behalf of mortgage investors. The dismissals resulted because the investors failed to prove that they actually owned the properties in question. The cases were initiated by Deutsch Bank National Trust Company who is trustee for securitization groups issued in June 2006 claiming to hold mortgages on the foreclosed homes.
Home loans have been ‘grouped’ or ‘pooled’ into securities for more than twenty years and they were one of the main reasons behind the housing boom between 2000 and 2005 when prices escalated rapidly as investors looked for the higher yields that mortgage trust were providing. By the end of 2006, there was more than $6.5-trillion in securitized mortgage debt outstanding.
Now that foreclosures are ramped, this ‘pooling’ has made it difficult for lenders and their lawyers to track down proof of ownership thanks to the complex structure and disparate ownership of mortgage securities. Judge Boyko ordered the lender’s representative to file actual copies of the loan assignments to prove that the lender actually owned the note and mortgage on the properties at the time of the foreclosure filings. To their dismay, Deutsch Bank could only provide proof of intent to convey the rights, but could not provide actual proof of ownership. The judge gave the attorneys thirty days to come up with proof of ownership that the court can accept. Notice of this requirement has been given to attorneys in 27 additional pending cases by another federal judge in Ohio in early November of this year.
This may prove temporary good news for foreclosed homeowners in as much as it will stall the inevitable for thirty days or more depending upon the lender’s ability to locate the proof required.
It is estimated that another 2-million homeowners nationwide will lose their homes in foreclosure in coming years as more adjustable rate mortgages reset to higher interest rate and as much as double their monthly payments. Moreover, a recent study performed by the University of Iowa found that forty-percent of 1,733 mortgages they studies, lenders did not have proof of ownership.
Many lenders and their attorneys have expressed concerns that the latest federal court rulings in Ohio will prove to be an excuse for troubled homeowners to escape foreclosures in the usual time frame as the grounds for dismissal surface in cases where proof of ownership is not immediately available to lenders. It is clear that federal courts have ‘had enough’ of lenders who ignore the law in these cases.
That’s good to hear one area so far is taking somewhat of a stand for homeowners against these loans. The banks originated garbage loans knowing they’d be packaged into incomprehensible investment instruments, and now they can’t even keep track of who owns the loans and is supposed to be doing the foreclosing. All they’re sure of is that they want to take the properties back now that they have a chance, even if they don’t have any legal right.
The real problem with Banks/Mortgage Companies is that all loans created by credit (mere computer or bookkeeping entries where no money is involved) are fraudulent. The Borrower is lead to believe the Lender is lending money. The Bank or Mortgage Company puts nothing at risk and is therefore not a ‘holder in due course’, which is requisite for lawful foreclosure.
The loan is funded by the Borrowers signature, which is monetized by the Lender, thus that signature creates the value for the loan and validates the fraud. In addition, the Borrower pays interest on non-existant funds…the magic of credit creation and fractional reserve banking.