In some states, lenders can foreclose quickly on delinquent homeowners. There are 23 states that use use a judicial process before a lender can take away someones home. These judicial states require the verification of documents including the need to verify and prove who actually owns the original promissory note. (Now... there is a novel idea). This is an issue we have been trying to educate homeowners on for the past several years. I know we have been sounding like a broken record, but in light of all the recent media coverage the past few weeks, you can hopefully see why.
Many mortgage lenders seeking to foreclose on homeowners (and the foreclosure attorneys representing them) are bringing forward foreclosure actions without the legal standing to do so. When a lender can't produce the original note, allowing a foreclosure to proceed puts the homeowner at risk of owing that debt again to another party in the future. Why mortgage lenders (or the attorneys representing them) decide to bring forward such actions against homeowners without having the rights to do so in the first place is beyond me! Bringing forward such an action (with no legal standing to do so) only puts the foreclosing lender (and the legal counsel representing them) in tremendous legal jeopardy and could also equally subject them to very substantial monetary damages (should a homeowner challenge their potential fraudulent actions in a court of law). Since Massachusetts is a non-judicial state regarding foreclosure, it would have to be up to the homeowner being foreclosed on to file a law suite against the foreclosing parties in order to challenge their lender's actions. Unfortunately, many unsuspecting homeowners (who are not aware of their rights) will lose their homes to a fraudulent foreclosure unless they stand up for themselves and challenge such an action!
It is important for Courts to understand that this issue is not merely a "technicality" and a judge should not be satisfied with anything less than full proof of this issue. The Court itself needs to appreciate the fact that if it should agree that an original note has been legitimately lost (and allows the foreclosure to proceed) it is the borrower who is still at risk. Why? Because incredibly, even if a Court has found that the original note is lost and the foreclosure sale is finalized, if someone later turns up with the original note and proves that it is the proper holder of the note (and not the person who foreclosed on the property) the original borrower is STILL LIABLE! Someone took your home and the Court allowed it because it believed that the lender proved that the note was lost and it was the proper party. Then someone legitimate shows up in the future with the actual note and you still owe that person or entity the money even though your property was taken with the blessing of the Court. How fair is that? It's not! Trust me; this is a very serious issue regarding foreclosures!
Whether or not a homeowner owes the money is not what is in question here. We all know the homeowner owes the money to "someone". However, they have every right to definitively know who that "someone" is. It's not like they are looking for a free ride. In fact (at least with our clients) it has been quite the contrary. They have been reaching out to their alleged lender for months asking for their help and assistance with no results. This is due to the fact that their loan is part of an asset backed security package that was sold on Wall Street and potentially belongs to multiple people and/or entities that technically requires each party to agree to modify any of the terms that could affect their bottom line. These people/entities (usually big time investors and speculators from all over the world) have no clue as to what investments they own and don't own (leaving the banks and servicing companies wondering the same thing). Trust me, it's a BIG mess!
I am just happy that President Obama had enough sense to veto the Notary Bill congress tried to quietly pass in the middle of the night (in favor of these mortgage lenders) that could have helped banks speed up foreclosures while stripping away rights of homeowners and individual states (essentially condoning the bank's fraudulent acts).
If this topic is of interest to you, check out the Massachusetts Foreclosure Prevention Group located on Facebook to learn why this is such an important issue. You may also find other helpful information on my ActiveRain blog as well.
All the Best,
Rick D. Misitano
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