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Fascinating Report on Sub Prime's being the tip of the Iceberg

I was led to an online report about how the sub Prime market woes are just the tip of the iceberg. Even though bankers are claiming the worst is over, interesting things are afoot in the U.S. Court systems. In the Cleveland, OH Federal District Court, Deutsche Bank was denied kicking out 14 families from their homes because DB was unable to produce the mortgages on those particular properties.

The document produced showed an "intent to convey the rights in the mortgages." Since this had never been actually challenged and ruled on in court, this led the judge to dismiss the suit brought by DB to take over the houses. All because of the current system of "globalization of mortgage backed securities".

Although this could scare lenders across the company from buying and selling such notes, putting a further crimp into America's already weak credit situation, it's more likely that lenders will get their ducks in row and be able to produce the documents needed before running willy nilly to court.

The one thing folk should realize is to not test the system, attempt to go into default to see if one can get a free and clear house. (Rather similar to FHA's Secure Loan program where a family getting advice to stop making payments so they can get into the Secure Loan program will be denied!)

btw - here is the link to the online report. http://www.rense.com/general79/subprime.htm

Posted by Matthew Rosov, Certified Mortgage Planning Specialist on 11/27/2007 04:22 PM

Comments (11)

mortgages, defaults, federal court, deutsche bank

11 Comments on Fascinating Report on Sub Prime's being the tip of the Iceberg

Interesting post and linked report. No doubt DB will appeal the decision, but it does make sense...they didn't have the right documents to give them legal standing to put the borrowers out of their homes.

I will be interested to see what transpires after this. Given that the banks have previously been able to use these documents in court (according to the article), I wonder if this judge is just one voice against a tide that will allow them to continue to do so.

11/27/2007 04:55 PM

by Judith Reppert (United Country Countryside Realty)

that is some interesting information. That ruling could have some lenders backing off even more but like you said I think they would get their stuff together first. They should have had the correct documents to begin with.

11/28/2007 08:07 AM

by Rick Grand--Mortgage Broker Eugene, Oregon

I've been saying all along that we have just begun to see the fallout. There is certainly more on the horizon. YIKES!! :-)

11/28/2007 03:06 PM

by Elizabeth Nieves - Bilingual Raleigh - Durham North Carolina Real Estate Team (The Elizabeth Nieves Realty Group @ Keller Williams)

Elizabeth - yup, the fallout has begun. It's going to be falling awhile. :-(

Rick - It's amazing what banks think they can get away with!

Judith - Sometimes all it takes is one brave soul (or judge) to stop the pain!

11/28/2007 04:10 PM

by Matthew Rosov, Certified Mortgage Planning Specialist (Envision Lending Group)

Interesting post. DB definitely should've been more prepared given the current status of the industry. I'd think they'd of brought everything available on the file given how easy it is nowadays just to upload to a zip drive ...Haven't read the linked article yet, I will.

12/07/2007 02:03 PM

by Christopher Ohlsen (Lake City Mortgage)

Interesting. This falls in line with many credit card companies being unable to produce documents that support that debt is owed. Clearly the current document management system isn't working.

12/07/2007 02:26 PM

by Kate Bourland; Redding Mortgage, Loss Mitigation, Money Merge Accounts (Windsor Capital, Dyer Beech & U First Financial)

Sounds like many a company are taking short cuts and just now realizing the price!

12/07/2007 02:27 PM

by Matthew Rosov, Certified Mortgage Planning Specialist (Envision Lending Group)

Wow, that is a scary report and I can't wait to see how this plays out. My worry is fraudsters will use this technique to try to con people out of their homes.

Todd

12/08/2007 12:46 AM

by Todd Clark (Realtor), GRI (Washington Co, Beaverton Oregon) (Kastings & Associates, Beaverton Oregon Real Estate)

It is and was welcome news. I do foreclosure defense here in California.There is a statute called California Civil Code 1632 that gives a homeowner rights if there contract is not in Spanish. Its an interesting thing to look at and work at for some time. there has to be an overhaul of the system we live in. Hope to see all the great results o f the last 5 years reap some benefits. Talk to you later.

12/08/2007 01:40 AM

by Brian Sullivan

Todd - Not just fraudsters but ignorant folk as well who think this is a way to beat the big bad mortgage banks.

Brian - Does the CA law include even those who don't have Spanish as any language?

12/08/2007 08:00 AM

by Matthew Rosov, Certified Mortgage Planning Specialist (Envision Lending Group)

Matt,

The judge's decision has probably caused a lot of discussion in lenders' and investors' corner offices. If any future decisions are based on that, lenders and servicers are likely forced to do more workouts.

12/08/2007 02:16 PM

by Esko Kiuru - Las Vegas NV Mortgage Consultant (Sinifox Financial)

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