Judges in One State Consider Original Loan Document Destruction

By
Real Estate Agent with GreatWest Realty DRE# 00827565

 

 


There is important stuff coming under consideration by federal bankruptcy judges in Delaware.
  It is the request by two defunct subprime mortgage lenders to destroy a multitude of original loan documents currently stored in thousands of boxes.

Because of recent court rulings, the importance of original loan documents is receiving attention.  Mortgage investors believe the documents to be essential to prove ownership of mortgages and have right to foreclose.

Troubled homeowners and their lawyers have expressed objection to document destruction, while claiming important evidence borrowers need to defend themselves in foreclosure cases will be lost.

Wells Fargo and US Bancorp, had two foreclosures voided by the Massachusetts high court, earlier this month, because the banks failed to produce records demonstrating they owned mortgages at the time the properties had been foreclosed upon.

Mortgage investors, worried the Massachusetts court decisions, could threaten the ability of lenders to work through a high volume of pending foreclosures.

Yahoo Finance provides an excellent and detailed article on these developments which can be accessed via: "Judges to weigh mortgage document destruction."

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Rainer
71,001
Andres Munar
Keystone Alliance Mortgage - State College, PA
Experience The Difference

That's crazy! Why would you want to destroy original documentation unless you possibly have something to side. So many times in my life i think dang I should of kept that.

Jan 24, 2011 12:44 PM #1
Rainmaker
820,770
Juli Vosmik
Dominion Fine Properties - Scottsdale, AZ
Scottsdale/Cave Creek, AZ real estate 480-710-0739

Why am I not surprised?  With all the trading that's gone on over the years of mortgage backed securities with only a required 10% audit ratio - not that most probably ever met that - they were sold off so quickly and in such "bulk."  When house values were still increasing, there was no problem - foreclose, sell the house for a profit, move on.  Now, it's such a HUGE mess. 

Jan 24, 2011 01:13 PM #2
Rainmaker
1,593,770
Bob "RealMan" Timm
Ward County Notary Services - Minot, ND
Owner of Ward Co. Notary Services, retired Realtor

It seems like such an obvious ploy to me. If they were allowed to destroy their documents it would set a precedence. From that point on they would never have to produce originals again because the justice department allowed the destruction of original papers thus proving would be the burden of the home owner. All consumer rights go right out the window with this one.

Jan 24, 2011 01:47 PM #3
Ambassador
670,099
Rene Fabre
First American Title - Seattle, WA
Marketing in the Digital Age

Funny they want to destroy original documents when it's the law for us (title/escrow companies) to keep files for 7 years... Hmmm, something smells a fowl here to me. If the mess is such that it's hard to determine who owns what, then so be it... we'll have to figure it out. You don't just erase the tape because you don't like the message...

Jan 24, 2011 01:58 PM #4
Rainmaker
596,893
Jim Hale
ACTIONAGENTS.NET - Eugene, OR
Eugene Oregon's Best Home Search Website

The banks want every one to be business like...except themselves.  Nothing new there.

We need more such judges.

Jan 25, 2011 12:59 PM #5
Rainmaker
1,214,432
Mary Yonkers
Alan Kells School of Real Estate/Howard Hanna Real Estate - Erie, PA
Erie/PA Real Estate Instructor

Myrl--thanks for exposing another bank fault--their desire to hide their despicable behavior in the subprime mess.  Many of these banks were touted as too big to fail.  Now they think they are too big to follow the same rules every one else must follow.

Jan 25, 2011 01:22 PM #6
Rainmaker
2,517,061
Myrl Jeffcoat
GreatWest Realty - Sacramento, CA
Greater Sacramento Real Estate Agent

Andres - My take on it is that they are trying to destroy the evidence of what they had folks signing up for on the liar loans.  However, there seems to be even more to the story than just that.

Jan 25, 2011 01:43 PM #7
Rainmaker
2,517,061
Myrl Jeffcoat
GreatWest Realty - Sacramento, CA
Greater Sacramento Real Estate Agent

Juli - The mortgage lending industry became far more than providing folks with loans for homes.  It was all about packaging and trading mortgage products.  The derivatives market, pumped up on steroids and morphed into the Credit Default Swaps,  sent the housing market ultimately over the cliff.

Jan 25, 2011 01:46 PM #8
Rainmaker
2,517,061
Myrl Jeffcoat
GreatWest Realty - Sacramento, CA
Greater Sacramento Real Estate Agent

Bob - You make an important point!  There is no reason on this planet that I can see, that those documents need to be destroyed at this time.  Especially with all that is going on in the arena of existing home loans.

Jan 25, 2011 01:48 PM #9
Rainmaker
2,517,061
Myrl Jeffcoat
GreatWest Realty - Sacramento, CA
Greater Sacramento Real Estate Agent

Rene' - I can see no reason that would justify the destruction of these documents. . .It clearly makes no sense to me.

Jan 25, 2011 01:49 PM #10
Rainmaker
2,517,061
Myrl Jeffcoat
GreatWest Realty - Sacramento, CA
Greater Sacramento Real Estate Agent

Jim - It seems that Wall Street and the banks are dwelling in a microcosm of existence.  They want to essentially have their way with us, and fight any regulation that would provide consumers with protection, and grant rules of the road.

Jan 25, 2011 01:51 PM #11
Rainmaker
2,517,061
Myrl Jeffcoat
GreatWest Realty - Sacramento, CA
Greater Sacramento Real Estate Agent

Mary - If we learn anything else from this crisis, we must fix the system that allows corporations and institutions to be deemed "Too Big To Fail."  Whatever it takes to break them into chewable size, so should they decide to be wreckless in their business practice, they can be allowed to bite the dust and fail - without taking everyone else down with them!

Jan 25, 2011 01:54 PM #12
Rainmaker
820,770
Juli Vosmik
Dominion Fine Properties - Scottsdale, AZ
Scottsdale/Cave Creek, AZ real estate 480-710-0739

I came back to see comments.  Looks like this will be just another thing to be on the look out in the coming months/ years.

Jan 25, 2011 03:30 PM #13
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Rainmaker
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Myrl Jeffcoat

Greater Sacramento Real Estate Agent
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