By Jody Shenn and Prashant Gopal – Nov 16, 2010 11:14 AM ET
A trade group for companies that help package loans and leases into securities rejected claims that mortgage-bond trusts can’t prove ownership of debt they hold as Congress began hearings on the foreclosure crisis.
The standard practices of the industry result “if followed, in a valid and enforceable transfer of mortgage notes and the underlying mortgages,” Tom Deutsch, executive director of the New York-based American Securitization Forum, said in a study released today. Lawmakers in Washington ordered hearings on mortgage practices after loan servicers including Ally Financial Inc. and JPMorgan Chase & Co. halted foreclosure proceedings following revelations of so-called robo-signing.
The trade group focused on whether industry practices resulted in securitization trusts taking ownership of loans, though not whether all the paperwork needed for foreclosures is in order. Without taking ownership of mortgages within a set period after their creation, often 90 days, the trusts may be unable to later assemble the documents needed for foreclosures because of contractual requirements or tax rules.
“The law is somewhat unsettled on what actually must be done via a securitization to complete the transfers correctly,” visiting Harvard Law professor Katherine Porter told a Congressional Oversight Panel Oct. 27. Porter has said “there is disagreement on whether the transfer of the notes needed to have occurred individually,” or potentially with a specific endorsement to the new holder or a physical transfer.
Legal Challenges
“Possession of mortgage notes is enough to prove ownership, the group said, arguing that segments of the Uniform Commercial Code allow for valid transfers even when mortgage notes are “lost, stolen, or destroyed.” The UCC also allows for the creation of an interest in such an instrument without it being physically handed over when there is a “signed a written or electronic security agreement that describes the mortgage note,” the group argued in its study.“Apparently the group feels it can pick and choose from the UCC at will because it specificallt states: § 3-203. TRANSFER OF INSTRUMENT; RIGHTS ACQUIRED BY TRANSFER.
(b) Transfer of an instrument, whether or not the transfer is a negotiation, vests in the transferee any right of the transferor to enforce the instrument, including any right as a holder in due course, but the transferee cannot acquire rights of a holder in due course by a transfer, directly or indirectly, from a holder in due course if the transferee engaged in fraud or illegality affecting the instrument.I believe the UCC proves the group grasping for straws.
Congressional hearings on Hearing on Mortgage Services and Foreclosure Practices are exercises in futility without including a THOROUGH probe of the LETHAL role of lawyers regarding mortgage and real estate repossessions! It alarms me that the ‘Elephant in the Room’ (hiding in plain sight) continues to not undergo investigation! Foreclosure fraud is IMPOSSIBLE WITHOUT an Officer-of-the-Court (a lawyer) filing civil, as well as bankruptcy judicial pleadings!
Investigations exclusive of the very lawyers who file court pleadings seems like a dog and pony show. Lawyers are required to prosecute legal claims by means of law, rather than predilections! Even if / when mortgage lenders instruct lawyers to file inappropriate or unlawful documents, a LAWYER is obligated to advise what can and cannot be lawfully done!
For a very LONG time people such as Professor Elizabeth Warren, Professor Katherine Porter, and Gretchen Morgenson-NY Times (and even me!) have sounded alarms about PREDATORY, sometimes irreparable outcomes from UNREGULATED, IGNORED debt collection ILLEGALITIES.
Our nation’s mortgage crisis has finally caused serious pondering of factors that indicate a mammoth creature (I am certain it is the judicial elephant!) might be the driving force for this incredible Banking debacle!
For myself, and people who ask me to help, I HOPE a graphic TRUE STORY, spelling out methods that judicial systems are utilized to accomplish fraudulent real estate conveyances, and unlawful collections, is a catalyst for needed CHANGE. The epitomizing foreclosure story is found here:
Foreclosure Fraud Assault – A Cry For Help http://newsblaze.com/story/20101116120222nnnn.nb/topstory.html
“A foreclosure that entails savagery, fraud, corruption, greed, intrusion, peril, trauma, desolation, shocking deviation from established law and court rules and procedures, and reprisals for whistleblowing and for not relinquishing one’s home to sham foreclosure is a riveting story worth being told.
The victim’s painful story comes with a plea for humanity to rise to a duty of raising awareness, and not merely for the sake of aiding this one victim. It is for the sake of calling attention – and hopefully “making a difference” by requiring lawmakers to make changes in what appears to be third-world judicial systems of shocking perversion and inequality, harmful to the entire economy.
Encapsulated in the story “Foreclosure Gang Rape,. . .,” the victim’s graphic details of years of harm from lawyers, judges, and banks summed up as ‘gang rape’ is commensurate with defilement, exploitation, humiliation, bigotry, betrayal, invasion, revilement, assault, depredation, torture, despoliation, stigmatization, maltreatment, denigration, ruin, pillage, ransack, intrusion, and racism.
Wells Fargo turned over the modified loan debt to a foreclosure mill debt collection lawyer who used a defunct lender’s identity to foreclose, as well as demand unfair fees. At some point after foreclosure had been filed, the victim discovered that the modification consisted of a contract between the homeowner and a fictitious lender. . .”
Thank you Barbara Ann Jackson. What infuriates me is the appalling silence of the American people while this crime by banks and loan servicers is going on! Trying to abide by the law, we have become spineless on lookers while the carnage of foreclosure is going on.In the name of loan modification tricks, these servicers with foreclosure attorneys (vultures) are pushing owners around with ultimate objective of netting all kinds of illegal fees and finally the property. This whole process of securitization of loans has become the biggest scam in recent times. When will american people rise against this crime?