Missing Loan Documents Stall Foreclosure

An example of the sloppiness of many mortgage lenders (and their attorneys) in going about their obligations in bringing foreclosure actions is illustrated in a recent decision of a New York City trial court. While there is nothing necessarily remarkable about the case in terms of its value as precedent, it nevertheless highlights the importance for an attorney representing a homeowner facing foreclosure to hold the lender's feet to the fire and make sure the lender presents in court all the crucial paperwork necessary to establish its right to foreclose.

In this case, the foreclosing mortgage lender simply failed to prove that it was the legal owner of the mortgage by presenting in court the legal paperwork associated with the loan. Whether the loan documents were lost, destroyed, stolen, or merely misplaced wasn't indicated. But, according to the court, unless a foreclosing mortgage lender can demonstrate that it has all its loan documents in order showing that it is the true owner of the mortgage, it cannot proceed with its foreclosure.

This may sound like common sense. However, given the number of times these mortgages are sold and resold (and, if they get into the hands of Wall Street mortgage repackagers, the loans get sliced and diced into collateral for mortgaged backed securities), it's no surprise that the mortgage companies buying and selling these loans lose track of who actually has physical custody of the loan documents.

For a longer version of this post (including links to this case and others), see Misplaced Loan Documents Stall Mortgage Foreclosure, at The Home Equity Theft Reporter Cases & Articles.

For other posts on the sloppiness and carelessness of foreclosing mortgage lenders in keeping their loan documents and associated records in proper order (with links to the online media articles), see:

• Defending Consumers In Foreclosure Actions,
• Dillon Continues Battle Against Alleged Predatory Mortgage Servicer (see "Editorial Note").