Foreclosing Mortgage Lenders Being Bitten By Carelessness In Securitization Process
- The financial engineering (ie. mortgage securitization) helped oil the housing boom by making credit more available. But stalled housing prices and rising defaults have revealed a mess: In the rush to flip paper, lots of the new lenders or pools don't have the proper paperwork to show they even hold the mortgage.
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- This sloppiness offers glorious reprieves for some defaulted homeowners but just headaches for lenders. One Maryland man, holding documents suggesting his loan was held simultaneously by a pool of loans and a bank, is still in his home--five years after foreclosure was filed.
Reportedly, lawyers representing homeowners facing foreclosure around the country are making moves that are "often forcing sloppy lenders to offer generous terms to avoid litigation."
For more, see Paper Chase (You're in luck. Your mortgage lender has flipped, sliced and diced your loan--and now no one knows who holds it).
For related articles, see:
- Financial Times: Contested foreclosures rise, could increase RMBS losses,
- Bloomberg News: Banks Lose to Deadbeat Homeowners as Loans Sold in Bonds Vanish,
- The Wall Street Journal Law Blog: Foreclosure Legal Work: A Shoddy, Assembly-Line Practice?
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