Improper Mortgage Assignment By Now-Defunct Originating Lender Could Lead To Free Home For Delinquent Borrower, Says Foreclosure Defense Attorney

In Fayetteville, Arkansas, The City Wire reports:

• The Legal Aid [of Arkansas] folks held [a] seminar in April in hopes of training attorneys interested in joining the effort to defend against foreclosures. First and foremost, seminar attendees learned that the worst mistake someone facing foreclosure can make is to take no action.

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• April Carrie Charney, senior staff attorney at Jacksonville, Fla., Area Legal Aid and a Legal Aid of Arkansas alum, said people going through the foreclosure process do have defenses. She signed on as a seminar presenter for the purpose of passing on some techniques that have been successful in Florida to Arkansas attorneys. “I'm going to fill up their quivers with more arrows than they'll ever need to stop or prevent foreclosures,” she promised prior to the seminar.

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• [C]harney said[] a good number of mortgages simply aren’t transferred correctly. Let’s say, for example, Joe Borrower takes out a mortgage through Fred’s Bank and Trust. Mortgages, quite often, are bundled up and put into trusts to provide a basis for investment in the mortgage-backed securities market. Fred’s Bank and Trust goes out of business and Joe Borrower’s loan goes into default -—if the mortgage was not transferred correctly into the aforementioned trust, who has standing to bring a foreclosure action?

• With Fred’s Bank out of business, can anyone legitimately bring a foreclosure action? In some cases, might the borrower wind up with a house free and clear of any mortgage obligation?

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• Whether we’ll see lawyers in Arkansas jump up and start aggressively defending against foreclosures is anyone’s guess. It also remains to be seen how the courts will react to some of the tactics suggested by Charney. Still, we do know there are a lot of foreclosures out there and it appears Arkansas attorneys are starting to take a hard look at how to fight them in court — and make a few bucks in the process.

For the story, see Foreclosure rights.