How Can You Get Divorced If You’ve Never Been Married?
That’s a question a wildly experienced attorney asks anytime anyone talks about entering into a loan modification or litigating against a trust. Her point is (and it has been for years) is that the trusts do not have the authority to enter into modifications or litigation because they do not own many of the mortgages they are purportedly acting on behalf of. Attorneys like her and a handful of others across the country have been screaming about the glaringly obvious problems with the failures of the securitized trusts for years now, and finally the larger world is starting to wake up.
The latest indication comes from today’s edition of the New York Times. In today’s edition, Gretchen Morgenson advises that two state attorneys general have now expanded their investigations to determine how many loans were not properly transferred into the alleged Mortgage Backed Securities Trusts (Nothing Backed Securities Trusts).
The rules governing the securitization process are labyrinthine, and there are steps required if the investment is to comply with tax laws and promises made by the issuer in its offering document. If the trusts did not comply with tax laws, for example, the beneficial treatment given to investors could be rescinded, causing taxes to be levied on the transactions. Here’s the basic scoop, from Gretchen’s article:
The terms of these mortgage deals varied, but many of them required that the trustee examine each of the loan files as soon as they came in from the Wall Street firm or bank issuing the security. For a file to be complete, it would typically have to include all of the information necessary to establish a chain of ownership through the various steps of the bundling process, as when the originator transferred it to the issuer of the security who then moved it to the trustee. (Full Article Here)
The reality for people who are down here fighting on the ground is that precious few of the mortgages that are being foreclosed on comply with their own contracts. As I dig into each one of my files to confirm whether the basics of securitization were complied with, I find that very few have…..evidence of this failure can be found in virtually every file….the post-dated assignments, the mysteriously appearing endorsements on notes, the substitution of party plaintiff. And contrary to what some courts think, all of this is dead relevant to our homeowner.
Why should my homeowner be negotiating at all with a plaintiff that cannot prove it complied with its own contract and which may lack the authority to participate in his negotiation?