Reading the torygraph business section I came across Deutsche Bank in ownership court row: "An American judge has prevented Deutsche Bank from repossessing 14 homes because the bank could not prove it owned the defaulting mortgages involved... Pooling involves taking hundreds if not thousands of mortgages, putting them in one unit, and then selling parts of that unit to others. As a result, it can often be unclear which bank actually owns the individual mortgages. Judge Boyko had ordered lawyers acting for Deutsche Bank National Trust Company to prove the lender was the ultimate owner of the mortgages. When it could not do so, he dismissed the cases."
Oops, someone has been careless.
[Update: thanks to C for Tanta -W]
- Log in to post comments
More like this
This is the second part of my series trying to answer peoples questions
about how mortgages work, and what went wrong. In the first part, I described
what a mortgage is, and how it works. In this part, I'm going to describe the
mortgage system - that is, the collection of people and organizations…
Against my better judgement, I've ended up writing a lot about the
financial mess that we're currently going through. If you've read that, you
know that my opinion is that the mess amounts to a giant pile of fraud.
But even having spent so much time reading and studying what was
going on, the…
Have no doubt, despite the claims of propagandists, the foreclosure documentation crisis is not nitpicking. Providing the court with affidavits with unverified information is fraud: were you or I to do this, we would go to jail. One of Yves Smith's commenters describes this in more detail:
An…
With the insanity that's been going on in the financial world
lately, a bunch of people have asked me to post a followup to my
earlier posts on the whole mortgage disaster, to try to explain
what's going on lately.
As I keep saying when people ask me things like this, I'm not an economist. I don'…
Someone has indeed been careless, and the judge basically bitch-slapped them for being careless and assuming they could get away with it in court. There's a good detailed summary at http://calculatedrisk.blogspot.com/
Somehow I doubt the judge would have done the same thing to the Bank of Greater Cincinnati Suburbia.
Sorry for being off-topic, but I have to...
Vaclav Klaus on BBC - http://news.bbc.co.uk/2/hi/programmes/hardtalk/7091092.stm
now, it is funny at all...
As a practical matter, it appears to me that it was the lawyer for DB who messed up by filing a foreclosure complaint and lis pendens on behalf of DB where that bank is not the record owner of the mortgage. Either DB is pretending to own mortgages it has no interest in (which is unlikely) or when an assignment of mortgage was made from Bank A to DB it was not recorded in the land records, and the lawyer for DB failed to pick this up in his title search. This type of oversight is a common occurrence and easily correctable.
If the judge truly is requiring DB to prove it is the "ultimate owner," they might be in court for a long time, because in a financial sense there may be thousands of "owners," given how mortgages (all mortgages, not just subprimes) are divvied up, pooled, guaranteed (often by Fannie Mae or Freddie Mac) and used to generate mortgage-backed bonds and derivatives.
What matters, in the context of a foreclosure action, is which bank is the "record owner" of the mortgage (i.e. the original mortgagee or most recent assignee). The identity of the record owner can be determined easily from the land records.
[Yes, this is where I'm unsure. If its just a slip in the paperwork, its not very interesting. If the slicing up of the mortgages has resulted in the ownership being spread around, then its rather more fun. I don't quite see how the ownership can't be spread, but them I'm no expert in resold mortgages -W]