Mortgages

Another judge has refused to grant a foreclosure when  the bank could not prove that it validly acquired the mortgage by assignment from the original mortgagee. Deutsche Bank Nat. Trust Co. v. McRae, 894 N.Y.S.2d 720 (Sup. Ct. 2010). The court emphasized that foreclosure actions can only be brought by those who have title when the action is commenced and that mortgages can be assigned in two ways—by delivery of the note and mortgage by the assignor to the assignee with the intent to assign or by a written instrument of  assignment. The written assignment in this case was insufficient because it assigned the mortgage but not the note (the underlying contractual obligation). The plaintiff sought to introduce evidence of a note that was endorsed by the assignor with notice of assignment. However, the assignment was not dated and conflicted with the unsigned note attached to the plaintiff’s foreclosure  complaint, leading …

Another N.Y. court refuses to grant a foreclosure when the bank failed to follow strict procedures to prove it owned the note Read More »

In Commonwealth v. Fremont Investment & Loan, 897 N.E.2d 548 (Mass. 2008), the highest state court in Massachusetts allowed the Attorney General to move forward on a claim that adjustable rate mortgages violated the state consumer protection act as “unfair or deceptive” practices when the borrowers’ incomes were not high even to allow them to afford to pay the higher interest rates. Granting mortgages on the assumption that the borrower would refinance at that point or the lender would foreclose assumed that the lender was entitled to base the security for the loan on the projected increase in market value of the collateral rather than the borrower’s ability to pay. The court allowed the claim to go forward even though the loans at issue did not constitute predatory loans as defined by state law.

Justice Arthur Sacks of the New York Supreme (trial) Court dismisses foreclosure actions when the mortgagee fails to prove ownership of the mortgage or has otherwise failed to comply with the formalities of the recording, property transfer, and foreclosure process as required by state law. read article

Millions of mortgages are recorded in the name of “MERS” – Mortgage Electronic Registration System – which holds mortgages as a “nominee” or stand-in for the real owner of the mortgage. MERS was created to make it easier to transfer mortgages electronically on a central computer system without having to re-record the mortgage. This was useful for mortgages that were securitized and resold many times but some courts are beginning to find the system inconsistent with recording requirements. One court in Kansas has denied MERS standing to receive notice of a foreclosure on the ground that it does not own the mortgage and is not the real party in interest in the transaction. Landmark National Bank v. Kesler, 2009 WL 2633640 (Kan. Ct. App. 2009). read opinion This strategy has been used to protect homeowners from having their property foreclosed and it may undermine the business model relied on by MERS. read …

MERS denied standing to receive notice of foreclosure Read More »

Costco CEO Jim Sinegal complains that it is hard for the company to buy new real estate to open new stores because “in many instances nobody knows who owns the land anymore.” read article