As any regular reader will know, I am not a fan of A. bailing out anyone that took on more mortgage than they can chew or B. letting people walk away from mortgages they cannot afford. Both A and B cost me money as a taxpayer, which I am not happy about. However, this story in the New York Times is quite different than both of these foreclosure scenarios, as these people were able to avoid foreclosure…because the bank could not prove ownership!
Upon first glance, it seems awfully unfair to those people who have regular mortgages that they took care of, as this woman got the following:
Last month she received a settlement from the Bank of New York, the trustee for a vast pool of mortgages that included hers. Under the terms of the deal, the bank reduced Ms. Palmer’s loan balance to $59,000 from about $100,000 and has agreed to accept the proceeds of a reverse mortgage in full satisfaction of her obligation. The settlement also eliminated about $12,000 in foreclosure fees added to her debt and called for the installation of central air-conditioning in Ms. Palmer’s home.
But then you see why she got the above deal:
“We believe that many of these companies can’t find the assignments,” said William J. Brennan Jr., director of the Home Defense Program of the Atlanta Legal Aid Society. “If they can never prove ownership, then they can never foreclose.” The problems associated with banks that begin foreclosure proceedings when they do not have proper legal standing are now looming larger in the mortgage meltdown. Loans were heaped into trusts with little documentation of ownership or proper loan assignments “” it was all about volume and the fees that came with it “” and now that sloppiness is hurting both lenders and borrowers.
OK in these type of cases, I do not think it is right for a bank to foreclose on a house if they cannot even find the paperwork proving that they own the property. The last 5-10 years of the mortgage industry sure created a giant mess! What do you guys think; in cases like these, do you think the bank should still be allowed to take away someone’s home? Let me know!