Archive for January, 2011

RECENT EVENTS AFFECTING THE TRUST DEED MARKET

Friday, January 7th, 2011

  Today in Massachusetts a judge ruled that Wells Fargo Bank had foreclosed on 2 homes without having the proper paperwork in order regarding ownership of the 2 loans they foreclosed on.

Large banks and others use the Mortgage Electronic Registration System (MERS) to register ownership of the loans they originate, buy and sell.  The MERS system records electronically the ownership of the loans as they pass title from one lender to another, or from one lender to an investor.

Pools of loans in the hundreds or thousands sometimes are sold and more than once.  When the loans transfer title, MERS keeps track of the transactions and ownership of the loans.  The big problem with this is that the County Recorders records where the property is located may just show that the loans were transferred into the MERS system and nothing further, so MERS is the record owner of the loan(s).  Since MERS can’t really own the loans, they are just a record keeping company / system, it was ruled that the bank or foreclosing entity that conducts a foreclosure must be the record owner (actual owner) of the loan being foreclosed on and have accurate records regarding that loan.  It is required by law to have the County Recorders Office where the property is located be notifed by filing an “Assignment of Deed of Trust” or an “Assignment of Mortgage” regarding the ownership of a loan every time is transfers.

The stock market was affected by this ruling today, sending financial stocks down in fear that the Massachusetts ruling will fast spread to other states.  The fact is that the borrowers on these loans stopped paying their mortgage payments and deserve to be in foreclosure was not the issue before the court.  The two borrowers that defaulted found a legal way to get their houses back without paying on their mortgages, at least for now until the bank straightens out the paperwork regarding recording the ownership chain of title to the defaulted loans, then start all over again filing foreclosure.

Certainly in my mind the borrowers deserve to have their properties foreclosed on for non-payment on their loan(s).  If the government takes away the power to foreclose, or hinders it greatly, there will be no financing, or financing that is so expensive, an outcry from the public will take place.

On the other hand, having the proper “chain of title” ownership to the loan and showing full and complete paperwork is necessary when conducting business or taking a legal action such as a foreclosure. 

Do you have your Original Promissory Note?  Original Deed of Trust? Original or a copy of the Title Policy insuring your loan in the 1st position? An original or a copy of the Fire Policy insuring your loan in the 1st position? A copy of the HUD-1 escrow closing statement?  A copy of the escrow instructions or contract calling out for a Note to be created in your sale transaction?  All of these items are necessary to us when we buy a note.  If you are missing one or up to all of them, we can help you rebuild your file, even if you can’t on your own.  Rely on our expertise of over 30 years in the business to assist you.

If you are considering selling your loan that you carried back when you sold your piece of real estate, we would love to give you a quote.  Click over to our “Get a Quote” page or call us toll free (800) 834-9188, or fax over your request, we’ll get back to you promptly!