- Carelessness, neglect and an utter disregard for proper procedures is something Oppenheim Law has come to expect from the mortgage industry.
So it is no surprise that mortgage servicers might have turned once again to robo-signing in order to foreclose on homes, according to Reuters. This time it’s because the original documents don’t even exist!
During the housing boom, over half of all mortgages issued were pooled together and sold by lenders to investors. When the lenders sold the mortgages, they were supposed to physically sign and endorse the mortgages over to the investors. In the rush, however, lenders simply overlooked the paperwork.
One of the best examples is New Century Mortgage, the second largest subprime lender until it collapsed in 2007. There are indications that New Century didn’t endorse almost all of the mortgages it sold to investors. A sampling of 50 mortgages in Duval County revealed that not a single of them was properly endorsed. Such oversights mean that it is difficult to pin down who actually owns a mortgage and that investors potentially paid lenders billions of dollars for nothing.
The former head of the FDIC, Sheila Bair, advocated for a widespread investigation to determine the extent of this robo-signing problem. Other regulators, however, don’t want to pick at the problem because they’re scared of what they might find and the resulting damage it could cause the housing market.
The problem could be good news for the homeowners who are facing foreclosure proceedings based on one of these notes. Issues with notes can extend the time a foreclosure takes to run its course and thus give homeowners valuable time. The problem does not, however, fully absolve a homeowner. If the mortgage note was not properly transferred, then the original bank still owns the mortgage and can foreclose on the home just like it would with any other house. The problem is, of course, that the owner of the note might not exist anymore or might be in bankruptcy themselves.