Federal ruling stops foreclosures as bank can’t prove ownership
This is just one of our articles referencing the financial crisis, crash of the housing market, subprime, and more:
Pooling of home loans into securities has been going on for decades and helped increase real estate prices in recent years as investors sought higher yields that such mortgage trusts could provide. Some $6.5 trillion of securitized mortgage debt was outstanding at the end of 2006. Mortgages are recorded in the MERS system. It seems the system is causing problems relating to true ownership of the properties.
Judge Christopher A. Boyko of Federal District Court in Cleveland dismissed 14 foreclosure cases brought on behalf of mortgage investors, ruling that they had failed to prove that they owned the properties they were trying to seize. All of the cases pertained to Deutsche Bank National Trust Company. The bank is trustee for securitization pools, issued as recently as June 2006, claiming to hold mortgages underlying the foreclosed properties. MERS is the mortgage electronic recording system.
The process of putting together a mortgage pool begins when a home loan is originated by a bank or mortgage lender. That loan is typically sold to a Wall Street firm that pools it with thousands of others. Once a pool is packaged, it is sold to investors in different slices, based on risk. A trustee bank oversees the pool’s operations, ensuring that payments made by borrowers go to the appropriate investors. At issue is whether the investor owns the home while the bank is merely the servicer.
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