Who Really Holds Your Mortgage?What’s really going on with foreclosures here in New York. Attorney Richard Croak interview…
Richard Croak – The big news appears to be a continuation – whether the mortgage electronic registration service is a holder of a mortgage and whether they have the right to assign it to another party. The courts of New York have been coming down consistently, that they don’t have the right to assign the mortgage. They have the right to represent the person who has nominated them.
Q: So,what’s happened here?
Richard Croak – What’s been happening consistently is individuals went to a mortgage settlement to close their mortgage. When they did that, they were signing a mortgage that nominated this mortgage electronic registration service, to be the nominee of the bank they were dealing with. A year or two later, they get a notice saying their mortgage has been assigned to another bank. And, a week or so after that, they get another notice saying that their mortgage is being held by another bank. What happens is, the mortgage broker – the entity that generated the loan, immediately assigns it to the company that finances it. That company now, turns around and sells the mortgage on the open market.
Q: But the mortgage never actually gets transferred.
Richard Croak – That’s correct. What happens is that the mortgage goes on this electronic filing system, and then, after something happens such as a foreclosure, the mortgage is assigned to theoretically, whoever is holding it at that time. That could be Bank of America, Chase, JP Morgan-Chase, Wells Fargo. Any of the larger banks. Often, they are representing themselves as the agent for a series of bond holders. But, when you look at the documents closely, you’ll see that one of the last documents is an assignment by this electronic registration service to current servicer – say a Bank of America or a Wells Fargo. Often, this occurred after the mortgage case was filed.
Q: So, the question is – is this right?
Richard Croak – Often, the New York courts are saying, it isn’t right. As a nominee, you don’t have the right to assign. You have the right to appear for them. IN other word, MERS can file the foreclosure, can’t act as assigner for somebody else who is not appearing .
Q: What was the original reasoning for this?
Richard Croak – Allegedly, for the purpose of saving filing fees. But what appears more of what it was done for, was the process of breaking the mortgage note. It now goes from the closing table to some other bank, to some other bank etc. That bank may or may not be available now. The note may not be available now. Here in New York, to foreclose on a mortgage, the courts are saying you have to have a note and a mortgage.
Q: So, how is this being solved?
Richard Croak – The courts are throwing out the foreclosures. They then, have to go back and start again. That the various parties have to have the proper documents and exchanges. That’s why, anybody getting foreclosed needs to sit down – and see a knowledgeable attorney. New York state has a rule that says attorneys fees provided for the mortgage, and that foreclosure gets tossed-out, you’re entitled to get attorneys fees the way the bank would.
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