Foreclosure Cases are one Sided With Borrowers Always Losing out to Lenders

Posted on November 6, 2009
Filed Under Repo Homes | Leave a Comment

It is not just today – but for many decades foreclosure cases have been one sided with the borrowers having little or no chance against the lenders; the latter always won. The courts always gave their stamp to the taking over of properties by the banks. The word of the bank was never doubted.

This was the situation in the majority of the cases with the lenders sitting in the driver’s seat running over the hapless borrower. There was hardly any sympathy for the borrower who failed to repay loans. But the current crisis has opened everybody’s eyes. It cannot be that millions are in the wrong and the few lenders are in the right. Many borrowers were tricked into contracting mortgage agreements without being made to understand them. The banks never bothered to find out if the borrowers had the means and capability to repay them.

In most of the court rooms the drama is being enacted over and over again – an unequal battle between Goliath and David. But lately some of the judges have been making in depth searches into the rules so far being used by the lenders. Consequently a handful of lenders are getting slapped around.

One of these outstanding incidents occurred on 9th October in bankruptcy count in Southern New York. The ruling was given that the lender, PHH Mortgage had not been able to prove it claim to the house in question. Judge Robert D. Drain erased a mortgage debt on the property amounting to $461,263. It’s hard to believe but is true that thanks to a court ruling a mortgage debt vanished into the blue!

The judgment has totally changed the complexion of the foreclosure game. If the lender fails to produce proof of its ownership and the judge gives that angle importance, then the borrowers have a sharp tool to produce in court; so much so they may not only save the house from foreclosure but may also become free from the mortgage.

The reason why the lenders are failing to provide proof is that so many times the notes changed hands during securitization that the original note has got lost. Large pools of mortgages were made but some of the notes were never minutely checked during the partying days of the housing boom. There was a heady drunkenness of money making. Thus nobody really knows who is the owner of what.

The shoddiness of handling foreclosure cases will not disappear overnight but a point has been made that can be regarded as a turning point in one sided success.

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