Worsening Of Foreclosure Crisis and Related Legal Wrangles

Posted in Foreclosure Crisis, November 20th, 2008 |

In the middle of November of the waning year of 2008 it seems that the foreclosure crisis has worsened with numbers reaching for the sky. Meanwhile the authorities at all levels continue to try to contain the menace by administering various measures. The foreclosure crisis has led to the sprouting of foreclosure-mills that handle en masse cases on behalf of lenders and borrowers. It has brought in an endless supply of work that are not always palatable. There are sanctions, stern admonitions from judges and the like. The judges too are a harassed lot as they tackle increasing number of foreclosure related cases. Invariably this leads to mistakes and errors.

One interesting case is that of widow Joanne Fredenburg who owned a house in Lehigh, Florida. The state is one of the worst hit foreclosure zones where real estate prices have fallen to dangerous low levels. In October 2008, Joanne was served with not only one but with two foreclosure notices. These were from two different lenders who claimed to be in possession of her promissory note and the mortgage. It is alleged that she owes each of them $276,000 – which is ridiculous.

Of the two lawsuits one seems to make better sense. The plaintiff in this case is the Deutsche Bank. The latter here is a trustee for investors who have purchased mortgage supported securities. The various investors are the collective owner of loans like that of Joanne’s. A servicing company that collects mortgage payments representing the investors has filed the other legal suit. The latter cannot file the suit, as a servicer cannot be the owner of a loan. After enquiry proceedings being conducted regarding this matter the servicing company, American Home Mortgage Servicing, decided to withdraw the suit.

Despite this gesture the lawyer representing Joanne is not satisfied. He will continue trying to find out what payments had been made by his client, whether they were paid to the proper entity and whether the credit was proper.

So far the general trend had been for the accused not to contest the forseclosure suits. As a result the plaintiffs get away with almost anything unchallenged. Stray cases like that of Joanne Fredenburg bring into focus the prevailing irregularities. Entities seem to be filing and winning foreclosure suits on notes they do not own. It is hoped that Florida Circuit Judges will be able to enlighten the interested about what is going on.