Federal Court Ruling Sets Precendence For Challening Foreclosures

Posted in Foreclosure, January 4th, 2008 |

Lenders have been caught on the wrong foot. A federal court ruling in Cleveland has sent shock waves in the foreclosure camp as it can well be cited as precedence for similar rulings. The triumphant rumblings of the victory chariot can already be heard.
On an average the federal court had been handling 100 new foreclosure cases per month. But when the judges started insisting on perusing authorization documents in detail the action has slowed down considerably. So far December has seen only two foreclosure related cases.

The Cleveland federal courts hardly handled foreclosures but recently its hands had become full. It became an alternative to Cuyahoga County courts that had become choked with foreclosure issues. Across the country foreclosure filings have become the norm but since the federal ruling the filing process has become tough and the going rough for the lenders.

The Ohio Attorney General Marc Dann is at one with the ruling and is using this stick to clear out scores of cases pending in other parts of the state. Judges in three other counties in Ohio did not have to be told to follow the precedence set by the federal court.
The banks are now being forced to do their homework and get together all the paper work required before filing a foreclosure related case. Banks have become habituated to transferring loans electronically, opines legal expert Professor Kathleen Engle from Cleveland Sate University. Her field of expertise is mortgage-backed securities. Loans have been bundled into investments and sold over and over again – thus making to hard to trace ownership.

The issue has been fuddled by Deutsche Bank and the like who have been rejected by the federal court of Cleveland. Their contention is that lenders or the investors are the ones who own the loans while the service companies collect the mortgage payments and see to the foreclosure matter. Attorney James Sassano comments that asking for the paper work would only delay matters but not affect the rights of the plaintiff in any way. But thousands of cases would begin to totter if courts start insisting on scrutinizing documentation and authorization papers.
The Common Pleas Court in Cuyahoga county permits banks to present the papers before promulgation of the final judgment. Many lenders who have been blocked by the federal count have re-filed their cases in county courts again.