Victory For Borrowers In Foreclosure Battle!

Posted in Foreclosure, November 20th, 2007 |

Ohio has made history! The Federal District Court gave a ruling dismissing 14 foreclosure cases filed by Deutsche Bank as trustee of mortgage investors. The suit was filed because of lack of ownership evidence. The mortgage securities were complicated amounting to $6.5 trillion debt as in December 2006. It had been easy for investors to trade these mortgages as securities but now it is far from easy to prove actual ownership.

So far the courts have been allowing the lenders to get away with this practice. The borrowers in their present economic and mental plight were in no condition to fight a legal battle. Judge Boyko asked the bank on 10th October to file copies of loan assignments clearly showing that the lender was indeed the owner of the note for each and every property. Deutsche Bank could not do so. They could only show that there was an intent to convey the rights in the mortgages. But it did not tantamount to proof of ownership.

So far the whole operation was structured to make it easy for banks to trade in these securities without shipping the mortgage notes all around the globe. Some of the mortgages could be put in more than one securitized debt packet. The same loan was playing in two or three pools. 40% of the lenders using the foreclosure plea to take over properties did not have proof of ownership. So far – till the Ohio ruling, they have got away unchallenged.

Judge Boyko was scathing in his attack against this lax legal attitude. Since this has been allowed to continue for so long it has been taken for granted that the same will remain so. It is nothing but legal compliance. Against strong legal arguments the doors have been closed bang on their faces just as they were about to enter. It is hoped that judges across the country will take the cue and issue similar judgments and force the lenders to work with the people and not against them.

It has infused new spirit into the borrower group – those directly affected and those helping them. In all likelihood they will not accept foreclosures meekly without putting up a legal fight. At last a legal weapon has been found to beat the predatory lenders in the game. So far only appeals were sent out. But now the message carries weight.