Improper Transfer of Mortgages Means Banks do not Have the Right to Foreclose
At a congressional hearing this December Justice F. Dana Winslow gave a testimony saying that he had come across innumerable foreclosure cases riddled with problems. This has led him to conclude that the 
lenders are not on the right side. He has often observed that lawyers trying to hurry through the foreclosure failing to show the proper ownership note or producing something that was incorrect. The companies could not show the chain of transfers made legally. The affidavits were questionable.
The lawyers representing the house owners alleged that the firms fabricated documents if they failed to find the proper ones. Half-baked employees signed the affidavits without knowing anything about the contents. Attorney Linda Tirelli of New York dealing with bankruptcy said that it was “cheaper to make the documents up than … to dig them up.
Lawyer James Kowalski of Florida recently testified before the legislators of the Congress. He referred to a case wherein two firms attempted to foreclose on one property. Both of them claimed to have the note.
The lenders on the other said that considering the volume of work, the mistakes were minimal and could be easily rectified. Last October many banks like Bank of America and GMAC Mortgage suspended temporarily 
foreclosure operations to review their procedure. The mortgage industry has tried to defend, in the face of harsh criticism, the bundling of mortgages into securities and selling them to international investors. Tom Deutsch of American Securitization Forum (executive director) said that mistakes may occur but in general broadly the “process is sound”.
Legal pundits said that if the lenders prove their legal standing to foreclose then the recent confusion has only delayed the inevitable. But it remains to be seen if the problems are of a minor nature said the Congressional Oversight Panel. The report stated that in the worst case the banks may fail to prove their ownership. This will cloud the property titles of millions of houses and cause immense damage to the banks.
The matter is technical but the potential risk to the economy of the country is dangerous commented Professor Adam Levitin of Georgetown University. Speaking at Winslow he said that he had frequently come across cases where lenders have failed to prove their legal standing. Levitin said that if the transfer of mortgages were not properly legally done “then mortgage-backed securities would in fact not be backed by any mortgages whatsoever”. Thus improper transfer means banks do not have the right to foreclose.
