Banks unable to foreclose on many homes due to bad recordkeeping

[malamute]

I think we all realized there was a whole lot of fraud going on when we saw them advertising large loans and no proof of income or social security number needed.

[Billymatoe]

the point is the lender is stating claim to a debt they have no proof they hold, the same argument of the borrower being a "irresponsible person" can be made about the lender. How do you know he can pay his mortgage? How do you know he hasnt fallen on hard times? Once upon a time, I packaged MBS for a big bank and if you dont purchase the note before the securitization, than there is no debt. Period. I challenge anyone to prove otherwise. The problem is big banks were infusing the smaller sub-prime lenders with capital to keep the "warehouse lending line" operational and the lenders never changed the legal paperwork to evidence which assets went where. They instead, created Servicing and Pooling agreements with servicers and investors to direct monthly payments to different big banks to compensate for the infused capital. Then these lenders went BK. So i dont care which way you slice it, a claim to a debt is nothing without evidence to a debt. Hey Nomander, you owe me $1,000,000.00

[Mircea]

Originally Posted by tablemtn

This problem has actually been noted for years, but only now, with the subprime meltdown, has it gotten to its current size.

You can thank me for that.

I'm serious. I used to be a moderator on a [now defunct] credit forum. I'm not an attorney, but I'm 88-0 against attorneys. I used to help people write their Answers and Motions, and also to file Complaints for violating the Fair Debt Collection Practices Act and the Fair Credit Reporting Act.

We could see problems even then, because we'd have people coming to the forum saying, "I need to raise my score from 610 to 700 to get this mortgage" and I tell them no problem, but it will take a minimum of 30 days and possibly as long as 6 months and if you aren't willing to file a lawsuit against the debt collectors it ain't gonna happen.

They would throw just an absolute hissy fit like a 2 year old. Those aren't my rules, that is the law under the Fair Credit Reporting Act. The credit reporting agencies have 30 days to take action, and they always take 30 days.

And those people would scream, "But we want to close this week." Okay then close with a credit score of 610 because nothing will happen for a month.

Anyway, there was a case, Hart v Asset Acceptance, and I happened to land a copy of the deposition with the CFO for Asset and she explained how they buy debt for pennies on the dollar, plus told how they buy the debt (there's a few different ways).

Then based on that, I started advising people how to attack lawsuits from junk debt buyers and a couple of the Mods on my forum and a couple on another forum (which we were friendly with) starting fine-tuning this down in a process that was easy for anyone to use if they got sued by a junk debt buyer.

Basically you attack the chain of document custody, plus attack the authority to sell the debt.

What we found is that Asset and quite a few others were buying debt from collection agencies, and not from the credit card banks. West was one of those collection agencies. West collected for Crapital One, and while West had authority to collect the debt and file legal action to collect, they did not have the authority to sell the debt.

That means Asset's claim of money owed is worthless, since Asset has no authority to collect since the sale was invalid (because West had no authority to sell).

Not only that, but from the deposition of Hart v Asset, the the junk debt buyers get no documents. They get a data tape with just an account number and an amount number.

So there's no history of the debt with respect to the accounting of accrued interest and what not, especially any fees that were added to the debt that may not be legal to add to the debt (that would depend on the State and the contract to determine that).

If the junk debt buyer can't provide the chain of document custody and an accounting of the debt, then there is no way they can legally prove they own the debt, that there is a debt, that the amount of debt is correct or that they have the authority to take legal action.

There a case from one of our forum members who filed pro se (representing themselves without an attorney) against Asset in a lawsuit and they won.

Mortgages are treated the same way as debt. You get the mortgage initially from one financial entity, and then they sell it to another, who sells it to another, who transfers it to another, who sells it to another, who transfers it to another entity who sells it and then they file foreclosure.

Apparently several years later some of the attorneys starting taking their cues from the debt collection lawsuits that were filed, forcing a showing (through Discovery) of the entire chain of custody of the mortgage documents, as well as the documents authorizing the sale or transfer of the mortgage.

If they can't provide that, then there is no way they can legally prove they own the debt, that there is a debt, that the amount of debt is correct or that they have the authority to take legal action, like foreclosure.

So none of that is surprising to me, but what is surprising is that it took so long for them to figure it out.