It’s not that anyone started out wanting to defraud you. It’s just that mortgage lenders were so busy making scads of money “back in the day” that they neglected to keep track of their paperwork. Now, they want to clean up their dirty little messes, backdate documents, and spin it all with an innocent sounding phrase.
Here are the details.
The problem started when mortgages were originated and then transfered into a trust so they could be securitized. To find out if your mortgage was in this category, call your servicing company and find out the name of the “investor” who owns your loan.
Next, go to the IRS website at www.irs.gov. Search for Publication 938. It has the list of all REMICs-Real Estate Mortgage Investment Conduits. These are the “trusts” everyone talks about. See if the owner of your loan is on the list.
REMICs receive certain tax advantages. In exchange, they must play by the IRS rules EXACTLY. Many of those rules deal with the necessity of transferring loans into the trust when it is formed, and then that pool of loans must remain “static.” In other words, new loans cannot be added at a later date.
Unfortunately, many many many loans did not have their transfer paperwork completed properly. Mortgage holders getting ready to foreclose are discovering they don’t technically own the loans they thought they own, because no one ever signed off on the right forms! To fix the problem, they are getting paperwork executed long after the fact. They call this “late documentation of earlier transfer.”
That sounds pretty innocent, doesn’t it? Many very smart people are saying there was never an “earlier transfer” because the transfer could only take place by signing the right paperwork. These same people say the process should be called “back dating transfers to conform to earlier good intentions.”
The bottom line: The company trying to foreclose on you might not be entitled to do so, because they might not actually own your note and mortgage. To find out, ask for proof they have the original note and the original mortgage. Ask to see a copy of the documents transferring ownership into the party trying to foreclose. In particular, check the notary seals and the expiration dates for the notaries. If the notary commission expires in 2012, it is unlikely the document was notarized back in 2005, because those commissions generally renew for only a few years at a time.
Yes, you are probably in default. But, Investor A might work out a loan modification or short sale with you. Investor B, who also claims to own your note, might be dead set on a foreclosure. Aren’t you entitled to deal with the right party?
Insist on your rights! You, the taxpayer, will be footing the bill for this whole mess. If you are paying the tab, aren’t you entitled to demand that people play by the rules, FINALLY!!! If you don’t insist on your rights, you are telling everyone that it’s okay to be greedy and sloppy, all will be forgiven later, when someone needs to step up and “take one for the team.” Don’t do it!!
