It was interesting in what she said. Most of these banks do not even have the original documents for the mortgage. AND they have no idea who or where they are since they were just bundled up into thousands of packages and sold all around the world.

So, making them produce a document could be interesting.

This is it. It's really going to happen, isn't it? The people who knowingly bought WAY more house than they could afford or didn't read the contract for the biggest purchase of their life are going to eventually get bailed out on this one. So much for personal responsibility.

Yeah, what happened to paying your mortgage payments?

Yet another poster child for term limits.

@wgrune: I've still got mixed feelings about this--both sides are at fault. On the Lou Dobbs segment, there was a woman who not only could afford her home, but who put down $40,000 on it when she bought it. She certainly didn't misrepresent herself or buy a bigger house than she could afford, but the lender deliberately led her into a bad loan where the payment amount literally doubled about a year after she moved in. If she had gotten a lawyer to review the loan, she could have caught it, but I don't think most regular people in other industries would know what to look for, especially if you're being deliberately lied to or misled by the person setting up the loan for you, which is what apparently happened to her.

On the other hand, *surely* there was some repayment document she had to sign (that's included in the Truth-In-Lending documentation, isn't it?) that would have demonstrated that her payments would balloon. Right?

Personal responsibility FTW, but down with predatory lenders at the same time.

Where's the accountability? What about paying what you owe? What about reading what you are signing? What about doing your due dilligence before buying the most expensive single item in your entire life? I just don't get it. The only ones in this whole thing who aren't getting screwed are the ones that knew they could pay their mortgage month after month and are living up to their committment.

It's not "squatting" if you have a legal right to be there.

@Chris Walters:

Agreed. I aknowledge that some percentage of the people in these situations were definitly lied to/misled/duped etc by bad lenders. I feel for their situation.

I know when I bought my place they printed out my ENTIRE repayment doccument and I made sure my payments would not change. It was 360 lines of itty bitty print (30 yrs x 12 mos) on legal size paper but I read it anyway.

@wgrune: And yet you feel banks have no "personal responsibility" to actually show ownership of properties they claim are theirs. Oh, I forgot; as long as your last name ends in "Inc." or "LLC" you can do whatever the hell you want.

@mythago:

The thing is, you may not have a legal right to be there. You don't own your house until you pay it off. A bank does. Some bank, somewhere, has the paperwork for your house and if you quit making payments you have broken your end of the contract.

@bricko: My office has seen a few claims regarding the production of the original note in litigation arising out of non-judicial foreclosures. Unfortunately, in the fine state of California, you don't need to have the original note in order to foreclose non-judicially; you only need an assignment of mortgage/deed of trust, then you're good to go.

While I don't disagree with your points, i.e. idiocy on the buyers part-do you have the same feeling for the 'smart' bankers that bought into, and promoted these credit default swap instruments? To paraphrase your comment; So much for corporate responsibility.

@wgrune: mythago is right. You own your house as soon as you sign the papers. Your bank has the right to take your house away from you if you fail to keep paying them (that's what a secured loan is), but it's still your house in the meantime. When you buy a house you get a copy of the title and it has your name on it.

The issue here is that the bank may not actually have the right to foreclose (ie, take title away from you).

@pb5000: what happened to following the law? What happened to ethics?

@Chris Walters: My lender asked a few times if I would prefer an ARM, saying the payments would be lower and I could just pay on the interest. It sounded tempting but I figured not paying off the principle could only come back to screw me. I said no and got a fixed rate.

Now if she was signing for a fixed rate and got an ARM, where are the loan papers she signed? I haven't heard of a case wherein the lender says a borrower signed for an adjustable rate loan only to have the borrower show loan documentation to the contrary. This makes me a sad panda; I didn't need to be reminded that this is more than likely the single largest purchase I would ever be making, so mine are stashed in my safe deposit box along with other important papers (car loan papers, insurance paperwork, tax records, etc etc).

Down with predatory lenders by saying "no thank you" or simply taking your business elsewhere, but the onus is still on the borrower to make sure they're not getting screwed over.

@wgrune: I guess we'll go around on this forever, but at this stage of the game, with all the absolute destruction that's been wrought on the economy by bad loans, bad selling, bad rating of the debt, bad repackaging, bad securities, bad bailouts, is there really still a feeling out there that this was a buyer problem?

The congresswoman in question is talking about illegal loans. If some loans were illegal, which many were, how on Earth does it fall on the face of the buyer who saddled with one? Would you feel that way if it were a car? I understand weeding out the folks who really took advantage of the system, but that number seems smaller and smaller as more rocks in this mess get uncovered.

@cecilpl:

Thanks for the clarification.

I don't have a problem with a homeowner asking to see proof that an entity claiming to hold title to my house actually does. Is this any different than the 'zombie' debt stories? I know that my first mortgage was sold almost immediately to another company. Does that mean that I still owe money to the original holder of the note?

When you figure in the grouping of these mortgages and converting them to securities, I know that I'd sure like to see proof before doing anything.

@wgrune: Here's a question, and a hypothetical:

If the homeowner was deceived, and their loan is invalid, what happens then? Who gets the property? Does the family get to keep it, or does it revert back to the developer? The Bank?

If the family DOES get to keep the house, then the Bank is left holding un-collectible, "toxic" debt that they will have to write off because they know they won't collect on it. Isn't this why they got their bailout? The risk became certain, but they're covered in that eventuality. The System Works?

It seems to me that it's not a bailout for the family as much as it is the realization of the circumstances that the bank bailouts were intended to shield banks from. Sounds like mission accomplished.

Well since the govt's bailout money is going to the banks, and its my tax payer monies, technically I should be allowed to stay in any foreclosed home I want correct?

@cecilpl: Which is why the title threw me off. Only after the foreclosure do the people need to get out. Until then, they should remain in the home.

At the same time, they need to be taking care of the home. I'm in the market and the number of idiot owners that trash the place when they leave is astounding. I have no pity for them living on the street.

@cecilpl: If I understand this correctly, your rights may actually change if you physically leave the property, as well.

She probably means 888-995-HOPE.

@wgrune: But the OTHER just-as-important thing is that the bank's paperwork may be a portion of the outstanding value of your loan, and that loan itself could be an invalid contract.

@wgrune: When I bought my house, I didn't read very much-- just what the payments were going to be. I got an FHA so the terms were pretty circumscribed for all parties. It is pretty overwhelming, though. They put a giant stack of paper full of 7 pt font in front of you, there are 10 people in the room looking at you, and they say, "Okay, sign here, and here, and here, and here and here, initial there, sign here, date that, then sign here and here and here and here and here." It's intimidating.

OK... here we go again...

First- it is a JOINT responsibility on people who bought more house than they could-- the people AND the lenders, who often distorted the terms or just made shit up on the credit app to get people approved.

Second- part of the issue is all the selling/trading of mortgages. So, it is perfectly fair and legal to ask the evicting company to produce proof they actually CAN evict. I bet a large number of them cannot produce the documentation. That is THEIR problem, not the home-owners.

(Let me tell you about the time Chase paid my taxes into the wrong property address and how much time and trouble that was to fix).

@wgrune: You "may" not have a legal right to be there?

The whole point of the congresswoman's advice was that until you (and the bank) know for sure, don't go anywhere. The banks are having difficulty proving who exactly owns the property, so why should anyone do anything?

@wgrune: Our contract had something similar, although it didn't list every payment. It listed how many payments we would make at a couple of different steps. Our payments will actually get lower because of the PMI, and then there was one payment that was slightly smaller than the others at the end of the loan.

@mmcnary: I really like that comparison, especially since we're pretty accustomed, around here, to insisting on collectors backing up their claims when requesting debt payments. It makes sense to retain that vigilance when it comes to your biggest loan/biggest asset.

I think that the banks ought to be forced to unwind these ridiculous products to foreclose, that said, it will not relieve these people of eventually paying their debts. It is just buying time.

Very true. A couple of years ago Deutsche Bank got stopped cold in Ohio when an attorney representing about 100 property owners demanded that DB produce evidence they owned the debt. They couldn't so the foreclosures were paused.

I never did see the follow up as to what happened next.

Pretty shrewd move.

@wgrune: Here's an example of what happens. About five years ago, I had a HEL. Not a line of credit, a loan. A telemarketer from the bank that held the loan, then called LaSalle Bank, kept calling and saying that they could lower my interest rate & payments on the home equity loan. Throughout the conversation, I stressed that I would only accept a fixed rate loan. They persisted, and I had them set up a refi.

We communicated regularly about the status of the refi, and then the day before closing they faxed over the final documents and disclosures, and that is when I read the fine print that said that this was an ARM. I called back, conveniently the rep who had worked with me throughout the process was "unavailable" (even though he answered my calls 100% of the time before the papers were faxed to me) and the guy who took the call said that there was nothing he could do, he couldn't change it to fixed, sigh, I'd just have to go forward with that loan.

I told him to cancel the closing. The night before. He tried to object, but I told him that there was materially different information in the disclosures than had been discussed, and that if he wanted to make my regular rep, who I had been dealing with all this time, "available", perhaps we could work it out. He still refused, and I persisted in canceling the closing.

Oddly I don't remember the fact that it was an ARM being part of the federally mandated disclosure page (the one with the interest rate and total of all payments, etc.) It was small print buried somewhere in the contract. Only by actually reading the contract myself did I learn about this.

I can't imagine how someone who has difficulty reading legal jargon, or with the English language itself, or without a high enough level of education, would have figured this out.

So I can see the predatory side of this, from firsthand experience. I bet LaSalle (who was then part of ABN Amro, which became one of the biggest merger debacles in banking history due to their subprime exposure) wrote lots of these deceptive loans.

@Borax-Johnson: Wow, I worked in Corporate Loans at Deutsche Bank, and they were complete sticklers about having the notes in the vault. There was a lot of pressure to have every piece of documentation secured. I used to have to chase lawyers around to get the docs lots of times.

Of course, 9/11 destroyed the building across the street from the World Trade Center, but I believe many of the original notes were recovered eventually.

Word of the day: Abrogate - to cancel (a law or an agreement) formally

@snowburnt: What happened to libertarians who remembered that FRAUD was one of the two things in libertarian theory that is a big-time liberty no-no? (FORCE is the other one.)

You shits embarrass me.

@Blueskylaw: Word.

@wgrune: I saw the segment and the woman in question seemed to be a victim of a predatory lender who was savvy enough to have an attorney present. I am not 100%, but I believe in some states such as Florida, the norm is not to have an attorney present, whereas here in NY, as far as I know, most people do. I for one would never really trust a mortgage broker, but I used to be a real estate paralegal and know how SOME of them are.

@PerpetualBoredom: sorry, I meant NOT savvy enough..

Well if the home is forclosed upon it is a bit late to be seeking legal advice. The legal advice should be sought when the summons is received.

Suggesting that people stay in their home that the Court has orderded them to vacate is about as bright as telling them they may as well sit in the house and smoke pot because it makes them forget their troubles.

Certainly there may be legal issues about the validity of the mortgage, but the time to explore those is well before the Court orders you out.

@wgrune: I have to agree, there is an amortization schedule with the loan package. If people don't read - or have their lawyer read and explain- the contract they deserve what they get.

@Blueskylaw: No that is not correct.

Abrogate means to treat as nonexistent.

As in the flight attendant abrogated my right to the seat I apid for an made me sit in the loo the entire flight.

It may also mean to nullify by official action.

As in the Court abrogated my responsibility to pay for the pizza as it was made with cardboard and ketchup.

In the use above abrogating means the people acted as if their own rights did not exist.

@feckingmorons:

That is incorrect. She is not suggesting you stay in a home that you've been evicted from, but many people abandon the homes as soon as they receive the first letter from the bank's lawyer, which can be up to 6 months or more from a sheriff's sale date. Getting a lawyer can buy the home owner even another year in the home. Families facing foreclosure should not abandon their homes, and should get legal representation, there is no issue with that statement.

@Chris Walters: "On the other hand, *surely* there was some repayment document she had to sign (that's included in the Truth-In-Lending documentation, isn't it?) that would have demonstrated that her payments would balloon. Right?"

These can be wicked hard to understand. I was going through one for a client where I had to first run it by an accountant friend, who didn't get it either, and then call up the opposing party's attorney to find out what the hell the repayment schedule was trying to say. (This was a slightly non-standard transaction, but not THAT non-standard.)

If you weren't particularly sophisticated about money or math, I can see where these could be incredibly difficult to comprehend.

Everybody talks about people buying more home than they could afford. I've started to think of it from a slightly different perspective. In the last few years, people have *paid* too much for houses that they should have been able to afford.

Why? Because "cheap" money and aggressive lenders played a huge role in driving up prices. (Creating mortgage-backed investment products superseded making and holding loans for conservative returns.) Even back in 1996 when I bought, banks wanted to lend us a LOT more money than we thought wise.

Considering the banks typically had an 80%+ stake in buying homes at insane valuations, perhaps they should accept 80% or so of the blame and loss?

@feckingmorons:

Nullify = cancel\invalidate
Official Action = contract

Don't see what was wrong with what blue said...

Re: Cheap Money.

You are correct, but your diagnosis is incomplete, because your forgot various other factors pushing up the cost of housing:

1) Forced lending to unqualified buyers via a newly aggressive enforcement of the Community Reinvestment Act, beginning in the 1990s (it is a Carter era law, but was largely ignored until the Clinton justice department, working with "community groups" like ACORN gave it new teeth.

2) Artificial land scarcity, caused by environmental regulation and other regulatory restrictions on land use.

3) Excess investment capital in the global economy looking for strong returns - this is not just cheap American money (thanks Alan!) but retirement investment from Europe looking for some decent returns, and unable to invest at home due to anemic European economic growth.

@humphrmi: i know that Bank of America purchased Lasalle... does BofA still administer the old LaSalle loan? or did they sell off the mortgages? (or did you refinance with another company?)

@zephyr_words: I am more down with: mutual rescission.

Just do not get an UD.