Struggling owners of delinquent homes have found a new wild-card to play in the fight to save their homes from a foreclosure order – forcing mortgage companies to prove they own their loans.
More and more homeowners are successfully arguing in court that their money lenders have no proof they own the loan they have taken out, and therefore have no right to foreclose their homes.
Several court cases have resulted in borrowers showing the courts that ownership of their mortgages was not properly assigned once they were pooled together in mortgage-backed security schemes.
Meanwhile, other cases have seen borrowers accusing mortgage lenders of fabricating documents or backdating them to try and cover up errors in ownership assignment they have made, reports the Wall Street Journal.
There have even been a few cases where foreclosures were ordered reversed, with courts finding the mortgage companies at fault for keeping incorrect paperwork.
Understandably, mortgage lenders are none too pleased with these new developments, arguing that borrowers are just clutching at straws, citing “arcane laws” to get away without paying their bills.
Laurence E. Platt, a banking industry lawyer at the K&L Gates firm in Washington says that when judges do not allow lenders to claim their legal ownership rights on properties, it is an “assault on the legal system”.
But not everyone agrees. Thomas Ice, an attorney from Royal Palm Beach, Florida, states that homeowners should not have to put up with incompetency or evidence tampering by money lenders