After reading the article, I’m still not sure what to make of it. What’s to stop me from foreclosing on my neighbor’s house, and when asked for proof that I own a lien against it, simply say that I lost the note?
I think that the following, from your cite, would do it:
This is somehow different than normal? You mean before I could make a false statement to a judge and not be subject to sanctions?
Plus, how do they prove the non-existence of a note? I know I have a $100k lien on my neighbor’s home, but I just can’t find it. How do you prove I am making a false accusation? By going to the four corners of the earth and not finding the document? That’s exactly what I said in my pleading.
I’m not sure I understand your objection. This law says that you have to prove you own the house before you can foreclose on it. It’s actually designed to combat the practice of filing “lost note” claims. The banks actually have to do more to prove owndership, not less.
No, you have to prove the positive. If you have a $100K lien against a house and you did not register that lien at the local clerk’s office at the time, and you can’t find the note, you are SOL.
So under these new rules, if a mortgage company can’t find the original note, then they are SOL, and the property owner keeps his property free and clear?
Missed the edit window:
If this is true, then I can’t see this streamlining the process in any way. I see homeowners that would otherwise roll over and give up their house now hiring attorneys and fighting the foreclosure in an attempt gain a windfall.
It seems to me that you’re using a different idea of “streamlining the process” than the writers of the bill. To wit (again, from your cite):
Back in the 90’s, I worked as a computer guy for a firm that did due diligence for investment banks, specifically concerning (residential) mortgage-backed securities. Missing notes were a problem even back then, but – AIUI – nowhere near the level of problem they are now. If your question is technical in nature – e.g., How is ownership of missing notes determined? – then I can only say that I know enough to say that I don’t know enough to answer. Someone with loan officer experience would likely be able to help.
But I don’t think that’s the issue this bill was meant to address.
It is interesting that as a result of this rule, buyers who go into default on their mortgage payments in Florida may get an unexpected windfall (basically, a free house), while those who pay their mortgages religiously get nothing but a clear conscience. While I understand the logic behind the rule, it comes awfully close to being a reward for bad behavior.
Only in the sense that requiring the police to produce evidence to send you to prison is a reward for bad behaviour: after all, this rule doesn’t benefit the innocent, but it does mean that some guilty people get an unexpected windfall, right?
pdts
“Not going to prison” isn’t exactly a reward. Nobody would commit a crime for that “incentive.”
A free house, on the other hand, pretty clearly qualifies as an affirmative reward.
Don’t get me wrong. I’m all for thwarting the banks if they screw up the paperwork. But this seems to really mess with incentives. How is someone who is scrimping and saving and sacrificing to pay their mortgage regularly going to feel when they see a shiftless neighbor skip payments for six months and then get a free house for it?
That was not the question I was answering. Please don’t twist things to suit a response you want.
You mean like the handouts the big banks got during the meltdown in order to keep them afloat?
You’re only seeing one “windfall” in this equation. The other windfall is to those who claim ownership of a valid lien against the property but don’t have documentary evidence of such a lien. Why should the courts take the claimants at their word that they hold a valid lien?
Notice also that the rule in this case was enacted by the Florida Supreme Court to stop lenders from filing suit without determining whether they could actually prove their claims in court. A situation where lenders file multiple suits and worry about that pesky evidence thing is one that is ripe for abuse, with the potential for debtors to be browbeaten into conceding to a plaintiff who might not even be entitled to judgment.
Also, even if you’re of the opinion that “these people know they’ve defaulted, stop fighting it,” surrendering your property to the wrong claimant only makes your situation worse.
My sympathy is not with the banks. It is with the homeowners who have scrimped and struggled to make their payments on time. It has to be disheartening for such a homeowner to see a neighbor who hasn’t been so diligent getting a free house.
This. We have banks that lent money they should never have lent in the first place, along with home buyers who should not have qualified for loans.
edit
How are the scenario’s different:
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I claim that I hold a $100k lien on my neighbor’s house. I cannot locate the note.
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The bank claims that they hold a $100k lien on my neighbor’s house. They cannot locate the note.
You said that in scenario #1, that I am “SOL”, but for me to apply that you scenario #2, I am twisting your words?
Um, I’m not sure where this is going but there is a huge difference in the 2 scenarios, one which is acknowledged by the law. Banks are professionals: due diligence with regards to who owns what is part of the business: it’s part of their specialty. They are expected not to just file the liens away in the back cabinet, but to have fail-safe procedures in place. Indeed, there are lots of people do just that sort of work full time. For a while the late and lamented Tanta of CalculatedRisk.com held such a job.
That said, I doubt whether people get to keep a house because of clerical error, outside of the movies. It can be shown though that they may be able to forestall foreclosure until the bank decides to do its (fucking) job. So they might score some free rent, as it were. I don’t have a problem with this, but then again I don’t resent lottery winners either.
I can see where you’re coming from and your concerns are legitimate ones. But what about the bank’s irresponsibility in losing track of the note and not being able to follow through on their due diligence?
Is this sort of windfall fair to responsible homeowners who pay their mortgages on time every month? Not really. But then again it’s not something that I as a homeowner am going to lose any sleep over or otherwise stew about.