# Foreclosures hit homeowners not in default **URL:** \ **Category:** Great Debates\ **Created:** [November 18, 2010, 9:29pm UTC](https://boards.straightdope.com/t/foreclosures-hit-homeowners-not-in-default/561148 "2010-11-18T21:29:13Z")\ **Posts on this page:** 16\ **Page:** 2
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [November 19, 2010, 5:03pm UTC](https://boards.straightdope.com/t/foreclosures-hit-homeowners-not-in-default/561148/21 "2010-11-19T17:03:31Z")
> [@Scylla](#): > > Voyager: > > I work for one of these very big banks, but not in the mortgage area. Nevertheless, these stories are affecting our business. > > The bank is telling us that there are 0 foreclosures that occurred against people who are not in default on their mortgages and that these stories are irresponsible And false journalism that is truly damaging to all concerned. > > I’ve seen some of these stories. So far, they all seem to lack a key component, that is, somebody who has been foreclosed on who is NOT in default of their mortgage. > > Without such people, it’s not true. There is no story, and it’s a fabrication. > > Now, I have no doubt that there are people who are in default who are being foreclosed on where there are problem’s with the bank’s paperwork. That’s one thing, and I say fuck 'em both. If the guy is in default he can be foreclosed on, and if the bank decides to foreclose on such a person, their paperwork better be right. That’s as it should be. > > But, that’s not what we are talking about. We are talking about people being foreclosed on who are NOT in default. > > Who? Give me an example. Show me a report from the news on somebody who lost their home who was not in default. > > Without such examples, this is simply bullshit. Fact is, there have been cases where the bank has tried to foreclose on people not in default. Any case rising to our attention is almost certainly going to be stopped - perhaps expensively. If the foreclosure did happen, perhaps to someone confused, we’d probably have never heard of it. Nonetheless all the stories I’ve read try to emphasize that the vast, vast majority of cases involve people who are in default. The issue here is really how much are we going to force the banks to actually check in order not to let some small percentage of the innocent get run over, and whether judges can reasonably ask for actual proof of ownership. That these things get blown up is not surprise - some people actually think there are such things as death panels. But it is an inevitable result of the banks own actions. If there hadn’t been cases of attempted foreclosures, the story wouldn’t have had legs. If you are asking the press to be responsible, there goes pretty much everything except NPR, The Wall Street Journal, and the NY Times. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [November 19, 2010, 5:05pm UTC](https://boards.straightdope.com/t/foreclosures-hit-homeowners-not-in-default/561148/22 "2010-11-19T17:05:57Z")
> [@Really\_Not\_All\_That\_Bright](#): > > Jesus Christ. Neither had I. Are you sure the bank wouldn’t have to indemnify the borrower against any other liens on the property? The came up a week or so ago. Mortgage insurance companies in some cases have stopped writing policies for people buying foreclosed houses for exactly this reason. ---
**Author:** ![gonzomax](https://avatars.discourse-cdn.com/v4/letter/g/e8c25b/32.png) [@gonzomax](https://boards.straightdope.com/u/gonzomax)\ **Post date:** [November 19, 2010, 5:16pm UTC](https://boards.straightdope.com/t/foreclosures-hit-homeowners-not-in-default/561148/23 "2010-11-19T17:16:23Z")
Well if the bank says they are not foreclosing improperly, it must be so. Why would they lie? It is always the evil borrower taking advantage of the helpless banks. ---
**Author:** ![mozchron](https://avatars.discourse-cdn.com/v4/letter/m/c2a13f/32.png) [@mozchron](https://boards.straightdope.com/u/mozchron)\ **Post date:** [November 19, 2010, 7:53pm UTC](https://boards.straightdope.com/t/foreclosures-hit-homeowners-not-in-default/561148/24 "2010-11-19T19:53:32Z")
> [@Scylla](#): > > Voyager: > > I work for one of these very big banks, but not in the mortgage area. Nevertheless, these stories are affecting our business. > > The bank is telling us that there are 0 foreclosures that occurred against people who are not in default on their mortgages and that these stories are irresponsible And false journalism that is truly damaging to all concerned. > > I’ve seen some of these stories. So far, they all seem to lack a key component, that is, somebody who has been foreclosed on who is NOT in default of their mortgage. > > Without such people, it’s not true. There is no story, and it’s a fabrication. > > Now, I have no doubt that there are people who are in default who are being foreclosed on where there are problem’s with the bank’s paperwork. That’s one thing, and I say fuck 'em both. If the guy is in default he can be foreclosed on, and if the bank decides to foreclose on such a person, their paperwork better be right. That’s as it should be. > > But, that’s not what we are talking about. We are talking about people being foreclosed on who are NOT in default. > > Who? Give me an example. Show me a report from the news on somebody who lost their home who was not in default. > > Without such examples, this is simply bullshit. You seem to be arguing using the “no true scotsman” defense. You request examples, people give them to you, and you say they don’t count because they are a “one-off” or a “tragic accident”. I don’t think anyone can argue that this isn’t happening. We can argue about how prevalent it is, but that isn’t what you are saying. It is happening. I would say that in today’s climate, banks and lenders better make damn sure they are doing things correctly, or it’s going to bite them in the ass. ---
**Author:** ![UltraVires](https://avatars.discourse-cdn.com/v4/letter/u/ecccb3/32.png) [@UltraVires](https://boards.straightdope.com/u/UltraVires)\ **Post date:** [November 19, 2010, 9:03pm UTC](https://boards.straightdope.com/t/foreclosures-hit-homeowners-not-in-default/561148/25 "2010-11-19T21:03:24Z")
> [@Voyager](#): > > The issue here is really how much are we going to force the banks to actually check in order not to let some small percentage of the innocent get run over, and whether judges can reasonably ask for actual proof of ownership. Why, in EVERY civil case, shouldn’t the Plaintiff have to provide evidence that they are entitled to what they are asking the court to do? ---
**Author:** ![UltraVires](https://avatars.discourse-cdn.com/v4/letter/u/ecccb3/32.png) [@UltraVires](https://boards.straightdope.com/u/UltraVires)\ **Post date:** [November 19, 2010, 9:07pm UTC](https://boards.straightdope.com/t/foreclosures-hit-homeowners-not-in-default/561148/26 "2010-11-19T21:07:38Z")
> [@Strassia](#): > > I can’t find it right now, but I remember reading a detailed write up of a case of a woman whose foreclosure was thrown out because of absurdly bad paper work and possibly fraud. The bank tried to file the lien after the foreclosure. The same woman signed affidavits as an employee for three different organizations on the same case. The judge gave the bank a period to straighten out the paperwork and clarify who signed the affidavits. The bank missed the deadline by a year and did not comply with the judges instructions so he/she cancelled the debt. > > I keep finding references to foreclosures thrown out in New York, but no specifics. Does anyone else remember this? I’ve seen these stories before as well, but in the end has ANYONE received their home free and clear because of this or similar reasons? It seems an awful penalty for bad paperwork, and unjust enrichment for the defaulting homeowner. Obviously, he owes money to SOMEBODY. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [November 19, 2010, 9:19pm UTC](https://boards.straightdope.com/t/foreclosures-hit-homeowners-not-in-default/561148/27 "2010-11-19T21:19:17Z")
> [@jtgain](#): > > Why, in EVERY civil case, shouldn’t the Plaintiff have to provide evidence that they are entitled to what they are asking the court to do? IANAL, but I think they do. In most cases a statement from someone who has examined the papers and is willing to testify that there was ownership will do. The problem was that these statements were being signed by people who could have no such knowledge. When that has been demonstrated, the judge should be asking for more evidence. it is similar in the way to the stuff that got us into this mess. Mortgages without documented income made sense for the fairly rare cases of writers and others whose income stream was irregular. This adds flexibility to the system, but it was taken advantage of by mortgage brokers who used it to get loans for people where the exception made no sense. (And I say brokers because an honest broker wouldn’t allow an unqualified applicant to use this channel.) In the same way, a loophole which allows for the case where good paperwork got lost somehow was used when the paperwork was more or less thrown away. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [November 19, 2010, 9:25pm UTC](https://boards.straightdope.com/t/foreclosures-hit-homeowners-not-in-default/561148/28 "2010-11-19T21:25:01Z")
> [@jtgain](#): > > I’ve seen these stories before as well, but in the end has ANYONE received their home free and clear because of this or similar reasons? It seems an awful penalty for bad paperwork, and unjust enrichment for the defaulting homeowner. Obviously, he owes money to SOMEBODY. But we don’t know, in the legal sense, who that is. What if the bank can’t find the paperwork because they really don’t own the mortgage - perhaps it got sold and the paperwork documenting the sale got lost? What if they did sell the loan, and after they take the house the real owner comes after the woman? You say it is an awful penalty, but if the bank considered the paperwork and loan to be valuable, perhaps they shouldn’t have treated it as scrap paper. ---
**Author:** ![UltraVires](https://avatars.discourse-cdn.com/v4/letter/u/ecccb3/32.png) [@UltraVires](https://boards.straightdope.com/u/UltraVires)\ **Post date:** [November 19, 2010, 9:34pm UTC](https://boards.straightdope.com/t/foreclosures-hit-homeowners-not-in-default/561148/29 "2010-11-19T21:34:48Z")
> [@Voyager](#): > > IANAL, but I think they do. In most cases a statement from someone who has examined the papers and is willing to testify that there was ownership will do. I can testify honestly under oath that I WAS the owner of a 1985 Chevy pickup truck. That is not evidence that I have a claim to that truck now. ---
**Author:** ![UltraVires](https://avatars.discourse-cdn.com/v4/letter/u/ecccb3/32.png) [@UltraVires](https://boards.straightdope.com/u/UltraVires)\ **Post date:** [November 19, 2010, 9:39pm UTC](https://boards.straightdope.com/t/foreclosures-hit-homeowners-not-in-default/561148/30 "2010-11-19T21:39:13Z")
Just curious. I wonder if any homeowner has brought an action for “quiet title” and when/if the bank can’t produce the note, they succeed on those grounds? ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [November 19, 2010, 9:41pm UTC](https://boards.straightdope.com/t/foreclosures-hit-homeowners-not-in-default/561148/31 "2010-11-19T21:41:17Z")
BTW, it is even worse than this. [Here is a column by Gretchen Morgenson](http://www.nytimes.com/2010/10/24/business/24gret.html?pagewanted=all) discussing the problem from the point of view of investors. > [@](#): > > ON the other hand, resolving paperwork woes in the world of mortgage-backed securities may be trickier. Experts say that any parties involved in the creation, sale and oversight of the trusts holding the securities may be held responsible for any failings — and if the rules weren’t followed, investors may be able to sue the sponsors to recover their original investments. and > [@](#): > > “The danger here is that the note would not be considered a qualified mortgage,” said Robert Willens, an authority on tax law, “an obligation which is principally secured by an interest in real property and which is transferred to the Remic on the start-up day.” If, within three months, substantially all the assets of the entity do not consist of qualified mortgages and permitted investments, “the entity would not constitute,” he said. > > If such failures increase taxes for investors in the trusts, Mr. Willens said, the courts will have to adjudicate the inevitable conflicts that arise. So, if the bank handling the mortgage can’t prove ownership, the people who own chunks of that mortgage can say that it was sold to them under false pretenses, and sue to get the bank to buy it back. And these people have a lot deeper pockets than those foreclosed on. Ditto if they wind up owing more taxes than they should because of the poor paperwork. The IRS might not be willing to take the banks’ word for it either. This is real money - far more than what they’d lose not being able to foreclose on a handful of properties. (Read the linked article - I’d have to quote far more to give the proper context.) ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [November 19, 2010, 9:43pm UTC](https://boards.straightdope.com/t/foreclosures-hit-homeowners-not-in-default/561148/32 "2010-11-19T21:43:34Z")
> [@jtgain](#): > > I can testify honestly under oath that I WAS the owner of a 1985 Chevy pickup truck. That is not evidence that I have a claim to that truck now. Someone correct me if I am wrong, but I think the people testifying were either lawyers and/or notaries, and thus had special standing. They were not Joe Fileclerk. One of the aspects of the scandal is that people were notarizing documents signed in other offices or other states, and so these notaries had no direct knowledge that the person saying they signed the document actually did. And in many cases, it seemed, they didn’t. ---
**Author:** ![Caffeine.addict](https://avatars.discourse-cdn.com/v4/letter/c/f475e1/32.png) [@Caffeine.addict](https://boards.straightdope.com/u/Caffeine.addict)\ **Post date:** [November 19, 2010, 9:43pm UTC](https://boards.straightdope.com/t/foreclosures-hit-homeowners-not-in-default/561148/33 "2010-11-19T21:43:36Z")
It is an issue of standing. The bank has to be able to prove that they own the loan and that therefore they are entitled to foreclose on the loan. It really isn’t that minor of an issue. It isn’t an issue of making a typo on something but rather not having proof of their claim. It is important because if it turns out that they don’t own the loan but rather sold it to someone else, it means that the bank that foreclosed collected monies that weren’t owed to them. **Jtgain** , you are thinking of Judge [Schack](http://www.nytimes.com/2009/08/31/nyregion/31judge.html) in New York. Some of those issues related to MERS. I suspect that those cases have been appealed but I don’t know the result of that. ---
**Author:** ![aruvqan](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/aruvqan/32/2891_2.png) [@aruvqan](https://boards.straightdope.com/u/aruvqan)\ **Post date:** [November 20, 2010, 1:09am UTC](https://boards.straightdope.com/t/foreclosures-hit-homeowners-not-in-default/561148/34 "2010-11-20T01:09:32Z")
It does make me somewhat grumpy … our mortgage was sold or however you want to consider it on average of once a year for most of the past 20 years that we have had it. Once for a period of 7 years it ping ponged back and forth between the same 2 companies about every 3 or 4 months. ---
**Author:** ![gonzomax](https://avatars.discourse-cdn.com/v4/letter/g/e8c25b/32.png) [@gonzomax](https://boards.straightdope.com/u/gonzomax)\ **Post date:** [November 25, 2010, 3:46am UTC](https://boards.straightdope.com/t/foreclosures-hit-homeowners-not-in-default/561148/35 "2010-11-25T03:46:09Z")
> [@aruvqan](#): > > It does make me somewhat grumpy … our mortgage was sold or however you want to consider it on average of once a year for most of the past 20 years that we have had it. Once for a period of 7 years it ping ponged back and forth between the same 2 companies about every 3 or 4 months. That misses the point. Mortgages were chopped up and put into CDOs. The process of breaking it us gives either lots of people with the right to foreclose or nobody with the right. ---
**Author:** ![aruvqan](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/aruvqan/32/2891_2.png) [@aruvqan](https://boards.straightdope.com/u/aruvqan)\ **Post date:** [November 25, 2010, 9:35am UTC](https://boards.straightdope.com/t/foreclosures-hit-homeowners-not-in-default/561148/36 "2010-11-25T09:35:11Z")
> [@gonzomax](#): > > That misses the point. Mortgages were chopped up and put into CDOs. The process of breaking it us gives either lots of people with the right to foreclose or nobody with the right. So who determines who gets to collect the cash? Like I said, I was upset because the ownership of my mortgage has pingponged around the mortgage world so often I honestly have no idea who owns it until I check the current payment book. We gave up trying to have it automatically deducted - we kept having to change it and there always seems to be a lag time of several months while the electronic paperwork sorts itself out. Thanks to that whole bunch of financial bullshit I now have 3 months late payments over about 4 years before we gave up on the electronic payment bit. [Previous page](https://boards.straightdope.com/t/foreclosures-hit-homeowners-not-in-default/561148.md?page=1)