# New Rule Says Banks Must Prove Ownership Before Foreclosing **URL:** \ **Category:** Factual Questions\ **Created:** [May 23, 2010, 4:22pm UTC](https://boards.straightdope.com/t/new-rule-says-banks-must-prove-ownership-before-foreclosing/540469 "2010-05-23T16:22:34Z")\ **Posts on this page:** 20\ **Page:** 4
**Author:** ![Spoke](https://avatars.discourse-cdn.com/v4/letter/s/a88e57/32.png) [@Spoke](https://boards.straightdope.com/u/Spoke)\ **Post date:** [May 24, 2010, 8:25pm UTC](https://boards.straightdope.com/t/new-rule-says-banks-must-prove-ownership-before-foreclosing/540469/61 "2010-05-24T20:25:03Z")
> [@Throatwarbler\_Mangrove](#): > > This American system sounds like something out of an 80s action movie. Are mortgages treated like bearer’s bonds or something, where you literally need the actual piece of paper to prove ownership? 😕 > > Around here, if you want to register a lien against a piece of land, you do it at the land titles office where all the documents are kept on record. I can go to their website right now and download the original lien documents of any particular piece of land in the province. No one needs to keep track of anything, it’s all right there at the office. That’s the way it’s done here too. The problem arises, as noted above, when the mortgage subsequently gets sold and re-sold. Looking at the recorded mortgage may not tell you who _currently_ owns it. ---
**Author:** ![Little\_Nemo](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/little_nemo/32/3120_2.png) [@Little\_Nemo](https://boards.straightdope.com/u/Little_Nemo)\ **Post date:** [May 24, 2010, 9:57pm UTC](https://boards.straightdope.com/t/new-rule-says-banks-must-prove-ownership-before-foreclosing/540469/62 "2010-05-24T21:57:22Z")
> [@](#): > > Banks aren’t just filing foreclosures willy nilly as you seem to think. Florida seems to feel it had reached the point of willy nilly: _“The new rule was approved in February with the intention of unclogging the foreclosure courts, which have an estimated statewide backlog of 500,000 cases.”_ and _“Law firms handling the foreclosure overload, sometimes called foreclosure mills, have routinely filed a “lost note” claim with the original default notice, regardless of whether they looked for the note, said Miami-Dade Circuit Judge Jennifer Bailey.”_ ---
**Author:** ![Gangster\_Octopus](https://avatars.discourse-cdn.com/v4/letter/g/a8b319/32.png) [@Gangster\_Octopus](https://boards.straightdope.com/u/Gangster_Octopus)\ **Post date:** [May 24, 2010, 11:18pm UTC](https://boards.straightdope.com/t/new-rule-says-banks-must-prove-ownership-before-foreclosing/540469/63 "2010-05-24T23:18:14Z")
If folks were defaulting on their loans knowing they would get a free house then I would be upset. But it seems to me that they are defaulting without any expectation of gettinga free house. Sure it is like winning the lottery, but it hardly incentivizes bad behaviour, becuase the more likely scenario is that you default and you get foreclosed and you are SOL without a house a shitty credit rating. ---
**Author:** ![Spoke](https://avatars.discourse-cdn.com/v4/letter/s/a88e57/32.png) [@Spoke](https://boards.straightdope.com/u/Spoke)\ **Post date:** [May 24, 2010, 11:20pm UTC](https://boards.straightdope.com/t/new-rule-says-banks-must-prove-ownership-before-foreclosing/540469/64 "2010-05-24T23:20:55Z")
Yes, **Little Nemo** , there have been a **lot** of foreclosures in Florida. An _overwhelming_ number. But nothing in your quote suggests they are being filed frivolously, as you seemed to be thinking. ---
**Author:** ![Saint\_Cad](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/saint_cad/32/18907_2.png) [@Saint\_Cad](https://boards.straightdope.com/u/Saint_Cad)\ **Post date:** [May 24, 2010, 11:33pm UTC](https://boards.straightdope.com/t/new-rule-says-banks-must-prove-ownership-before-foreclosing/540469/65 "2010-05-24T23:33:01Z")
The “free house argument” is just not a large issue. The only times I’ve heard of it was when the mortgage company was so incometent and/or abusive that the discharge of the debt was the only legal recourse. What should be complained about (and I have in previous threads) is the benefit the fiscally irresponsible get in reduced mortgages so Alan Abbatior gets his $400K mortgage reduced to $200K because he can’t pay his bill but Betty Bouffant next door still pays her $400K mortgage because she wasn’t an idiot. ---
**Author:** ![Little\_Nemo](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/little_nemo/32/3120_2.png) [@Little\_Nemo](https://boards.straightdope.com/u/Little_Nemo)\ **Post date:** [May 25, 2010, 12:04am UTC](https://boards.straightdope.com/t/new-rule-says-banks-must-prove-ownership-before-foreclosing/540469/66 "2010-05-25T00:04:53Z")
> [@](#): > > But nothing in your quote suggests they are being filed frivolously, as you seemed to be thinking. The Florida court system apparently felt they were being filed frivolously. And I have to say I can see their point - filing a suit accompanied by your admission that you lack the most basic evidence to support your claim seems to be a reasonable example of a frivolous lawsuit. And it seems to have worked on filtering out these cases. Lawsuit submissions have dropped by 36% since the law was passed. ---
**Author:** ![chorpler](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/chorpler/32/2888_2.png) [@chorpler](https://boards.straightdope.com/u/chorpler)\ **Post date:** [May 25, 2010, 12:33am UTC](https://boards.straightdope.com/t/new-rule-says-banks-must-prove-ownership-before-foreclosing/540469/67 "2010-05-25T00:33:55Z")
> [@Saint\_Cad](#): > > The “free house argument” is just not a large issue. The only times I’ve heard of it was when the mortgage company was so incometent and/or abusive that the discharge of the debt was the only legal recourse. What should be complained about (and I have in previous threads) is the benefit the fiscally irresponsible get in reduced mortgages so Alan Abbatior gets his $400K mortgage reduced to $200K because he can’t pay his bill but Betty Bouffant next door still pays her $400K mortgage because she wasn’t an idiot. Whoa, how do people get reduced mortgages? ---
**Author:** ![Little\_Nemo](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/little_nemo/32/3120_2.png) [@Little\_Nemo](https://boards.straightdope.com/u/Little_Nemo)\ **Post date:** [May 25, 2010, 1:47am UTC](https://boards.straightdope.com/t/new-rule-says-banks-must-prove-ownership-before-foreclosing/540469/68 "2010-05-25T01:47:40Z")
> [@](#): > > Whoa, how do people get reduced mortgages? Probably by negotiation with the bank. They don’t really want your house, especially if the real estate market’s tanked. Ideally, you’d pay off the $400,000 you owe. But if they understand that’s not going to happen, they might decide getting $200,000 from you is better than getting a house that’s only worth $150,000. ---
**Author:** ![Darth\_Panda](https://avatars.discourse-cdn.com/v4/letter/d/ee7513/32.png) [@Darth\_Panda](https://boards.straightdope.com/u/Darth_Panda)\ **Post date:** [May 25, 2010, 3:20am UTC](https://boards.straightdope.com/t/new-rule-says-banks-must-prove-ownership-before-foreclosing/540469/69 "2010-05-25T03:20:58Z")
> [@spoke-](#): > > The Prodigal Son comes more readily to mind. I’m more reminded of the story of Hercules and the Lion: Homer: Don’t you know the story of Hercules and the lion? Bart: Is it a Bible story? Homer: Yeah, probably. Anyway, once upon a time, there was a big mean lion who got a thorn in his paw. All the village people tried to pull it out, but nobody was strong enough! So they got Hercules, and Hercules used his mighty strength, and…bingo! Anyway, the moral is, the lion was so happy, he gave Hercules this big…thing…of riches. Bart: How did a lion get rich? Homer: It was the olden days! ---
**Author:** ![Spoke](https://avatars.discourse-cdn.com/v4/letter/s/a88e57/32.png) [@Spoke](https://boards.straightdope.com/u/Spoke)\ **Post date:** [May 25, 2010, 3:40am UTC](https://boards.straightdope.com/t/new-rule-says-banks-must-prove-ownership-before-foreclosing/540469/70 "2010-05-25T03:40:39Z")
> [@Little\_Nemo](#): > > The Florida court system apparently felt they were being filed frivolously. No, the Florida Supreme Court was looking for a way to stem the tide of foreclosures…by adding a layer of red tape. > [@](#): > > And I have to say I can see their point - filing a suit accompanied by your admission that you lack the most basic evidence to support your claim seems to be a reasonable example of a frivolous lawsuit. No, it’s an example of overworked lawyers and bankers looking for shortcuts. Look, the idea that you _originally_ expressed, of bankers deliberately launching foreclosures out of the blue on houses in which they had no reason to think they had any interest, is just _ludicrous_. Bankers don’t go driving through neighborhoods pointing at random houses in which they have no interest and saying “Oooohhh! That’s a nice one! Let’s foreclose on _that_ one!” ---
**Author:** ![Measure\_for\_Measure](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/measure_for_measure/32/557_2.png) [@Measure\_for\_Measure](https://boards.straightdope.com/u/Measure_for_Measure)\ **Post date:** [May 25, 2010, 5:43am UTC](https://boards.straightdope.com/t/new-rule-says-banks-must-prove-ownership-before-foreclosing/540469/71 "2010-05-25T05:43:59Z")
> [@spoke-](#): > > Look, the idea that you _originally_ expressed, of bankers deliberately launching foreclosures out of the blue on houses in which they had no reason to think they had any interest, is just _ludicrous_. Bankers don’t go driving through neighborhoods pointing at random houses in which they have no interest and saying “Oooohhh! That’s a nice one! Let’s foreclose on _that_ one!” Oh, really. Then how do you explain the judge in Florida who discovered [two separate banks attempting to foreclose on the same house](http://seminal.firedoglake.com/diary/42244)? Even better, the signer of the 2 separate sets of paperwork, _was the same guy_. This may shock some, but there’s something known as fraud, and banks on occasion are party to it. Furthermore, there have been rumblings in the banking industry for years now about irresponsible cost-cutting in the back office. If all this comes to bite them in the posterior now, it may prove to be a helpful teaching moment. ---
**Author:** ![Little\_Nemo](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/little_nemo/32/3120_2.png) [@Little\_Nemo](https://boards.straightdope.com/u/Little_Nemo)\ **Post date:** [May 25, 2010, 5:55am UTC](https://boards.straightdope.com/t/new-rule-says-banks-must-prove-ownership-before-foreclosing/540469/72 "2010-05-25T05:55:32Z")
> [@](#): > > No, the Florida Supreme Court was looking for a way to stem the tide of foreclosures…by adding a layer of red tape. Having evidence is red tape? > [@](#): > > Look, the idea that you originally expressed, of bankers deliberately launching foreclosures out of the blue on houses in which they had no reason to think they had any interest, is just ludicrous. Bankers don’t go driving through neighborhoods pointing at random houses in which they have no interest and saying “Oooohhh! That’s a nice one! Let’s foreclose on that one!” That does sound pretty ludicrous. I’m sure glad I never said that. ---
**Author:** ![MOIDALIZE](https://avatars.discourse-cdn.com/v4/letter/m/e274bd/32.png) [@MOIDALIZE](https://boards.straightdope.com/u/MOIDALIZE)\ **Post date:** [May 25, 2010, 7:18am UTC](https://boards.straightdope.com/t/new-rule-says-banks-must-prove-ownership-before-foreclosing/540469/73 "2010-05-25T07:18:16Z")
It doesn’t even have to be fraud by the banks trying to foreclose. The assumed owner of the note may have been a victim of fraud themselves. You could have a situation where someone fraudulently assigns a single mortgage to multiple purchasers, who all think they own the note and have the right to demand payment on it. This kind of stuff happens. [Here’s a recent story](http://jacksonville.com/news/florida/2010-05-14/story/florida-investigating-bogus%E2%80%99-foreclosure-records) from Florida involving forged real estate documents. I also recall a case from Ohio a few years ago where a lender sold the mortgages while continuing to service the loans, but failed to pass on the payments to the actual mortgage holders. The lender eventually absconded with the money literally in the middle of the night, leaving a locked office and a bunch of people several months delinquent on their loans. **Spoke** , [here’s a story](http://jacksonville.com/news/florida/2010-05-14/story/florida-investigating-bogus%E2%80%99-foreclosure-records) that should make your blood boil. WaMu tried to foreclose on a guy who was unquestionably a deadbeat and submitted an affidavit which stated that they had tried to locate the note but couldn’t find it. Turns out that WaMu was routinely filing these affidavits with the court even though they weren’t actually attempting to find the notes. Now, notes can certainly get lost (FedEx might lose one during shipping, for example), but why would WaMu feel the need to routinely file these affidavits? Could it be that their record keeping was crap? I don’t believe they were able to find the note and ended up dismissing their suit. ---
**Author:** ![UltraVires](https://avatars.discourse-cdn.com/v4/letter/u/ecccb3/32.png) [@UltraVires](https://boards.straightdope.com/u/UltraVires)\ **Post date:** [May 25, 2010, 12:21pm UTC](https://boards.straightdope.com/t/new-rule-says-banks-must-prove-ownership-before-foreclosing/540469/74 "2010-05-25T12:21:22Z")
A lot of good information in this thread. Another question: Can anyone point to an example of a single homeowner (with a cite) who ended up owning a “free house” because the note holder couldn’t produce it in court? Florida or any other U.S. State. ---
**Author:** ![Spoke](https://avatars.discourse-cdn.com/v4/letter/s/a88e57/32.png) [@Spoke](https://boards.straightdope.com/u/Spoke)\ **Post date:** [May 25, 2010, 12:47pm UTC](https://boards.straightdope.com/t/new-rule-says-banks-must-prove-ownership-before-foreclosing/540469/75 "2010-05-25T12:47:32Z")
> [@Measure\_for\_Measure](#): > > Oh, really. Then how do you explain the judge in Florida who discovered [two separate banks attempting to foreclose on the same house](http://seminal.firedoglake.com/diary/42244)? Even better, the signer of the 2 separate sets of paperwork, _was the same guy_. That doesn’t sound like fraud so much as corporate confusion. The same guy was director of both banks involved. Never ascribe to evil that which may be explained by incompetence. ---
**Author:** ![Spoke](https://avatars.discourse-cdn.com/v4/letter/s/a88e57/32.png) [@Spoke](https://boards.straightdope.com/u/Spoke)\ **Post date:** [May 25, 2010, 12:51pm UTC](https://boards.straightdope.com/t/new-rule-says-banks-must-prove-ownership-before-foreclosing/540469/76 "2010-05-25T12:51:15Z")
> [@jtgain](#): > > A lot of good information in this thread. Another question: Can anyone point to an example of a single homeowner (with a cite) who ended up owning a “free house” because the note holder couldn’t produce it in court? Florida or any other U.S. State. That’s not going to be citable, because it doesn’t make the news. As described before, the house just goes into limbo, and if the bank doesn’t come up with the paperwork, the statute of limitations on the mortgage runs out. That can be many years later, and it isn’t going to make the papers when it silently happens. ---
**Author:** ![Spoke](https://avatars.discourse-cdn.com/v4/letter/s/a88e57/32.png) [@Spoke](https://boards.straightdope.com/u/Spoke)\ **Post date:** [May 25, 2010, 12:53pm UTC](https://boards.straightdope.com/t/new-rule-says-banks-must-prove-ownership-before-foreclosing/540469/77 "2010-05-25T12:53:41Z")
> [@Little\_Nemo](#): > > That does sound pretty ludicrous. I’m sure glad I never said that. you said this: > [@](#): > > [W]hat stops Smith County Bank from filing for foreclosures on every defaulting property in Smith County. Some of those defaulters owed money to Smith County Bank and some owed money to other banks, so they file against every defaulter and get whatever they can. I was riffing on that…and it is ludicrous. ---
**Author:** ![Spoke](https://avatars.discourse-cdn.com/v4/letter/s/a88e57/32.png) [@Spoke](https://boards.straightdope.com/u/Spoke)\ **Post date:** [May 25, 2010, 1:01pm UTC](https://boards.straightdope.com/t/new-rule-says-banks-must-prove-ownership-before-foreclosing/540469/78 "2010-05-25T13:01:35Z")
> [@MOIDALIZE](#): > > **Spoke** , [here’s a story](http://jacksonville.com/news/florida/2010-05-14/story/florida-investigating-bogus%E2%80%99-foreclosure-records) that should make your blood boil. Of course it does. That’s fraud and wrongful foreclosure, **and subjects the perpetrators to civil and criminal liability** , as I noted earlier. The new Florida Supreme Court rule doesn’t prevent that sort of fraud. ---
**Author:** ![MOIDALIZE](https://avatars.discourse-cdn.com/v4/letter/m/e274bd/32.png) [@MOIDALIZE](https://boards.straightdope.com/u/MOIDALIZE)\ **Post date:** [May 25, 2010, 4:58pm UTC](https://boards.straightdope.com/t/new-rule-says-banks-must-prove-ownership-before-foreclosing/540469/79 "2010-05-25T16:58:12Z")
> [@spoke-](#): > > Of course it does. That’s fraud and wrongful foreclosure, **and subjects the perpetrators to civil and criminal liability** , as I noted earlier. The new Florida Supreme Court rule doesn’t prevent that sort of fraud. It’s not fraud or wrongful foreclosure. What are you talking about? ---
**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:** [May 25, 2010, 5:05pm UTC](https://boards.straightdope.com/t/new-rule-says-banks-must-prove-ownership-before-foreclosing/540469/80 "2010-05-25T17:05:20Z")
How would using forged documents with with people signing as officers of multiple companies not fraud on the court? [Previous page](https://boards.straightdope.com/t/new-rule-says-banks-must-prove-ownership-before-foreclosing/540469.md?page=3) [Next page](https://boards.straightdope.com/t/new-rule-says-banks-must-prove-ownership-before-foreclosing/540469.md?page=5)