Banking Law
‘Law School 101’ Could Help Struggling Homeowners
Posted Nov 15, 2007, 10:36 am CDT
By Debra Cassens Weiss
The requirements of legal standing could help homeowners facing foreclosure on their homes.
A federal judge in Cleveland recently tossed 14 foreclosure cases because Deutsche Bank National Trust Co. could not prove ownership of the properties, the New York Times reports. The bank is trustee for investors in pools of mortgage securities.
Lawyers for defaulting homeowners may cite the ruling in an effort to impede foreclosures or force a settlement in other cases, the newspaper says. One study by an Iowa law professor showed that 40 percent of creditors in foreclosure cases had failed to show proof of ownership.
Mortgage notes originated by a lender that are sold to a securitization pool are not sent to the trust. Instead they are kept at a separate document repository company, which keeps down costs.
The issue, says lawyer O. Max Gardner III, is whether the mortgage has been transferred and assigned to the securitization trust. “If not, then they really don’t have standing,” he told the Times. “It’s Law School 101.”
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