Feb. 22 (Bloomberg) -- Joe Lents hasn't made a payment on his $1.5 million mortgage since 2002.
"That's when Washington Mutual Inc. first tried to foreclose on his home in Boca Raton, Florida. The Seattle-based lender failed to prove that it owned Lents's mortgage note and dropped attempts to take his house. Subsequent efforts to foreclose have stalled because no one has produced the paperwork."`
Seems that the bank had trouble following the paper trail of the mortgage and couldnt prove it actually owned the note. During boom times companies hire bodies to handle the onslaught of business and a mountain of paperwork. If the original lender, who may have had the mortgage sold and resold five or six times.
The Bloomberg piece goes on to say that "Judges in at least five states have stopped foreclosure proceedings because the banks that pool mortgages into securities and the companies that collect monthly payments haven't been able to prove they own the mortgages. The confusion is another headache for U.S. Treasury Secretary Henry Paulson as he revises rules for packaging mortgages into securities."
More than $2 trillion dollars of these loans have been bundled and sold several times. Each time the loan has to be assigned to the new owner of the loan and many times the paper was lost or shortcuts were taken.
Lost-Note Affidavits
.."Nobody knows how widespread the use of lost-note affidavits are, Charney said. She's had foreclosure proceedings for 300 clients dismissed or postponed in the past year, with about 80 percent of them involving lost-note affidavits, she said.
"They raise the issue of whether the trusts own the loans at all,'' Charney said. "Lost-note affidavits are pattern and practice in the industry. They are not exceptions. They are the rule.'"
*Special thanks to Bob Ivery for this story.
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