Bank foreclosure practices have drawn increased national scrutiny in recent years as the role of MERS, the mortgage industry’s recording agent, has raised serious questions about the validity of how mortgages are sold in the global market place.
These are the 10 most tried Nationwide Default Solutions homeowners have used to fight foreclosure and save their home.
Starting with No. 10 [and not by order of importance]
10. The “Legal Standing” Defense
In order for a bank to foreclose, it must demonstrate the “legal standing” to do so. In other words, the bank must show that it has the authority to enforce the terms of the mortgage.
In most cases, the bank pursuing the foreclosure designates a third party named MERS (Mortgage Electronic Registration Systems) which assumes ownership-like rights over the mortgage, but it too must prove its rights to foreclose with a security interest.
Too often MERS’ documentary trail is poor or otherwise compromised particularly since it was created to track transactions via an electronic database as opposed to traditional land records archived at the county level.
9. The “Original Note” Defense
In the absence of the original mortgage note, the bank is unable to foreclose – most of the time. The bank may have some flexibility on this issue. Depending on the specific jurisdiction, if the bank can show that the original note was once in its possession but later became lost or destroyed, the bank foreclosure attempts may still prevail.
8. The “No Splitting the Note” Defense
During the foreclosure process, the bank cleverly attempts to parse its ownership of the mortgage from its ownership of the loan, thereby creating two separate assets in one. Most courts have held that the mortgage and the loan are one and cannot be separated.
7. The “No Trust” Trust Defense
In most instances, mortgages are eventually assigned by the bank or its agent MERS to a large trust otherwise known as a securitization pool. However, that trust’s lifespan does not always coincide with the timeline in which mortgages are reportedly assigned to it.
It’s not uncommon to see a mortgage assignment [or sale] to a trust actually predate the formation of the trust itself. If the trust was not yet born at the time the mortgage is presumed to have been assigned to it – HELLO, then the bank’s right to foreclose is seriously undermined
6. The “No Knowledge of the Facts” Defense
When a foreclosure action is filed, in many ways it’s just like any other lawsuit. The claims in the lawsuit must meet a requisite burden of proof in order to prevail. The party bringing the action should have a basic “knowledge of the facts” contained in its court complaint.
Foreclosure actions have long prevailed even in the absence of a bona fide bank representative with knowledge of the facts surrounding the foreclosure. However, recent challenges to the authenticity of the foreclosure bank documents have resulted in many courts applying stricter rules of evidence.
The “faceless” foreclosure may have seen its final days.
5. The “No Attorney Affirmation” Defense
In recent years, not only have courts tightened evidence requirements against foreclosing banks, courts have also required attorneys representing banks to accompany their foreclosure lawsuit with an affirmation attesting to the truthfulness of the foreclosure documents. If the bank fails to produce an attorney affirmation, the foreclosure action may be dismissed.
4. The “Wrongful Assignment” Defense
Challenging the bank’s assignment simply disputes the validity of any one of the various mortgage transfers. Banks typically transfer ownership of mortgages numerous times as part of a highly complex mortgage securitization process.
Although these multiple transfers are electronically recorded by MERS, the documentary trail has been criticized as weak and in some instances non-existent.
If the bank is unable to establish the validity of the mortgage transfer, the foreclosure action may be dismissed.
Basically, no ticket no laundry – sort of.
3. The “MERS Conflict of Interest” Defense
In some less frequent instances the giant mortgagee and agent to the mortgage industry MERS, is named both plaintiff and defendant in foreclosure actions. As a result, the MERS conflict of interest defense can be raised to outright dismiss the foreclosure.
The complexities of MERS transfers cause MERS to defend their highly unconventional business model with more established and conventional legal methods. As a result, MERS has been embattled by the legal community and there have been significant compromises to MERS’ infrastructure as a result.
It almost seems psychotic to want to sue yourself!
2. The “Chain of Ownership” Defense
This is pretty straight forward. – I think.
If the foreclosing bank is unable to track [with documentary proof] the sale of the mortgage to the numerous institutions commencing from the loan’s origination, and furthermore prove that it received its rights to foreclosure through those transfers, then the foreclosure action is subject to dismissal.
Keep in mind, MERS will retain ownership rights to the mortgage as a mortgagee, but effectively transfers ownership rights of the loan to the bank buying the loan. You got that? Ok now repeat it – backwards.
Proving [or disproving] chain of ownership of the loan will involve research but it is a critical aspect of the foreclosure defense.
A Quiet Title action may be an applicable defense in this scenario. Quiet title is a legal remedy brought by the homeowner to remove claims by the foreclosing bank or MERS when asserting an invalid interest in the property.
1. The “MERS Owes Homeowners a Legal Defense” Defense
Ok this defense may not be “proven” if you like following things like that, but I made it #1 because it’s my own personal theory. I personally believe MERS’ complex system actually helps the homeowner to some degree.
MERS is often a named co-defendant with the homeowner in the foreclosure lawsuit. As MERS loosely distributes ownership rights of the loan to the party that eventually pursues the foreclosure, it yet retains its ownership rights to the mortgage. Yes, it does sound confusing.
The foreclosing party [with its ownership rights of the loan] must somehow extinguish MERS’ ownership rights of the mortgage which it attempts to do by naming MERS a defendant. Although a named co-defendant, MERS is complicit with the foreclosure and shows indifference to the homeowner by remaining silent.
As a co-defendant, MERS fails to plead in favor of the mortgagor-mortgagee covenant which MERS is in fact a party to. As a defendant, MERS has the explicit duty to defend.
Contact Us today and discuss your specific matter with an advocate.