Fairview Lending, a private hard money lender, has watched the case unfold regarding the securitization of mortgages and the subsequent foreclosure when the borrower does not pay. The full article can be found: http://www.bloomberg.com/news/2011-01-07/us-bancorp-wells-fargo-lose-pivotal-massachusetts-foreclosure-case.html
What was the importance of this case: The essence of the case was regarding whether the mortgage assignments were properly recorded and whether the bank could lawfully foreclose.
The essence of a mortgage or loan is that the borrower promises to repay a debt. In this case the borrower did not make payments and the bank started foreclosure proceedings. The foreclosure was overturned by the courts since supposedly the securitization documents were not complete.
This case is a huge loss for both banks and consumers. At the end of the day the borrower did not pay the mortgage. The borrower should not be able to stay in the property. The courts ruling is a terrible precedent and will raise borrowing costs for all consumers. From a logical standpoint, who cares who owns the mortgage; there is only one party claiming to own the mortgage and the borrower did not pay. If you make a promise to repay a loan and default, the bank must be able to enforce their rights or the entire essence of a mortgage is defeated
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January 9th, 2011 at 6:30 pm
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