More Problems for Countrywide in Miami Foreclosure Cases

A recent court ruling in Bank of New York V. Stephen Silverberg, the New York Supreme Court ruled that a bank couldn’t foreclose on a couple’s Long Island house because of problems with documentation by Countrywide and MERS.

Miami Foreclosure Lawyers continue to monitor the latest developments with Countrywide loans and some of the other lending institutions leading the way with shoddy mortgage documents. The firm is a member of Max Gardner’s Army, a network of mortgage foreclosure lawyers sharing techniques in real time on how to fight for homeowners. We use those tactics and others to help homeowners fight foreclosure in Miami.
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At issue in the New York case was a problem with MERS, the Mortgage Electronic Recording System created in 1993 by the residential mortgage industry to track sales of homes. But the system is flawed because it doesn’t necessarily properly record transactions. And lenders have relied more on MERS than county clerk offices when filing mortgage foreclosure lawsuits. For instance, when a mortgage is sold, information is registered in MERS, but no assignment is recorded. So, if a homeowner faces a foreclosure, county records may not reflect whether the company, a trust of investors or another lender actually owns the house.

In the case of the Silverbergs, they obtained a $450,000 loan from Countrywide Home Loans in 2006. According to the court ruling, the mortgage refers to MERS as the mortgagee and provides that the underlying promissory note is in favor of Countrywide. A year later, the couple took out a second mortgage from Countrywide and executed a consolidation agreement.

Defaulting a year later, MERS, as Countrywide’s nominee, assigned the agreement to the Bank of New York. On appeal, the couple argued that the bank doesn’t have standing to sue because it didn’t own the notes and mortgages at the time it commenced the foreclosure action. Neither MERS nor Countrywide ever transferred or endorsed the notes described in the consolidation agreement to the plaintiff.

Without actually possession of the promissory note, the court ruled, MERS was never the lawful holder or assignee of the notes described and identified in the consolidation agreement. The court ruled that the home couldn’t be foreclosed on as a result. And in its ruling, the court noted that MERS holds more than 60 million mortgage loans.

This ruling comes on the heels of other problems with Countrywide loans, as previously reported by Miami Foreclosure Lawyer Blog. As recently reported by Fortune Magazine, many of Countrywide’s mortgage securitizations may be invalid after an investigation by the magazine revealed that many loans weren’t properly handled.

The magazine did an investigation of more than 130 foreclosure cases in two New York counties involving Countrywide, which was bought out by Bank of America in 2008. Of the 130 cases, 104 were loans originally made by Countrywide and of those, none were endorsed by Countrywide. The investigation began after a Bank of America official testified under oath in a New Jersey bankruptcy case that Countrywide didn’t deliver the notes to the securitization trustee and that the company’s notes weren’t endorsed except on a case-by-case basis, usually long after securitzation occurred. Under securitization contracts, both steps are required.

It’s obvious what kind of problems these banks are having with their loans. Not only do they not properly document who owns your house in many cases, they don’t follow the rules when they sell your mortgage as part of a securitization. Our firm works to exploit those problems to help you save your home.

If you are fighting foreclosure in Miami or the surrounding areas, contact Jacobs Keeley for a confidential appointment to discuss your rights. Call (305) 358-7991.