Lender Lacks Docs, Judge Cancels Mortgage

Sunday, October 25, 2009

In a New York federal bankruptcy court Oct. 9, Judge Robert D. Drain ruled that lender PHH Mortgage lacked the documents to prove its claim to a delinquent borrower's home in White Plains and wiped out the entire $461,263 mortgage debt on the property.

Posted by silver_ironist at 09:03 AM | 14 COMMENTS | permalink | Comment on This Entry

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I saw an attorney on TV once that helped fight foreclosures. I believe he said that the lender needed the original documents in order to prove ownership and many lenders simply didn't have them at times especially if the loan is sold.

In those cases he would prevail in court.

#1 | Posted by mysterytoy at 2009-10-24 08:03 PM | Reply | Flag:

In those cases he would prevail in court.

I have seen some of those guys, too.

Apparently, this is a notable case where that legal theory has actually passed muster with a judge.

#2 | Posted by silver_ironist at 2009-10-24 09:03 PM | Reply | Flag:

I've heard several financial advisors on the radio say that one "out" from a foreclosure is to demand that they produce the documants. IN many cases, they can't. It's a defense we should all put in the back of our minds, just in case.

#3 | Posted by danni at 2009-10-24 09:38 PM | Reply | Flag:

I've been hearing this for awhile as well. I have no doubt that many if not most of the note holders cannot produce them. Also have no doubt this loophole will be filled quickly if it becomes inconvenient for the banks.

#4 | Posted by TedBaxter at 2009-10-24 09:46 PM | Reply | Flag:

Strangely enough, that's also a defense for parking tickets.

Since the ticket is technically given to the car, and not the owner, the state has to prove ownership, and the only thing accepted in court is the original document, usually kept in the state capitol.

#5 | Posted by Danforth at 2009-10-24 09:54 PM | Reply | Flag:

I had seen this discussed as a good foreclosure legal strategy.

#6 | Posted by L_RContrarian at 2009-10-24 10:19 PM | Reply | Flag:

Why in the hell?!? You're lending out huge sums of money, and you don't fail to keep the original documents? That's... just... stupid.

#7 | Posted by Scrumplet at 2009-10-25 09:24 AM | Reply | Flag:

It's not that they don't keep the documents, the mortages are sold and traded as a package. Several years ago my home loan was sold 3 times in a single year. After these boxes are moved from storage to storage and numerous people sift throught them they are a complete mess. These companies rely on data tapes and computer files to transfer info.

The same is true with most collection companies, they buy debt for as low as .10 cents on the dollar and rarely could find the original paperwork if requested.

#8 | Posted by tygersilver at 2009-10-25 09:40 AM | Reply | Flag:

Serves 'em right buying the note and leaving the original docs...right out of Poltergeist...

"You son of a bitch. You moved the mortgage, but you left the original documents, didn't you? You son of a bitch, you left the original documents and you only moved the mortgage. You only moved the mortgage. Why? Why?"

#9 | Posted by UpL8 at 2009-10-25 09:41 AM | Reply | Flag:

#9 | Posted by UpL8

LOL..It's bad when you have to dig waaay down deep in your memory to understand how bad a joke really is...thanks for the chuckle

#10 | Posted by STIRSUMUP at 2009-10-25 09:45 AM | Reply | Flag:

i.e. the appeals court want some of that bailout cash.

#11 | Posted by Shawn at 2009-10-25 12:26 PM | Reply | Flag:

So this guys keeps his house, AND doesn't owe any money on the property now?

#12 | Posted by LIVE_OR_DIE at 2009-10-26 11:03 AM | Reply | Flag:

I want to see the banks get screwed as much as the next guy, but let's be real honest here. The guy took out a loan and found somebody dumb enough to lend him the money. The guy then defaulted on his end of the contract and gets to walk away with a $500K home for basically being a deadbeat. I don't like bank bailouts, but I sure as hell don't like a deadbeat like the guy in this article getting one either. If you took out the loan and can't pay, be a man and walk away. Don't try to use a slimey lawyer to weasel your way out of paying your debts and don't wreck the house on your way out. The bank didn't make you take out the loan and the bank didn't make you into a deadbeat - this guy did that all by himself.

#13 | Posted by goodlittlenazi at 2009-10-26 11:10 AM | Reply | Flag:

#3 | Posted by danni at 2009-10-24 09:38 PM | Reply

Yeah thats a good idea. Just because you used their money to purchase the home, who cares if they can't prove it. Eventhough they proved it when you cashed their check...

Its just someone elses money anyway.

Only scum of the earth(aka lawyur) or librul's would consider this an option.

#14 | Posted by slicksterWilly at 2009-10-26 11:31 AM | Reply | Flag: