Tammy’s story dramatically demonstrates what I refer to as the “left hand, right hand” phenomenon which seems to occur with every securitized loan. That is to say: “the left hand doesn’t know what the right hand is doing.”
Whether its in the form of the “lender” (actually the loan servicer, who is not the lender at all), not being able to adequately demonstrate that it has the right to collect on the loan, or in the form of getting different answers to critical questions regarding repayment or modification of the loan depending on the day of the week you call, this phenomenon is universally present.
Tammy was sued for foreclosure in March, 2011. Despite the fact that the rules require any party filing a lawsuit demonstrate that the party suing (called the Plaintiff) has the right to do so, the promissory note an mortgage attached to Tammy’s foreclosure named a bank other than the plaintiff as having right to the loan.. In other words, the bank was essentially telling the court (and Tammy), “take my word for it; I am the right party to be suing.” Even though banks have gotten away with this tactic hundreds of thousands, possibly millions of times before, courts now are coming to the realization that homeowners, like the banks themselves, have the right to insist that the paperwork is in order.
In Tammy’s case, four different banks had a connection to her loan, meaning that it would be possible that had the bank suing her obtained a judgment and had her home sold, one of the others, or even some other unknown bank, could later step forward and demand payment on the same debt. Our position in a case like Tammy’s is quite clear: Until the banks get their act together, determine which of them has the right to collect on the loan, and prove that to us, the “left hand, right hand” thing just doesn’t work for us.
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Next week: Paperwork shuffle.
Copyright 2013 Daniel L. McGookey