Foreclosure may be voided if the lender who did not originate the note was unable to produce the chain of title (ownership). This chain of title would need to be presented by the lender listing every beneficial owner of the deed in a chronological order including their name and address, the date of recordation and the recordation number and a description of the instrument used to convey the transfer of title to each beneficiary.

If unable to establish a chain of title, lenders could face more borrowers’ challenges of foreclosures which borrowers and their attorneys could use as bargaining chips to get lenders to negotiate favorable mortgage modification terms or other foreclosure prevention options so borrowers could keep their homes and avoid foreclosure.

How Mortgage Ownership Is Tracked

Lenders currently use Merscorp’s databases (MERS) to electronically track ownership changes of mortgages instead of recording assignments each time the loan is sold. About 2/3rd’s of mortgages the last 10 years were packed and sold on Wall Street as mortgaged backed securities. Loans could have been sold at least three times making it more difficult today to determine who owns a mortgage. Under the Uniform Commercial Code, adopted in Arizona and every other state, only the owner of the mortgage has the right to enforce it by foreclosing. In Arizona, foreclosures are conducted by non-judicial foreclosure trustee sale, which do not require court approval. Judges across the country have started to throw foreclosure cases out of court where MERS is the plaintiff on the grounds that they are not the legal owner of the mortgage. Also, 50 state attorney generals are investing lender practices of robo signing after complaints from consumers of lenders falsely submitted affidavits and other paperwork in connection with the repossession of their Arizona homes.

A Real Life Example

In fact, Republican Senator Michele Reagan from Arizona District 8 decided to write and sponsor Arizona Senate Bill 1259 with the help of her attorney Beth Findsen, after Senator Reagan and her husband David Gulino were sued by their mortgage servicer. The couple advised Colonial Savings FA in 2009 that they were rescinding their loan because their mortgage servicer, Texas based Colonial Savings FA, failed to disclose certain fees and their underwriter inflated their income by 12 percent in violation of the federal Truth in Lending Act laws. Colonial Savings claimed the couple does not have the legal right to rescind their Arizona mortgage. Senator Reagan and her husband counter sued Colonia Savings claiming they were steered by Colonial Savings to an adjustable rate mortgage that they did not need and that Colonial Savings has refused to advise them who owns their loan. The bill was opposed by the Arizona Bankers Association, the Arizona Trustees Association, who represents trustees that conduct foreclosure auctions on behalf of lenders and Merscorp Inc., the company that operates a mortgage database that keeps the electronic records for more than half of all mortgages made in the United States.

The best advice when obtaining a an Arizona mortgage is always make sure you work with a reputable Arizona lender or Arizona mortgage broker and comparison shop on your Arizona mortgage rates. Ask questions and read all the small print so you understand your Arizona mortgage loan terms. Keep all correspondence from your loan servicer or lender. Periodically, send a written request to your loan servicer asking for information verifying who owns your Arizona mortgage. Staying informed and retaining good records is a good idea in case you and your lender or mortgage servicer have a dispute.

If you have any questions about this or if you have any questions you’d like us to answer on our podcast, you can email your questions to team@azmortgagebrothers.com or give us a call at (602) 535-2171. Be sure to ask us for a free quote on your next mortgage. We’ll personally work with you and help you through the whole process.

•••

Thanks for listening and reading the Mortgage Brothers Show. Let us know if you have any questions you’d like us to answer on this podcast. You can email your questions to Tom@AZMortgageBrothers.com or Eddie@AZMortgageBrothers.com.

Be sure to ask us for a free quote on your next mortgage. We’ll personally work with you and help you through the whole process.

Signature Home Loans LLC does not provide tax, legal, or accounting advice. This material has been prepared for informational purposes only. You should consult your own tax, legal, and accounting advisors before engaging in any transaction. Signature Home Loans NMLS 1007154, NMLS #210917 and 1618695. Equal housing lender.

BACK TO LIST