Kenneth M. Lapine on In re Foreclosure Cases 2007 U.S. Dist. LEXIS 84011 (N.D. Ohio 2007)

Kenneth M. Lapine on In re Foreclosure Cases 2007 U.S. Dist. LEXIS 84011 (N.D. Ohio 2007)

This case dismissing numerous foreclosure actions for lack of standing because the lenders failed to establish a chain of title to the loans may provide troubled borrowers with an opportunity to seek accommodations with their lenders. In this commentary, Kenneth M. Lapine discusses the import of this significant decision.
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“The . . . decision demonstrates," Lapine writes, "that the intricacies of the mortgage pools are beginning to create problems for lenders. Attorneys for homeowners should be expected to embrace the District Judge’s opinion as a way to impede foreclosures nationwide or force investors to settle with homeowners, and it will probably encourage judges of other courts to demand more documentation of ownership from lenders trying to foreclose. A similar dilemma is faced by borrowers. As the volume of foreclosures has exploded, the complex structure and disparate ownership of mortgage-backed securities have made it difficult for borrowers to work out troubled loans, in part because they cannot identify who holds the mortgage notes, and the companies servicing the loans are often without authority to make modifications to the notes. Judge Boyko was not appreciative, and in fact was disdainful of the plaintiff-lenders’ argument that they were the real parties in interest just by paying for the mortgage, even before the purchase agreement, let alone a proper assignment, made its way to the plaintiff-lender.

"Judge Boyko, in a footnote, made it painfully clear (to the plaintiff lenders, at least) that: [quoting from the opinion] ‘Plaintiff's, “Judge, you just don't understand how things work,” argument reveals a condescending mindset and quasi-monopolistic system where financial institutions have traditionally controlled, and still control, the foreclosure process.’”
 
 

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Kenneth M. Lapine on In re Foreclosure Cases 2007 U.S. Dist. LEXIS 84011 (N.D. Ohio 2007)