MORTGAGE RIGHTS
 The New Foreclosure Defenses Assignments of Mortgages and Deeds of Trust
Assignment of Mortgages Mortgages are very important documents. The mortgage gives the owner of the mortgage the right to foreclose. The right to foreclose is very valuable because the owner of the loan can count on selling the house and use the money from the sale to pay back the loan. If a loan servicer does not have a mortgage, it does not have the right to file a foreclosure case. In legal terms, the servicer has an unsecured loan. The servicer must file an ordinary case asking for the amount due. Once it gets a judgment for the amount due, it can foreclose as a means for collecting the money judgment. But other debtors may have gotten there first, and the house may already be sold. When loans are securitized, the party putting together the securitization (often called the Sponsor) buys loans. The original note is supposed to be physically transferred to the buyer, and the mortgage is assigned to it. The securitization process requires loans be transferred at least two times to become property of the trust. MERS was created to get rid of mortgage assignments. The mortgage is given to MERS as the agent of the party that made the loan, and stays with MERS until either the loan is paid or a foreclosure action is filed. When a foreclosure takes place, MERS assigns the mortgage to the loan servicer for purposes of collection. There are a number of legal problems that can pop up in this procedure. For example, MERS is the agent of the company that made the loan. When the foreclosure crisis struck, a lot of the companies that made the loans, such as Countrywide and Ameriquest, went out of business. There is a rule in agency law that the death of the principal (here the company that made the loan) ends the agency. The end of the agency means that the agent can no longer act on behalf of the principal. Let’s use an example to make this rule clear. Suppose that Ameriquest made the loan and the mortgage went to MERS as an agent for Ameriquest. In this example, Ameriquest is the principal. Under agency law, the agency terminated when Ameriquest “died,” ending MERS’ power to exercise any control over the mortgage. In other words, MERS cannot assign the mortgage to the loan servicer because it no longer has authority; its agency terminated when Ameriquest “died.” Unfortunately, the mortgage assignment arguments have not done well in court. Courts are increasingly holding that the mortgage "follows" the note. This means that the current holder of the note owns the mortgage whether it was correctly assigned or not. These rulings adopt a very old rule of law that the security for a debt follows the debt. Assignment of Deeds of Trust If you have a Deed of Trust, chances are you live in a title theory state, the lender owns the title to your property. You only hold the right of possession. Because the title is transferred when Deeds of Trust are securitized, the rule that a security follows the note does not apply. Let me emphasize that the rule does not apply because title is not a security. You should read my posts about the California Supreme Court's decision in Yvanova. If (1) the assignment of the deed of trust was not done correctly; AND (2) the mistake makes the assignment void (not merely voidable) you may have a defense that the trust does not own your loan.
NEXT: Botched Securitization
 MORTGAGE RIGHTS
The site does not provide legal advice. Neither Susan LaCava nor her law firm, LaCava Law, S.C., represent you until there is a signed retainer agreement.
 The New Foreclosure Defenses Assignments of Mortgages and Deeds of Trust Assignment of Mortgages Mortgages are very important documents. The mortgage gives the owner of the mortgage the right to foreclose. The right to foreclose is very valuable because the owner of the loan can count on selling the house and use the money from the sale to pay back the loan. If a loan servicer does not have a mortgage, it does not have the right to file a foreclosure case. In legal terms, the servicer has an unsecured loan. The servicer must file an ordinary case asking for the amount due. Once it gets a judgment for the amount due, it can foreclose as a means for collecting the money judgment. But other debtors may have gotten there first, and the house may already be sold. When loans are securitized, the party putting together the securitization (often called the Sponsor) buys loans. The original note is supposed to be physically transferred to the buyer, and the mortgage is assigned to it. The securitization process requires loans be transferred at least two times to become property of the trust. MERS was created to get rid of mortgage assignments. The mortgage is given to MERS as the agent of the party that made the loan, and stays with MERS until either the loan is paid or a foreclosure action is filed. When a foreclosure takes place, MERS assigns the mortgage to the loan servicer for purposes of collection. There are a number of legal problems that can pop up in this procedure. For example, MERS is the agent of the company that made the loan. When the foreclosure crisis struck, a lot of the companies that made the loans, such as Countrywide and Ameriquest, went out of business. There is a rule in agency law that the death of the principal (here the company that made the loan) ends the agency. The end of the agency means that the agent can no longer act on behalf of the principal. Let’s use an example to make this rule clear. Suppose that Ameriquest made the loan and the mortgage went to MERS as an agent for Ameriquest. In this example, Ameriquest is the principal. Under agency law, the agency terminated when Ameriquest “died,” ending MERS’ power to exercise any control over the mortgage. In other words, MERS cannot assign the mortgage to the loan servicer because it no longer has authority; its agency terminated when Ameriquest “died.” Unfortunately, the mortgage assignment arguments have not done well in court. Courts are increasingly holding that the mortgage "follows" the note. This means that the current holder of the note owns the mortgage whether it was correctly assigned or not. These rulings adopt a very old rule of law that the security for a debt follows the debt. Assignment of Deeds of Trust If you have a Deed of Trust, chances are you live in a title theory state, the lender owns the title to your property. You only hold the right of possession. Because the title is transferred when Deeds of Trust are securitized, the rule that a security follows the note does not apply. Let me emphasize that the rule does not apply because title is not a security. You should read my posts about the California Supreme Court's decision in Yvanova. If (1) the assignment of the deed of trust was not done correctly; AND (2) the mistake makes the assignment void (not merely voidable) you may have a defense that the trust does not own your loan.
 MORTGAGE RIGHTS
 MORTGAGE RIGHTS
The site does not provide legal advice. Neither Susan LaCava nor her law firm, LaCava Law, S.C., represent you until there is a signed retainer agreement.
 The New Foreclosure Defenses Assignments of Mortgages and Deeds of Trust Assignment of Mortgages Mortgages are very important documents. The mortgage gives the owner of the mortgage the right to foreclose. The right to foreclose is very valuable because the owner of the loan can count on selling the house and use the money from the sale to pay back the loan. If a loan servicer does not have a mortgage, it does not have the right to file a foreclosure case. In legal terms, the servicer has an unsecured loan. The servicer must file an ordinary case asking for the amount due. Once it gets a judgment for the amount due, it can foreclose as a means for collecting the money judgment. But other debtors may have gotten there first, and the house may already be sold. When loans are securitized, the party putting together the securitization (often called the Sponsor) buys loans. The original note is supposed to be physically transferred to the buyer, and the mortgage is assigned to it. The securitization process requires loans be transferred at least two times to become property of the trust. MERS was created to get rid of mortgage assignments. The mortgage is given to MERS as the agent of the party that made the loan, and stays with MERS until either the loan is paid or a foreclosure action is filed. When a foreclosure takes place, MERS assigns the mortgage to the loan servicer for purposes of collection. There are a number of legal problems that can pop up in this procedure. For example, MERS is the agent of the company that made the loan. When the foreclosure crisis struck, a lot of the companies that made the loans, such as Countrywide and Ameriquest, went out of business. There is a rule in agency law that the death of the principal (here the company that made the loan) ends the agency. The end of the agency means that the agent can no longer act on behalf of the principal. Let’s use an example to make this rule clear. Suppose that Ameriquest made the loan and the mortgage went to MERS as an agent for Ameriquest. In this example, Ameriquest is the principal. Under agency law, the agency terminated when Ameriquest “died,” ending MERS’ power to exercise any control over the mortgage. In other words, MERS cannot assign the mortgage to the loan servicer because it no longer has authority; its agency terminated when Ameriquest “died.” Unfortunately, the mortgage assignment arguments have not done well in court. Courts are increasingly holding that the mortgage "follows" the note. This means that the current holder of the note owns the mortgage whether it was correctly assigned or not. These rulings adopt a very old rule of law that the security for a debt follows the debt. Assignment of Deeds of Trust If you have a Deed of Trust, chances are you live in a title theory state, the lender owns the title to your property. You only hold the right of possession. Because the title is transferred when Deeds of Trust are securitized, the rule that a security follows the note does not apply. Let me emphasize that the rule does not apply because title is not a security. You should read my posts about the California Supreme Court's decision in Yvanova. If (1) the assignment of the deed of trust was not done correctly; AND (2) the mistake makes the assignment void (not merely voidable) you may have a defense that the trust does not own your loan.
 MORTGAGE RIGHTS
 MORTGAGE RIGHTS
The site does not provide legal advice. Neither Susan LaCava nor her law firm, LaCava Law, S.C., represent you until there is a signed retainer agreement.
 The New Foreclosure Defenses Assignments of Mortgages and Deeds of Trust Assignment of Mortgages Mortgages are very important documents. The mortgage gives the owner of the mortgage the right to foreclose. The right to foreclose is very valuable because the owner of the loan can count on selling the house and use the money from the sale to pay back the loan. If a loan servicer does not have a mortgage, it does not have the right to file a foreclosure case. In legal terms, the servicer has an unsecured loan. The servicer must file an ordinary case asking for the amount due. Once it gets a judgment for the amount due, it can foreclose as a means for collecting the money judgment. But other debtors may have gotten there first, and the house may already be sold. When loans are securitized, the party putting together the securitization (often called the Sponsor) buys loans. The original note is supposed to be physically transferred to the buyer, and the mortgage is assigned to it. The securitization process requires loans be transferred at least two times to become property of the trust. MERS was created to get rid of mortgage assignments. The mortgage is given to MERS as the agent of the party that made the loan, and stays with MERS until either the loan is paid or a foreclosure action is filed. When a foreclosure takes place, MERS assigns the mortgage to the loan servicer for purposes of collection. There are a number of legal problems that can pop up in this procedure. For example, MERS is the agent of the company that made the loan. When the foreclosure crisis struck, a lot of the companies that made the loans, such as Countrywide and Ameriquest, went out of business. There is a rule in agency law that the death of the principal (here the company that made the loan) ends the agency. The end of the agency means that the agent can no longer act on behalf of the principal. Let’s use an example to make this rule clear. Suppose that Ameriquest made the loan and the mortgage went to MERS as an agent for Ameriquest. In this example, Ameriquest is the principal. Under agency law, the agency terminated when Ameriquest “died,” ending MERS’ power to exercise any control over the mortgage. In other words, MERS cannot assign the mortgage to the loan servicer because it no longer has authority; its agency terminated when Ameriquest “died.” Unfortunately, the mortgage assignment arguments have not done well in court. Courts are increasingly holding that the mortgage "follows" the note. This means that the current holder of the note owns the mortgage whether it was correctly assigned or not. These rulings adopt a very old rule of law that the security for a debt follows the debt. Assignment of Deeds of Trust If you have a Deed of Trust, chances are you live in a title theory state, the lender owns the title to your property. You only hold the right of possession. Because the title is transferred when Deeds of Trust are securitized, the rule that a security follows the note does not apply. Let me emphasize that the rule does not apply because title is not a security. You should read my posts about the California Supreme Court's decision in Yvanova. If (1) the assignment of the deed of trust was not done correctly; AND (2) the mistake makes the assignment void (not merely voidable) you may have a defense that the trust does not own your loan.
 MORTGAGE RIGHTS
The site does not provide legal advice. Neither Susan LaCava nor her law firm, LaCava Law, S.C., represent you until there is a signed retainer agreement.  MORTGAGE RIGHTS