Comments on: Why mortgages aren’t modified and what a ruling stopping foreclosures means

By: Anonymous

Anonymous — Fri, 06 Nov 2009 01:28:00 +0000

Do not confuse a mortgage “security” with a “mortgage-backed security” – they are not the same thing. A mortgage-backed security is simply an investment “interest” in a “Pool” of current receivable cash payments. Ownership rights are not the same. An investor in a mortgage-backed security is only has has “pro-rata” share interest in pooled receivables backed by the numerous actual mortgage securities. It is not a direct investment in individual mortgage liens/mortgage notes. This is a serious misconception promoted by uninformed media.

Make sure that readers understand that any loan modification in the name of the “servicer” is not valid without identification of the actual INDIVIDUAL mortgage/loan owner/creditor/mortgagee. Any loan modification without identification of the actual owner of the mortgage/note is highly questionable.

By: Edward Harrison

Edward Harrison — Tue, 27 Oct 2009 21:35:00 +0000

Thanks for the reply, Kevin. My desire was not to characterize how many broader implications this case has, but to highlight the fact that it can be used as a tool to restrict MERS from foreclosing in other cases. As such, we will need to see how the specifics of the case are interpreted.

The key line to why I see this having greater importance comes in the Supreme Court opinion:

“MERS contends that the Fourteenth Amendment and §18 of the Kansas Constitution Bill of Rights guarantees of due process were violated when the foreclosure action was consummated without MERS receiving notice of the proceeding and without MERS having the opportunity to intervene in the action.”

MERS is making a constitutional argument, and that means it should be considered by the high court.

By: Kevin W. Hardin

Kevin W. Hardin — Tue, 27 Oct 2009 21:23:00 +0000

Mr. Harrison, it is refreshing to see those reporting on the current mortgage crisis work hard to distill the issues and try to understand them. It is very complicated and the average consumer is typically left scratching their head after reading most articles on the subject. I do disagree with your conclusion that Landmark v. Kelser is indicative of a secondary market issue or securitization issue. Having spent 18 years in this industry, I can tell you it is indicative of extreme incompetence and negligence by the second lien holder and the following failed attempt to hide it amongst the MERS issues. MERS is a tremendous tool that has saved homeowners Billions of dollars in closing costs over the years by saving the costs of multiple assignments at closing and future sale of the loan. The issue is the blind octopus treatment of the mortgage by the Note Holder moving forward and their failure to perform their responsibilities at default. Great job on the article. Look forward to reading more.

By: Lance Newton

Lance Newton — Thu, 22 Oct 2009 19:28:00 +0000

Thank you for your well written article. You did not mention much about HAMP modifications, which pay fees to the servicer too and appear to disincent lenders/servicers from doing internal (non-HAMP) modifications. Since lenders/investors have not been mandated to take/make principal reductions part of their modifications, the are not doing so, to the the detriment of all.

What is your take on why banks can continue to get so many foreclosures and keep them off the market? Where is the tipping point?

If you have a source that is knowledgeable about accounting practices for lenders that allow them to use off balance sheet tools or other tricks to keep from putting up reserves on REO I would love to hear about it. Take a look at my blog and see if you think there is anything there with merit. unsustainabubble.com