this NY court ruling affects all of the major banks / mortgage lenders with HQ in New York ...
(snip)"In sum, because MERS was never the lawful holder or assignee of the notes described and identified in the consolidation agreement, the corrected assignment of mortgage is a nullity, and MERS was without authority to assign the power to foreclose to the plaintiff. Consequently, the plaintiff failed to show that it had standing to foreclose. MERS purportedly holds approximately 60 million mortgage loans (see Michael Powell & Gretchen Morgenson, MERS? It May Have Swallowed Your Loan, New York Times, March 5, 2011), and is involved in the origination of approximately 60% of all mortgage loans in the United States (see Peterson at 1362; Kate Berry, Foreclosures Turn Up Heat on MERS, Am. [*6]Banker, July 10, 2007, at 1). This Court is mindful of the impact that this decision may have on the mortgage industry in New York, and perhaps the nation. Nonetheless, the law must not yield to expediency and the convenience of lending institutions. Proper procedures must be followed to ensure the reliability of the chain of ownership, to secure the dependable transfer of property, and to assure the enforcement of the rules that govern real property. Accordingly, the Supreme Court should have granted the defendants' motion pursuant to CPLR 3211(a) (3) to dismiss the complaint insofar as asserted against them for lack of standing. Thus, the order is reversed, on the law, and the motion of the defendants Stephen Silverberg and Fredrica Silverberg pursuant to CPLR 3211(a)(3) to dismiss the complaint insofar as asserted against them for lack of standing is granted.
FLORIO, J.P., DICKERSON, and BELEN, JJ., concur."(snip)
... or stated another way, unless the bank / mortgage servicer can produce and present to a judge the actual promissory note signed by the mortgage borrower, they do not have legal standing to be granted a foreclosure / eviction in response to non-payment.
From a 'real world' standpoint, this probably means that any mortgage borrower / homeowner that is so inclined can probably stop making mortgage payments and continue living in their home free of charge for the rest of their lives ( facetious comment ) !!! But it's guaranteed that it will take the mortgage lending industry YEARS to sort out their packaged mortgage bond paperwork to the point of being able to produce original promissory notes.
Also from a 'real world' standpoint, this probably means that hedge funds / major financial institutions / the US FED, and anybody else currently owning mortgage backed securities is going to take a MAJOR 'haircut' on the value of those securities. That loss of 'collateral value' will then force REactions ... from another Lehman Brothers to another TARP to another FANNIE bailout, to US Taxpayers being stuck for hundreds of billions ( if not trillions ) of dollars worth of defaults on already existing mortgages that the US Treasury has explicitly guaranteed !!! Because of those US taxpayer guarantee costs, we can expect a major effort by FANNIE / FREDDIE to execute 'putbacks' of delinquent mortgages to the originating banks and financial institutions if the original promissory note investigations that must now occur also turn up any arguable grounds for fraudulent loan origination ( i.e. stated income of mortgage borrowers was not accurate etc. ).
Other REactions will undoubtedly be a major reduction in the types of mortgages that will continue to be available to new borrowers, higher interest rates on any future mortgages written, and much tighter screening of future borrowers regarding their long term ability to repay. Also, the 'foreclosure freeze' will also 'freeze' much of the US real estate market given the strong implication that clear property title for sale / purchase of property will now also require physically producing the original promissory note.
Undoubtedly this court decision will be appealed to the highest level !
much more complete discussion at
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