Is it true that "what goes around comes around" ?
I'm not into higher finance at all, but this article was a interesting read to me (I'm not a fan of BofA),
and it at least sounds like a serious problem for BofA.
Daily Finance article
Countrywide's Mortgage Document Errors May Doom Bank of America
By ABIGAIL FIELD Posted 1:30 PM 11/22/10
Quote:
Testimony in a New Jersey foreclosure case decided last week may spell big trouble for Bank of America (BAC).
If what one bank employee said on the stand proves to be accurate, paperwork problems it acquired when it purchased
the failing mortgage provider Countrywide in 2008 could leave BofA on the hook for billions of dollars.
As first reported by Kate Berry for American Banker, Linda DiMartini, a supervisor and operational team leader
for the Litigation Management Department of BAC Home Loans Servicing, testified in the foreclosure case of John T. Kemp
that it was "customary for Countrywide to maintain possession of the original note and related documents."
If that's true, then Bank of America may discover that it has millions of loans on its books
that it thought it had transferred to trusts that issued mortgage backed securities,
because 96% of Countrywide loans were ostensibly securitized.
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BofA agreed the testimony of Linda DiMartini was accurate
I've skipped through what was interesting to me...
the parts about what BoA tried to do before the trial to avoid/solve the problem,
and how the judge ruled against them in each of their arguments.
Judge: simple fact --- the documents were not transferred
Quote:
Assuming the case follows the normal course going forward, that will mean
that neither bank will be able to foreclose on Kemp's house, and his mortgage debt will become unsecured debt --
the banks will have to stand in line with the credit card issuers and get paid only a portion of the principal.
If it's true the securitization trusts routinely didn't get notes delivered from Countrywide, then all those properties --
millions of properties -- could have clouded titles.
That hurts many people outside of the bank, because clouded title makes selling those properties much harder,
and leaves the current owners in a kind of legal limbo.
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