McDonnell Property Analytics (“MPA”) offers a Mortgage Ownership Research service that is designed to assist you in finding out who really owns your mortgage loan.
Most consumers are unaware of the fact that the entity who collects their monthly mortgage payments, i.e., the entity who services their mortgage loan, does not own or hold their note and mortgage, although they act as if they do.
The true mortgage owner is likely to be a qualified special purpose entity, such as a common law trust, into which a pool of mortgage loans has been
conveyed for the benefit of investors who purchased securities backed the income producing assets of the trust through a process known as securitization.
As a practical matter, the securitization structure separates borrowers from their lenders and introduces a third-party administrator to handle the day-to-day operations. These “servicers” have no contractual or fiduciary relationship to borrowers and have an adverse economic interest in that they stand to profit more from handling loans in default than if they were current and in good standing.
On November 10, 2021, the Consumer Financial Protection Bureau issued a press release which explains the problem:[1]
Most homeowners make their monthly mortgage payment to a mortgage servicer. Mortgage servicers collect the payments on behalf of the entity that owns the loan and are hired and fired by that entity, not the homeowner. Homeowners cannot shop for a new servicer, no matter how badly they are mistreated. As a result, borrowers cannot exercise market power to discipline mortgage servicers and, absent government intervention, have no defense against a servicer’s abuse of market dominance.
One of the unintended consequences of the securitization structure is that it places the servicer in the lucrative “sandwich position” between the borrower and the investor which makes it possible for the servicer to skim profits from both parties to the mortgage contract.
CASE STUDY – Wrongful Foreclosure
MPA’s Pennsylvania Client contacted us only recently to see if we could identify any defects in the foreclosure of her primary residence that might undermine an ejectment (eviction) action that is active and ongoing as of this writing (Nov. 2021). This was a tall order because Pennsylvania is a judicial foreclosure state and the trial Court issued a judgment of foreclosure on May 1, 2015, in favor of U.S. Bank, National Association, as Trustee for J.P. Morgan Mortgage Trust 2006-A5, which was upheld on appeal.
We researched the securitization of the J.P. Morgan Mortgage Trust 2006-A5 and discovered that HSBC Bank USA, National Association was appointed Trustee pursuant to a Pooling and Servicing Agreement dated July 1, 2006 and remains so to this day.
Therefore, U.S. Bank misrepresented its authority when, on May 6, 2011, it filed its Complaint in Mortgage Foreclosure. Because U.S. Bank failed to implead a necessary party, i.e., HSBC Bank USA, the Court of Common Pleas lacked subject matter jurisdiction and the foreclosure is void ab initio (from the beginning).
Because the underlying foreclosure is void, we have provided our Client with the grounds to ask the Court hearing the ejectment matter to vacate the judgment of foreclosure and dismiss the case before it.
CASE STUDY – Wrongful Foreclosure
MPA’s Arizona Clients also contacted us after their property had been foreclosed upon by Wilmington Trust, National Association, as Trustee for the Structured Asset Securities Corporation Trust 2005-10. Our Clients felt the foreclosure was wrongful and wanted to see if they could overturn the Trustee’s Sale. We discovered that their mortgage loan had been securitized into the Lehman XS Trust, Series 2005-10, and that the wrong entity instituted the nonjudicial foreclosure action. Our discovery provided sufficient grounds to vacate the foreclosure, but a Judge found that because the Borrowers had entered into a settlement agreement with Wilmington Trust —albeit as Trustee of a different Trust— they had no recourse.
THE LESSON
As these examples show, knowing who really owns your mortgage loan is the key to resolving a dispute; understanding what loss mitigation options are available to you; and defending your property against foreclosure.
MPA’s skilled analysts have access to private and public databases that enhance our ability to trace the ownership of your mortgage loan. This information is absolutely necessary to understand who has the legal right to enforce your note and mortgage.
[1] Nov. 10, 2021, CFPB Takes Action to Prevent Avoidable Foreclosure: https://www.consumerfinance.gov/about-us/newsroom/cfpb-takes-action-to-prevent-avoidable-foreclosures/
I am text block. Click edit button to change this text. Lorem ipsum dolor sit amet, consectetur adipiscing elit. Ut elit tellus, luctus nec ullamcorper mattis, pulvinar dapibus leo.
