LITTLE-KNOWN FEDERAL LAW MANDATES DISCLOSURE TO CUSTOMERS
by Sharon Rondeau
(Nov. 16, 2011) — The Post & Email has been researching the options available to homeowners who are facing foreclosure, and, contrary to popular belief, there is evidence to suggest that a loan servicer may not have the legal authority to collect payments, serve foreclosure notices, or to take the property if the homeowner can no longer make his payments.
Home foreclosures in the U.S. rose a reported 7% last month as compared to September 2011, after “lenders corrected foreclosure paperwork and processing problems.”
Many banks have packaged mortgages into a financial product called trusts, or mortgage-backed securities, in which mortgages and other cash-flow instruments are sold in groups called “pools” to investors. If a mortgage is sold to another institution, the debtor must be notified in writing of his rights. If a homeowner is facing foreclosure, there is action that can be taken to ascertain the details of where his mortgage went after its initial signing.
One of the causes of the current financial crisis was the promotion of subprime mortgages, which began with very low interest rates but increased after a given period of time, sometimes to monthly payments which the homeowner could not afford to pay.
According to radio show host Jerry Doyle, there are four steps through which a mortgage must pass to reach “trust” status. Both the promissory note and the contract which the customer signs with the bank must make it through this four-step process. Doyle states emphatically that if the documentation is lost at any point during the process, there is no legal noteholder and the homeowner can secure unencumbered title to his property.
U.S. Code Title 12, Section 2605 states that any time a mortgage is sold, the customer must be notified. Under provision (e) of the statute, the loan servicer must provide a response to the borrower in writing within 20 days of receipt of a Qualified Written Request. The Real Estate Settlement Procedures Act, passed by Congress in 1974, was intended to prevent “kickbacks between lenders and third-party settlement service agents.” The Department of Housing and Urban Development provides a sample QWR letter; however, its RESPA page yields an error message. HUD has been accused of inaccurate recordkeeping and the waste of millions of dollars, yet it continues its work in “sustainable communities” and “affordable housing.”
Writer and researcher Steven Wayne Pattison is in the process of establishing a national organization to assist homeowners who are unable to make their mortgage payments by educating them about what the banks might have done with their promissory notes and contracts after they were signed. Before the current financial crisis, many banks sold the notes as outlined above, and in some cases, the origination paperwork was misplaced. Pattison is passionate about helping people to save their homes. “We have to help educate people,” he said. “Even people who think they are not affected by the foreclosure crisis are affected. It is projected that 1,200,000 more homes will be foreclosed on by the end of this year.”
Pattison believes that “homeowners are the sovereigns” and that if enough homeowners unite, common law can be used to preserve liberties. He asserted that the Federal Reserve is “printing money out of thin air” and that the current financial situation is a “Monopoly game.” However, he stated that “possession is nine-tenths of the law,” although generally the banks “do not adhere” to that philosophy.
Through his organization, Pattison and his son are seeking “anyone who is a leader” to become a county coordinator who will assume the responsibility of training others in regard to people’s sovereign rights, bank fraud, and actions they can take to maintain ownership of their homes. “People need to ask for the note,” he said. “There is no paper trail in 99% of the mortgages out there. If the bank doesn’t have the note, then they have no standing against the homeowner.” Pattison also believes that our financial system is only “de facto” because there is no “real money” since the U.S. was taken off of the gold standard in 1968.
While he and his son are not doing mortgage modifications, they scan the internet daily for new information regarding the mortgage crisis and plan on issuing weekly updates through the self-help organization. Pattison stated that he is “leery of attorneys,” although one or two have been speaking with him about his plan and have indicated an interest in possibly becoming involved.
A guest writer of The Post & Email has been trying to ascertain who owns her mortgage for the last five months but has received only a nominal response from the lending institution. Questions regarding the original promissory note and how much the bank paid to acquire it from another lender have been routinely ignored by several different parties. According to Wikipedia, Wells Fargo acquired Wachovia in 2008 as the result of an “all-stock transaction,” so doubt exists as to whether or not Wells Fargo has the promissory note and if any actual money was paid for it.
A Chapter 13 bankruptcy filing can be made to avoid foreclosure on a debtor’s home if the debtor qualifies for such relief.