Homeowners nationwide have something to be happy about. In the fight against foreclosure, homeowners in New York were able to use the foreclosure defense, “produce the note” tactic to successfully save their home. A June 7th, 2011 New York appellate ruling has thrown out an attempted foreclosure by the Bank of New York based on the paperwork, or lack there of. The bank had utilized Mortgage Electronic Registration Systems (MERS) to keep track of the loan, but the questionable practices of MERS itself along with their recording of documents and transfers, played a big part in the banks inability to produce the note.
MERS has long been known as a nationwide foreclosure fraud registry that banks and lenders use to track mortgages. This time however, their illegal practices and transfers of documents, has landed them in the heat of the recent foreclosure crisis and court cases. Several states are ruling that MERS does not have the right to foreclose because they only hold interest in the physical property that is secured by the note, but not the actual note and debt itself. According to ForeclosureFraudExposed.com, Homeowners nationwide have been wising up over the past couple months, learning about the foreclosure process, and effective foreclosure defense tactics to save their homes. “This has been evident from the increased spike in traffic volume, new member registrations, and the average time members spend on the site learning what steps to take in fighting foreclosure, which has increased to an average of 3.6 hours daily per member,” echoed Rick Haughton, who is a Consultant for the company.
As with many other foreclosure fraud cases, the judge found that the Bank of New York was not able to foreclose because of the lack of documentation and because they didn’t possess the underlying note and debt, nor the homeowner’s promise to pay.
The court stated, “A transfer of the mortgage without the debt is a nullity, and no interest is acquired by it.” Just because the mortgage documents were transferred does not give the new party legal right to foreclose unless they also possess the legally transferred note. The bank admitted, that they did not possess the note in court.
There was also a critical part of the ruling which discussed and nullified the possession and effective transfers of the mortgage by MERS who was entrusted with its possession. The court analyzed that because MERS was acting as a “nominee for the lender in a very limited way,” it had no right to assign both the mortgage and the note which evidenced the debt. Without an effective transfer of both the mortgage and the debt the new party holds no ownership to the debt and cannot foreclose. Because of these reasons the homeowners were able to use the produce the note tactic effectively, and because the bank could not prove they physically had the note or had ownership interest in it, they were not able to foreclose and seize their home.
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