6 Comments

What is the issue?

The bank still has the loan and can go for a judgment. It is just an unsecured loan now.

Of course, there one was a mortgage and a mortgage holder. There probably is now, too. And the mortgage holder should have the right to foreclose. But the issue is: who owns the mortgage? If the party instituting the foreclosure cannot prove it has the right, then it should not be able to foreclose, ever.

As for dismissal of this sort, it is not unusual in the context of litigation. All sorts of sanctions are imposed for improper litigation, including dismissal with prejudice (which this is).

Finally, owernship of property is a keystone to the US economic success. For that reasons, foreclosure actions should be closely monitored, for we only want the true owners of property to get the property.

Of course, the government won’t tax these folks on their forgiven debt.

The debt is not forgiven. It is still there, but it just unsecured.

It should be noted that you can’t attach a Floridan’s home in bankruptcy.

Bob

And how is someone who has defaulted on his or her mortgage the “true owner” of the property, Allan?

Anti,

Quick and simple:

1. You get money from the bank to buy property.
2. You are the property owner.
3. At the same time you buy the house, you tell the lender that if you don’t pay the loan, you will give back the property. That is, you sign a security agreement.
4. The owner of the security agreement files with the local authorities.

So, when you buy a house, you are a property owner and the mortgage holder has a security interest in the house.

#4 is very important. If the lienholder does not file, another lienholder can do so (in theory, the owner can get two loans for the same property). Furthermore, only a bona fide lienholder can take the security if the note is not paid.

The problem is that many companies are doing #4, then transferring the note and the mortgage, but the transferee does not do #4.