Tuesday, March 3, 2009
The next big crisis – proving who owns what for bundles securitized mortgages
Joe Lents hasn't made a payment on his $1.5 million mortgage since 2002. That's when Washington Mutual first tried to foreclose on his home. The lender failed to prove that it owned Lents's mortgage note and dropped attempts to take his house. Subsequent efforts to foreclose have stalled because no one has been able to produce the paperwork. Judges in at least five states have stopped foreclosure proceedings because the banks that pool mortgages into securities and the companies that collect monthly payments haven't been able to prove they own the mortgages. More than $2.1 trillion of mortgages have been bundled into securities by banks.