Posted on January 21, 2014 by Neil Garfield
As I predicted in 2009, the number of cases where foreclosure had been simply dismissed without further action has increased exponentially. The homeowner is normally afraid to take any proactive stance for fear of awakening the giant who will then respond by filing another foreclosure. Some of these cases are as much as 10 years old which goes beyond the statute of limitations in virtually all jurisdictions. As a caveat, let me add that there are states in which the statute of limitations is “ongoing” which means that the entire action is not barred by the statute of limitations; instead, in states where this doctrine is applicable, each new payment due gives rise to a new Period where the statute of limitations begins to run.
The number of inquiries I am receiving based on this scenario has been steadily increasing for the last year. At this point I would say it is accurate to say that I am receiving inquiries at the rate of 3 to 5 per day involving cases in which foreclosure has gone into a state of “limbo”. In most cases the time between the disappearance of the pretender lender at the present time has been a period of years.
There are several strategies that might be applicable and you should contact a licensed attorney who is practicing in the area in which your property is located before you make any decision about taking action or not taking action.
The first strategy which is being followed by most people at this time is doing absolutely nothing. These are people who’ve been living without paying rent or mortgage payments and who hopefully have been wise enough to pay the taxes and insurance. If they haven’t paid the taxes they could lose the home as a result of the tax lien. There most likely entitled to relief under some cause of action like nullification of instrument or a lawsuit to quiet title and may be entitled to damages under various statutes or common law doctrines. In judicial states where the action has been dismissed, most lawyers agree that the dismissal of the action should be recorded in the county records that keep track of transactions involving property.
Another strategy which is being followed by an increasing number of people is a lawsuit to quiet title and nullify the mortgage. The lawsuits to quiet title are getting more traction than any efforts to nullify the mortgage. This is because the homeowner cannot identify whether there is an actual creditor and who that creditor might be. But that is what constructive service of process is all about. You publish the notice in a legal newspaper to let the world know that there is a pending action in which anyone who is claiming a right property, directly or indirectly, or claiming a right under the mortgage or note, might be negatively affected by the outcome of the litigation. If the judge accepts that there is a good possibility that in the absence of anybody coming into court to defend the action a default will be entered along with a final judgment.
I know several hundred cases in which such final judgments have been entered resulting in the elimination of the mortgage and note completely. Frankly I think most of the cases should be resolved by elimination of the mortgage and potentially avoid the note as an instrument upon which party could rely enforce the collection of a debt. That would still theoretically leave a debt owed by the borrower to an unknown creditor.
Some interesting questions arise when servicer’s case against the borrower has been dismissed by the creditor has not been informed. The argument would be that the servicer as an agent of the creditor has notice and therefore his principal has notice. This would only be true if the servicer was operating under the provisions of the pooling and servicing agreement. But the provisions of the pooling and servicing agreement would not apply unless the trust was the creditor. if the investors realize that their interest in the loan arises not because of their purchase of bogus mortgage bonds but rather because their money was used directly to fund the origination or acquisition of loans, then the servicer has no written agreement upon which you can rely for its power to enforce collection of the debt, the note or the mortgage.
There are several other strategies that are in use right now which I do not wish to elaborate upon. I suspect that they may be successful only because they are not on the radar for the banks or the attorneys for the banks. So I don’t want to do anything that might impair the ability of some borrower out there to get the relief that he deserves.
In all cases the homeowner should obtain a full title and securitization report. This can be obtained from us or any number of other reputable vendors. If you are purchasing or selling a home or attempting to refinance it probably should take extra steps to assure that there are no defects in the chain of title and especially no defects in connection with the satisfaction or release of the existing mortgage. In all probabilities those defects exist. I have been receiving an increasing number of inquiries from people who wish to purchase a home but after reading what is available on the Internet have realized that they might not get clear title. Thus they come to us to review the transaction and give our opinions as to what defects might exist and what to do about them.
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Filed under: CORRUPTION, evidence, foreclosure, foreclosure defenses, foreclosure mill,GARFIELD KELLEY AND WHITE, GTC | Honor, investment banking, Investor, MBS TRUSTEE,Mortgage, Motions, Pleading, securities fraud, Servicer, TRUST BENEFICIARIES, trustee Tagged: |dismissal of foreclosure, NULLIFICATION OF INSTRUMENT, quiet title, statute of limitations on foreclosure