One of the big stories making the rounds -- I've written about it before -- is the foreclosure scandal. Banks have sold mortgages in the form of "financial instruments" to a dizzying number of mortgage services, hedge funds and who knows what else. The paperwork has lagged behind or, in some cases, it's been literally shredded. So, while homeowners are being threatened with or actually thrown from their homes for missed or nonpayment, no one can be sure that the enterprise foreclosing on a home is the genuine legal holder of the note.
Fortunately, I haven't been involved in this sort of scenario (yet?), I so understand the overall parameters. I suffered through a somewhat similar situation a few years ago in connection with a college loan.
When I attended graduate school, I took out two college loans. Neither was huge as I was able to garner one of the Graduate Teaching Assistant positions and this lessened my costs considerably. Within a year after graduation, I was able to pay off the smaller of the two loans. However, the larger one of several thousand dollars remained.
Not being a rich bloke, I paid on it when I could. I dutifully paid some months and had to let it slide other months. When my mother died in August 1992, my brother and I split the proceeds from her life insurance policy. One of the first expenditures I made was to pay off the larger school loan. It felt really, really good to be done with it.
Flash forward two years. One day, when going through the day's mail, I opened a letter which informed me that such and such a company was prepared to take me to court for nonpayment of my student loan. WTF?
I immediately got on the telephone to call their information center. I explained that I had paid the balance IN FULL 2 years previous and thus owed them nothing. Their rep got on his computer. He told me they had no record of a payment received. WTF?
I had to do some searching through my records, but I found the canceled check. I called the company back. I provided all the info on the canceled check and I even faxed them a copy of it. That's when I learned a bit of information about the banking industry that I had not been aware of.
You see, I had paid off my loan to the bank I had taken the loan from. Unbeknownst to me, said bank had sold my loan to a different bank several months BEFORE I paid it off. Neither the seller nor the buyer had informed me of this transaction. The upshot was that I had sent my payment to the former owner of the note who had not passed it on to the new owner which, I believe, is a form of theft!
That's all well and good the new owner of the note stated, but we want OUR money now!! It's your responsibility to pay us or we're taking you to court. I told them that, if they wanted their money, THEY needed to get it from the original holder of the note.
Because my dad is an attorney (criminal defense, not civil) and I have a fairly strong background in constitutional law, we were able to prevail without the need for going to court. It took over one and one-half years, but after much wrangling, the new holder of the note finally received the payment from the previous holder of the note. While I didn't part with any additional money in the form of a loan payment, I spent a pretty penny mailing and faxing a variety of correspondence and I pulled out what little hair I had left numerous times.
All this effort for a loan of less than $10,000. I can imagine the strong-arm tactics utilized when the note is 10 or 100 times greater! I can also understand the massive confusion there must be for a homeowner whose note has been sliced and diced enough times to make one's head spin.
I also imagine that the most commonly used phrase throughout the whole sordid process is: WTF?
Fortunately, I haven't been involved in this sort of scenario (yet?), I so understand the overall parameters. I suffered through a somewhat similar situation a few years ago in connection with a college loan.
When I attended graduate school, I took out two college loans. Neither was huge as I was able to garner one of the Graduate Teaching Assistant positions and this lessened my costs considerably. Within a year after graduation, I was able to pay off the smaller of the two loans. However, the larger one of several thousand dollars remained.
Not being a rich bloke, I paid on it when I could. I dutifully paid some months and had to let it slide other months. When my mother died in August 1992, my brother and I split the proceeds from her life insurance policy. One of the first expenditures I made was to pay off the larger school loan. It felt really, really good to be done with it.
Flash forward two years. One day, when going through the day's mail, I opened a letter which informed me that such and such a company was prepared to take me to court for nonpayment of my student loan. WTF?
I immediately got on the telephone to call their information center. I explained that I had paid the balance IN FULL 2 years previous and thus owed them nothing. Their rep got on his computer. He told me they had no record of a payment received. WTF?
I had to do some searching through my records, but I found the canceled check. I called the company back. I provided all the info on the canceled check and I even faxed them a copy of it. That's when I learned a bit of information about the banking industry that I had not been aware of.
You see, I had paid off my loan to the bank I had taken the loan from. Unbeknownst to me, said bank had sold my loan to a different bank several months BEFORE I paid it off. Neither the seller nor the buyer had informed me of this transaction. The upshot was that I had sent my payment to the former owner of the note who had not passed it on to the new owner which, I believe, is a form of theft!
That's all well and good the new owner of the note stated, but we want OUR money now!! It's your responsibility to pay us or we're taking you to court. I told them that, if they wanted their money, THEY needed to get it from the original holder of the note.
Because my dad is an attorney (criminal defense, not civil) and I have a fairly strong background in constitutional law, we were able to prevail without the need for going to court. It took over one and one-half years, but after much wrangling, the new holder of the note finally received the payment from the previous holder of the note. While I didn't part with any additional money in the form of a loan payment, I spent a pretty penny mailing and faxing a variety of correspondence and I pulled out what little hair I had left numerous times.
All this effort for a loan of less than $10,000. I can imagine the strong-arm tactics utilized when the note is 10 or 100 times greater! I can also understand the massive confusion there must be for a homeowner whose note has been sliced and diced enough times to make one's head spin.
I also imagine that the most commonly used phrase throughout the whole sordid process is: WTF?
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