I’m not sure what the American Dream is anymore. A white-picket fence? A chicken in every pot? For a lot of individuals, the American Dream is owning a home. My own personal American Dream is that the government is working for and protecting me and won’t jerk me around.
Those ideals apparently tie into owning a home because for thousands of home owners, the “dream” turned into a “nightmare” as a result of mortgage and foreclosure fraud.
Who owns what
David Dayer lays it all out in his latest book Chain of Title: How Three Ordinary Americans Uncovered Wall Street’s Great Foreclosure Fraud.
“A house with borrowed money has always required two main contracts. The first is the loan itself, the borrower’s promise to repay the lender. The second is the mortgage, which gives the lender a lien on a house if the borrower defaults. In the old days, the lender would keep both. But in modern markets, the lender typically passes off both the loan and the mortgage to another bank, and then that bank might pass them on to another.”
This then is the process of what is referred to as “Securitization.”
The bottom line, points out writer Frank Partnoy in a NYTimes Literary Review, is that “both loans and mortgages require pen and ink: a loan requires an endorsement; a mortgage, an assignment.”
Without a signature from a human being, neither can legally be transferred.
That signature requirement might seem outdated today says Dayer, but in the aftermath of the financial crisis of xxxx, “Many bankers were dismissive of the requirement, foreclosing on millions of borrowers without regard for process.”
The thing is, if there isn’t clear proof of each transfer, it becomes impossible to tell who actually holds the property, and therefore impossible to tell who has the legal right to foreclose.
Who owns what (part II)
Banks took advantage of the fact that nobody knew who owned what. And as a result more than 9.3 million American families gave up their home between 2006 and 2014, either in a foreclosure or a short sale or some other transaction. That translates to about 14 million people.
That’s 14 million people who, like myself and many others, feel the government should be protecting their interests. In this particular case it didn’t happen.
David Dayen’s book makes for an absorbing read and certainly can’t be taken as a template for each case of foreclosure. But the foreclosure process itself is an eye opener and maybe Dayen’s account, on some level, has provided the stimulus for more current legislation, which seems to have the home owner’s best interests at stake.