The spate of foreclosures, instead of being a short lived phenomena, will remain with us for the foreseeable future. The Sunday Business section of the New York Times featured the case of Mamie Ruth Palmer. This article is interesting for two points it makes. To wit: The bank agreed to reduce her balance and accept the proceeds from a reverse mortgage as payment in full. The plaintiff (bank) in these actions may not have standing (the right to sue) because as these loans get sold in the secondary market, assignments may be wanting.
Ms. Palmer suffered through 6 years of “foreclosure hell”. Her suffering through this foreclosure action just may have some redeeming value. She was fortunate because she was able find a lawyer that took her on as a client. The purpose of this particular post is not to look into the reason (s) the foreclosure happened. Our purview is not to look into why Ms. Palmer got stuck in her financial quagmire. By now all of us should know that there is plenty of blame to spread around for the mortgage debacle. Rather her case points up why reverse mortgages could be relied upon as an important financial tool.
It appears that courts around the country are looking at these foreclosure cases with a new set of eyes. No longer are they accepting the lender’s position. They are starting to look behind the facts to determine whether that lender has the right to bring the action at all.
When a loan gets sold in the secondary market, the loan must be assigned to the new lender/ investor. These assignments are often not drafted, or recorded. In New York, for example it was difficult to do consolidation extension and modification agreements because of issues with the assignments. Because lenders deal with pools of mortgages it is easy to see why assignments can be missed.
Accordingly, the reverse mortgage can perhaps be used as a bargaining tool whereby the existing mortgage balance gets reduced to an amount that can be satisfied with the use of a reverse mortgage.
vist: www.secureseniorliving.org , www.unitedlossmitigation.org
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