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Who Really Owns Your Mortgage?

This article was written by in Real Estate and Home. 8 comments.


A family in New York is suing Citigroup. The bank’s mortgage servicing branch, CitiMortgage, is seeking a foreclosure claim against their house. The suit alleges that CitiMortgage does not own the mortgage, and can therefore not foreclose upon the property. The mortgage is owned by Fannie Mae.

The D’Amelio family has been in default on the loan, even after CitiMortgage granted mortgage modifications. They also owe more to the bank that the property is now worth. Declaring bankruptcy didn’t solve these problems, so they turned to the courts.

Fannie Mae says this is standard operating procedure; the servicer handles all collections as well as foreclosures even though CitiMortgage may have owned this mortgage for only a day before selling it to the federally guaranteed agency. The only way this case against CitiMortgage could succeed would be if a judge agrees that the mortgage documentation — none of which points to Fannie Mae as the true owner of the mortgage — is insufficient.

None of this would be a problem if the family had paid their mortgage as agreed. It’s possible that some emergency circumstance arose that would have prevented the family from doing so, but it’s more likely that like millions of other homeowners, they overestimated their ability to pay back the loan over time.

It’s interesting to see these stories of real families affected by the real estate market and their own choices. Eight or nine years ago, an acquaintance of mine, Charles, bought a house with his wife, Donna. His employment situation was iffy at the time while her career on the fast track to nowhere. They were young, newly married and did what society and their families encouraged them to do: buy a house. I don’t know exactly what they paid or their mortgage interest rate, but I do know they purchased a home in an expensive area. The husband told me off-handedly that they would be fine. House prices always go up.

A quick look at some statistics shows that their county now has the most foreclosures and bankruptcies in the state — and it’s not the most populated county. More data are hard to find, but recent average performance (value of median home prices in their town) is bad at -5% in the past few months, and I’d expect that number to be worse aver the past few years. I hope Charles and Donna are in a secure financial position now, as I try to wish only the best for people, but if we assume they’re the average family in their town, it doesn’t look good.

Embattled homeowner to bank: You don’t own my loan, Allan Chernoff, CNN, October 12, 2010

Updated November 1, 2010 and originally published October 13, 2010. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.

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About the author

Luke Landes is the founder of Consumerism Commentary. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about Luke Landes and follow him on Twitter. View all articles by .

{ 8 comments… read them below or add one }

avatar Candide

An “emergency circumstance” could include just losing your job, like millions of others have. The odds are that you’re right, they overextended themselves, but there are a ton of people out there that are in trouble for reasons beyond their control.

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avatar Stevedh

I borrowed your money, but didn’t pay you back.
I live in your house, but you can’t have it back.
I’m suing you, though I may not win.
But the lawyers are happy, just look at them grin.

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avatar Steve

I think when you said “underestimated” you meant “overestimated.”

If your acquaintances bought 8 or more years ago, their house is likely worth more than what they paid for it. At that point the huge run up had started but was far from peaking. Of course they are only in a good position if they didn’t continually cash-out refinance, or trade up.

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avatar Evan

Maybe the bank shouldn’t have given the mortgage cause it was a bad investment. Regardless the rules out there for everyone – if you want to lend then foreclosure is your only right if the banks don’t like it then they shouldn’t lend in that particular state.

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avatar Ninja

I was listening to the radio today and heard that it’s pretty common for no one to know who owns the mortgage anymore. The banks sold the loans so many times the paperwork has gotten lost. Apparently some people are using this as reason to not pay their mortgage. They are saying “prove to us we owe you money, show us the paperwork” and many times the lender can’t do that.

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avatar KNS Financial ♦404 (Nickel)

I can’t believe they didn’t pay their mortgage and are suing the people who they stole money from! Unbelievable! I honestly don’t care who really owns the mortgage, those people need to pack their bags!

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avatar Dave@50plusfinance

I can’t believe this, use the courts to get the bank to settle and throw a little cash your way. We have made a big mess and it will take a decade to clean up all these foreclosures. It will damage the equity of the people that have been paying their mortgages and behaving responsible. A lot of people have been counting on their home equity and savings to see them through retirement. Thats gone now. We are going to see a lot of retirees at the supermarket bagging groceries for the next 30 years.

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avatar mari

I am a hard working person who pays my bills and it still getting screwed. I got my loan via capital one. I read all the paper and the fine print. I agreed legally with the terms. In less than one year my loan has been to 4 different services and fiy landed at Bank of America who refused to honor my original loan terms. they apply my payments incorrectly, charge outrageous fees and don’t apply money to principle like my contract states. So this ownership issue is about more than repos. its about banks too big tp fail allowed by the gov to rip off any group they want.

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