Banks Are Stumbling Over Foreclosure Suits Being Unable to Produce Proper Documents

As the war between borrowers and lenders get hot, the banks are stumbling over foreclosure suits, as they are unable to produce the relevant proper documents that establish their rights to pursue with foreclosures.

Many banks have not given importance to keeping the paper trail intact commented Gretchen Morgenson in Times Sunday. She wrote, “The result is that bankruptcy judges are finding that institutions claiming to hold the notes that back specific mortgages often cannot prove it.”

The case of Wells Fargo versus Byrd was a sensational one in Ohio in which the judge gave a landmark judgment. The judge dismissed a foreclosure action because the attorney’s of the plaintiff failed to produce relevant documents to prove that their client was the holder of the mortgage debt or even had the right to collect mortgage payments. As such the plaintiff was not a “party in interest” as per legal terms. As of now the Ohio courts have a precedent to refer to. If at the time of filing the necessary papers are not presented then it cannot be fixed retroactively. It would require the filing of a new lawsuit.

In another instance in October 2007 in the District Court of northern Ohio, Judge Christopher A. Boyko dismissed as many as 14 foreclosure law suits ruling that the plaintiff (Deutche Bank) could not proceed with the filing of foreclosure action without attaching necessary proof that it was indeed a party in interest. The documents would not be entertained later. It was a hard slap delivered by the judiciary to the jumbo bank. It was argued that it was “astounding” that after money changing hands to purchase the mortgage note the bank assumed that it had developed a legal interest in the property “even before the purchase agreement, let alone a proper agreement, made its way into (the bank’s) possession.” Boyko scornfully commented that it  “reveals a condescending mindset and quasi-monopolistic system where financial institutions have controlled, and still control, the foreclosure process. The institutions seem to adopt the attitude that since they have been doing this for so long, unchallenged, this practice equates with legal compliance.”

Those who have taken up the cudgels for the unfortunate foreclosure victims argue that it is not just a case of sloppy housekeeping but of genuine instances of whether the plaintiff pursuing foreclosure has at all the right to do so. Sometimes the names on the attachment do not even match that of the plaintiff.

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