Many of our clients experience fear, intimidation, and uncertainty when they are facing foreclosure. The Internet can deceive people into thinking they have access to useful resources, which may or may not be the case. Consumers who are trying to save their houses are all too frequently misled.
Even while lawyers are conversant with the procedure, the common homeowner might as well be reading something written in hieroglyphics. Many businesses provide a service for homes facing foreclosure: a Securitization Audit. This is similar to consumers wanting to reduce or eliminate their delinquent credit card debt. Securitization audits are touted as a tool homeowners can use to retaliate against their lenders, but are they really the best option?
Securitization: What is it?
Securitization is the act of taking an illiquid asset, or combination of assets, such as a mortgage on a home or business, an auto loan, or credit card debt, and effectively selling the debt to other investors. Think about how a box of loan documents presented to investors may seem.
The debts may be sold in the form of bonds, pass-through instruments, or collateralized mortgage obligations. Why? In order to avoid keeping you in debt for thirty (30) years, the firm providing your loan requires money to fund its operations.
To investors who are willing to wait for a payoff, your loan originator, therefore, provides collections of debt. Taking mortgages issued by banks and other lending institutions and turning them into securities sold to investors is referred to as securitization in the context of mortgages, for example. Using this process, the originator can generate additional loans in order to purchase more securities.
A securitization audit is what?
A representative for the homeowner reviews the documents that the Security & Exchange Commission (SEC) has filed into the public records throughout the securitization audit process. They basically trace the title’s chain, looking for any activities that differ from those demanded by the Pooling & Servicing Agreement (PSA). It is thought that in the event that any inconsistencies are discovered, the plaintiff could not have the legal authority to foreclose on the property. The PSA is a document that details exactly what must be done, who must do it, and when it must be done.
Are Audits of Securitization Useful?
At first, glance, paying a company a few thousand dollars to look for a flaw in the way your mortgage was processed that might result in the cancellation of your foreclosure appears too good to be true. And, regrettably, it is.
Companies or people who offer to perform a securitization audit on your mortgage are doing so with full knowledge that Florida’s 3rd District Court of Appeals has previously ruled that homeowners lack the legal right to object to the securitization of their loan in an effort to stop or delay a foreclosure. Since it has not yet been determined whether the 3rd DCA made the appropriate choice, their ruling is still valid, and many trial courts have adopted it.
This means that whatever is discovered during the aforementioned audit is not admissible in court during your foreclosure case, and a judge will not consider it when assessing a foreclosure defense claim.
Mortgage securitization is the grouping or pooling of a large number of mortgages into a trust, the shares of which are offered for sale to investors. Usually, one investing organization or a major institutional investor purchases the entire pool. These mortgages are typically sold multiple times before being included in a final trust.
This approach requires that all loans enter the trust by the deadline, which is kind of like a steel door that can’t be opened beyond the deadline, and that there are real sales and an uninterrupted chain of assignments between all participants within the procedure.
Audit of Financial and Securitization
A securitization audit is carried out to follow the paper trail from the mortgage and note to the trust account servicer. This audit verifies if the originator of a mortgage and note properly assigned it to the trust account or note holder.
To ensure that the correct assignments were submitted to the county recorder’s office, the audit is undertaken by evaluating all recorded papers of the correct address. These assignments must be completed within the time range specified by the trust’s Pooling and Servicing agreement.
Once the findings are confirmed, the auditor produces in-depth reports on them in order to establish with certainty that no UCC, SEC, State, or Federal laws were breached. This makes sure that the customer is paying the right party and that the person who is actually handling the mortgage note servicing is the one who is collecting the payments for the trust. The technique used to record every transaction throughout the entire mortgage transfer must, however, abide by all relevant local, state, and federal laws.
TILA and RESPA Forensic Audit
Mortgages are typically marketed these days through the Mortgage Electronic Registration System (MERS). The electronic transactions that take place when a mortgage is traded through MERS could happen very quickly.
Recent transactions demonstrate that many of those MERS transactions did not produce the necessary documentation to properly and legally assign a mortgage. Suppose a mortgagee is unable to submit this documentation when performing a foreclosure. In that case, they will be unable to establish their property ownership. They will not have the necessary legal standing to move through with a foreclosure action.
Instead, spend the thousands of dollars you would have spent on an audit on a knowledgeable foreclosure defense lawyer. Your attorney would be the ideal person to choose the audit’s route and the expert who should do it if a problem, later on, arose that required an audit because that individual would be a witness in your lawsuit and would be susceptible to cross-examining.
Whichever one you decide to go with, Mortgage Audit Online has the resources to help you. We have a team of qualified attorneys and forensic auditors. Contact us now and you won’t regret it.
For information on foreclosure defense call us at (877) 399 2995. We offer litigation document review support, mortgage audit reports, securitization audit reports, affidavit of expert witness notarized, and more.