What To Learn From The Mortgage Foreclosure Debacle When It Comes To Buying A Mortgage Loan
Foreclosing a mortgage loan is a roller coaster ride. The car sometimes flies off the tracks. Securitization trustees often fly off the tracks when they can’t prove that they own the debts secured by the mortgages being foreclosed. You can easily avoid this problem when purchasing a mortgage loan.
Take possession of the original signed mortgage note. Get a separate allonge for each note endorsing the note to your bank. Permanently (!) attach the allonge to the note. A paper clip is insufficient. An allonge should be so permanently affixed to the note as to become a part of it. Bulk allonges and blank allonges should be avoided.
Make sure that you get an original assignment of the mortgage. The assignment should include language that assigns both the mortgage and the note secured by the mortgage. Watch out for assignments prepared outside New York. Many out-of-state lenders use forms that assign only the mortgage and not the secured debt. Promptly submit the assignment for recording and make sure you get back the original.
Finally, get an originally signed mortgage. In my opinion, this is not necessary to confirm ownership of the secured debt, but some courts get confused, so having possession of an original mortgage can help solve problems.
Then make sure you put the original documents in a safe place and don’t lose them. Sounds silly, but if you only knew . . .
Today's Takeaway? As my mother used to say, “An ounce of protection is worth a pound of cure." Prepare a checklist that lists the note with allonge attached, the assignment, and the mortgage. Take possession of all of them and keep them in a safe place in case you ever have to prove that you own the loan you are trying to foreclose.