The Bankwatch

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Wells Fargo and US Bank cannot prove they have valid mortgages | Supreme Court

In the latest on the ‘chain of title’ issue reported in October, the latest Supreme Court decision in Massachusetts upholds the decision that Wells and US Bank had lost their right of claim against mortgages they owned.

US foreclosure ruling to reverberate |

The Massachusetts Supreme Judicial Court upheld a lower court ruling that Wells Fargo and US Bancorp did not have the right to claim the homes because they could not prove they owned the mortgages at the time of foreclosure

This goes back to one of the many flaws in wholesale product design (bank to bank) that led up to the credit crisis.  The parsing out of mortgages into small pieces, and rebundling into Asset Backed Commercial Paper (ABCP) was so complex that along the way the chain of ownership was lost.  The eventual owner of ABCP might be bank in France and the borrower was a homeowner in Arkansas.  The unbundling and rebundling process was so convoluted and poorly thought through that the chain of ownership was lost. 

This goes to the very core of what was wrong with the pre crisis financial system.  The securitisation markets were a nice theory. 

Written by Colin Henderson

January 8, 2011 at 00:49

Posted in Uncategorized

4 Responses

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  1. and what does this have to do with a borrower making payments??? can I stop paying too?

    Rich Tan

    January 8, 2011 at 09:46

  2. Rick – I cannot imagine that borrowers do not owe the money, and stopping payments will only result in a terrible credit history aside from the points in the post.

    Colin Henderson

    January 8, 2011 at 14:53

  3. This is exactly what I’ve expected since the foreclosures began. It’s good to see that the court has some brains and I do hope that bigger rulings will show a similar degree of independence.

    Oh, and Rich,
    Remember It was you ho borrowed the money, nobody made you do it, it’s just a shame the market was so twisted at that time.

    Elli Davis

    January 9, 2011 at 09:10

  4. what means they cant prove this? Shame!!


    January 9, 2011 at 13:50

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