IMPERFECT LIENS TRANSFERRED BY IMPERFECT MEANS

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FANNIE MAE: Servicers Required to Report Title Defects and “Repurchase”

EDITOR’S NOTE: STEP BY STEP, the noose tightens. 

Fannie Mae bought nothing and they know it. And they bought it from someone who had bought nothing and knew it. Nobody cared while the money was flowing. Now with the water level falling, the stumps are showing and the results are catastrophic for banks and servicers who thought they had beat the system.

Under the new rules, effective October 1, 2011, servicers must examine and report on the status of title, especially those that are supposedly in delinquency, default or foreclosure. Of course we know they won’t. But, it being a rule from the the Federal government and all, what is to stop you from asking in discovery for their report which is due before they continue to initiate foreclosure? Will they  fudge that too? Will it be signed? By whom?

If title is bad, which is the case in probably 98% of all cases, then the obligation to repurchase applies, according to Fannie. The money isn’t there to “repurchase” an empty bag, so then what? The aggregator that “Sold” it was merely saying they were selling it without ever having it. The originator never had it to begin with, which is why the mortgage is not attached to the land as a perfected lien. STEP BY STEP.

• So who has a lien? Answer: NOBODY. There is no lien.
  
• Who owns the obligation from the borrower? Answer: the partnership of investors whose money can be traced to funding the mortgages.
  
• Who owes the investors the money that wasn’t used to fund mortgages? Answer: investment banks who sold them bogus mortgage bonds.
  
• Who owes the investors the rest of the money that was lost? Answer: lots of people including rating agencies, auditors, and other enablers.

SEE FANNIE MAE servicing guidelines svc1108

Title Defects
With respect to each first lien mortgage sold to Fannie Mae, the following warranties, among others, are made to Fannie Mae:
    that the mortgage is a valid and subsisting lien on the property,

    that the property is free and clear of all encumbrances and liens having priority over it
except for liens for real estate taxes, and liens for special assessments, that are not yet due
and payable, and

 that the mortgage and any security agreements, chattel mortgages, or equivalent
documents relating to it have been properly signed, are valid and their terms may be enforced by us, our successors and assigns.
Announcement SVC-2011-08R    Page 23
If loans referred to foreclosure cannot proceed because of title defects,

    the servicer must notify Fannie Mae of the issue, and

    Fannie Mae reserves the right to require repurchase of such loans if the defects are not
resolved within 90 days of the attorney’s (or trustee’s) discovery of the defects or, at Fannie Mae’s option, to pursue other remedies, including the assessment of compensatory fees for the delay caused by the title defects.
Delays by title insurance companies in processing and resolving claims, or disputes with title insurance companies over coverage issues will not excuse the servicer from its repurchase obligations or prevent the imposition of compensatory fees.

Tags: bankruptcy, borrower, countrywide, disclosure, Fannie, foreclosure, foreclosure defense, foreclosure offense, foreclosures, fraud, Freddie, LOAN MODIFICATION, modification, quiet title, rescission, RESPA, securitization, TILA audit, title, trustee, WEISBAND
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