Posted on Wednesday, December 1, 2010
The term ‘robo-signer’ has come to mean those individuals who signed their names to tens of thousands of flawed documents at a million miles an hour with complete disregard for the truth and accuracy of contents of those documents. This word may well wind up being the official Miriam Webster Dictionary’s word-of-the-year. Perhaps a big deal in the world of literary resources, but not so much so for the rest of us.
On a similar note, those of us not in foreclosure and at risk of having been ‘victimized’ by robo-signers or not invested in mortgage-backed securities now risking losses as a result of robo-signing, no doubt consider the whole mess to be someone else’s’ problem. But here’s the truth; everyone who owns a home may be the exact same facing problem with the title to that home that the robo-signers have brought to light.
To recap briefly, the title problem as it related to robo-signers goes to the requirement that, in order to foreclose on a home, the bank must be the actual loan ‘holder.’ As we’ve heard, in many cases these loans have been transferred from one bank to another multiple times, and often times improperly, resulting in the inability to determine which bank is the true loan ‘holder.’ So what does that have to do with the rest of us? Here’s what. Every time a home with a mortgage is bought or sold, the bank that has the mortgage on that home is paid off and in return provides a ‘Satisfaction of Mortgage’ which must be recorded in the local Public Records in order to release both the property and the seller-borrower from that mortgage.
The problem is, the banks we’ve been paying and getting Satisfactions from are the same banks that have been foreclosing on folks who happened to be in default on their mortgage (as opposing to merely selling their homes). And the mortgages we are paying them off for were often times acquired by these banks in the exact same way as the mortgages they’ve been foreclosing on. If, as we’ve learned from the robo-signer debacle, these banks are often times not the true ‘holder’ of the mortgages they are foreclosing on, then they also oftentimes not the true ‘holder’ of the mortgages we are paying them off for and for which they are providing ‘Satisfaction.’ Remember, the only difference between those mortgages being foreclosed and those being paid off are that the former are in default, and the later are not. The transfer method by which the banks came to allegedly own these mortgages is identical and thus so are the alleged flaws in the chain of transfer.
Should these ‘Satisfactions’ ever be contested we may all learn that the homes we bought are in truth still burdened y the former owner’s mortgage and those sellers have, in truth, never been properly released from liability for the mortgages that were paid off.
Shari Olefson is a commercial real estate lawyers with the Florida law firm Fowler White Boggs and the Author of “Foreclosure Nation: Mortgaging the American Dream”