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Standing and Trust..

November 22, 2010

Here’s the skinny from Prof. Levitin* on prosecutorial matters before the House Financial Services Committee last week..

If mortgages were not properly transferred in the securitization process, then mortgage-backed securities would in fact not be backed by any mortgages whatsoever. The chain of title concerns stem from transactions that make assumptions about the resolution of unsettled law. If those legal issues are resolved differently, then there would be a failure of the transfer of mortgages into securitization trusts, which would cloud title to nearly every property in the United States and would create contract rescission/putback liabilities in the trillions of dollars, greatly exceeding the capital of the US’s major financial institutions….

Recently, arguments have been raised in foreclosure litigation about whether the notes and mortgages were in fact properly transferred to the securitization trusts. This is a critical issue because the trust has standing to foreclose if, and only if it is the mortgagee. If the notes and mortgages were not transferred to the trust, then the trust lacks standing to foreclose…

Looks like someone or somethings overlooked what it means to have standing.. and ‘deserved’ trust. Also we cannot overlook the mad dash to avoid and evade obligations and responsibility by financial parties throughout this past decade. Talk of the roost..!

* h/t: NC

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