NY Times columnist Gretchen Morgenson writes about one seniors struggle with foreclosure and how uncertainty of what bank owned her loan and a reverse mortgage was able to save her from losing her home.  Mamie Ruth Palmer has lived in her Atlanta Georgia home since 1987 and for the past six years has been fighting to keep her home from being foreclosed on.

Last month she received a settlement from Bank of New York, the trustee for a vast pool of mortgages that included hers.  Under the terms of the deal, the bank reduced Ms. Palmer’s loan balance to $59,000 from about $100,000 and has agreed to accept the proceeds of a reverse mortgage in full satisfaction of her obligation.  The settlement also eliminated about $12,000 in foreclosure fees added to her debt and called for the installation of central air-conditioning in Ms. Palmer’s home.  “I feel good,” Ms. Palmer said last week. “It’s been a long time coming.” To celebrate, she said, she is going to Florida to fish with her nephew.

Ms. Ruth’s situation is one that we will see more and more of because of the uncertainty of who owns the note when it’s forced into foreclosure proceedings.  Before mortgage securitzation took off, foreclosing on a property was a fairly simple process because banks held onto the mortgages they made.  During the mortgage boom loans were heaped into trusts with little documentation of ownership or proper loan assignments because lenders were all about volume and the fees that came with it.

As a result it’s much less clear who controls the note because over the years so many loans have been package into securities and are sold off to investors.  This is a very interesting article and is good to know for any originator who is helping seniors try to save their home from being foreclosed on.

Fair Game – How One Borrower Beat the Foreclosure Machine (NY Times)

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