Mortgage note
Business cycles are the order of the life. When the economy is booming, the activity is so much hilarious that hardly anyone has time to ensure a good paper work for the contracts entered into. Especially, when it comes to the financial institutions, from 2003 to just one year back the mortgage activities have formed their basic profit earners as more and more people entered into mortgage contracts with the greed to make the most of the real estate sector boom.
Slowly, within a month or so, when everything has experienced a standstill, the owners who pledged their property in the mortgage notes are now finding it heart breaking to honor the payments. The reason being simple that the property investors are fixed in a double whammy of high installment burden on one side and deteriorating equity in the property on the other at the same time.
Naturally, with no financial gain, many property investors who have taken up mortgage loans to buy those properties are now trying new means to evade those obligations and in this connection, are trying to play with the imperfect working conditions of the financial institutions. They are trying to screw the financial institutions by approaching to the court if they find any chance of evasion. In this way, the best option available for them is to demand the presentation of the mortgage note which most of the financial institutions are not able to do as they have not looked into this matter seriously at the time of high business. As the mortgage contracts are to be backed by proper mortgage notes duly signed in by the loan taker, failure to present those affidavits is resulting into a favorable situation to the loan seekers.
Actually, these mortgage notes were traded as securities by the financial institutions in the open markets and big institutions like the Freddie Mac and Fannie Mae used to purchase these mortgage notes at discounted prices to provide the liquidity to these institutions. The main point here is, whenever, a mortgage note changed hands, and it was the responsibility of the purchasing institution to make sure that these notes are again freshly drawn duly signed by the original loan seeker so that it can be honorable at the time of redemption. However, as these mortgage notes are bundled into securities, little care was taken to make sure that the original loan seeker was approached at times and as such, the loan seeker is taking it as an advantage to by drawing the institution to the court whenever he gets a notice of foreclosure of his mortgaged property.
The court always try to help the little guy from the shackles of big institutions and in this way, lack of evidence is inducing more and more loan takers to turn into loan evaders. Statistics suggest that the foreclosure is way high at 1.69% or so and more than 1.5 million loan seekers would be given notices of foreclosures in the current year of which there is a probability that at least half of them which amount to 750,000 or so can cleanly come out of the mortgage obligation given the mishandling done by the institutions. It has been observed that this type of chaos in the mortgage note presentation to the court is the highest in comparison to what was being happening from past five years.
Analysts attribute this irresponsible behavior on the part of the institutions as a consequence of greed due to which these institutions were entering into great number of credit disbursal obligations without giving due importance to the formalities while entering into these contracts.Whatever may be reason; many of the financial institutions have already suffered huge losses due to these imperfections in the mortgage notes and have also shut shop. Those who are prevailing are finding it difficult sustain and are searching of new ways to restore their lost money. In this connection, they are resorting to filing a lost note affidavit which can be passed through if the loan taker accepts his obligation. But the interesting fact is that, the number of such filings is lately on a rise and the courts are becoming more and more skeptic as to how so many mortgage notes can be lost at the same point of time. The gimmick is that wherever the institutions notice that the mortgage note is not duly signed by the loan seeker or not in conformity to the prevailing law, they just try to conceal the original one and file a lost mortgage note affidavit. Their loan can be honored if the loan seeker is a sincere one and thus they can reduce their losses.
However, if the loan seeker doesn't agree to the affidavit, these institutions are taken on a ride as they cannot produce the original half-filled note nor can they prove that their note is lost. Hence, such steps are taken by the institutions only when they are sure about the sincerity of the loan taker. Otherwise, they try to sell the mortgage notes at deep discounts to mortgage recovery specialists who act as holder in due course and try to regain the whole mortgage amount or foreclose the property by hook or crook and the premium and interest on the mortgage contract thus gained is their consideration. These recovery specialists are as such also known as the wicked nice guys that they are nice in helping the institutions by regaining some of the lost money and at the same time wicked that they force the loan taker to step down and honor the loan repayment failing which they can even enforce a mortgage property foreclosure. Thus, it is observed that in all these transactions, the mortgage note plays a vital role and as such, the parties to contract should act more responsibly at the time of entering into the contract to avoid such repercussions in future
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