Foreclosure Cases Complicated By Fees And Mortgage Packets

March 5th, 2008

It is a true story about Mark and Gina Wellman of Circleville Ohio who glued to the bidding of their house. The irony is that the lender proceeding with the sale is not the owner of the mortgage note. Foreclosure proceedings were initiated in 2002. It was also testified in court in 2006 that the lender had charged an excess of $40,000 by way of false charges – that is 13% of what the Wellmans owed to the bank at that time. Many like Wellman are losing their houses because of blatantly questionable charges.

Thus there are two important issues at stake – who actually owns the house and the arbitrary charges. The wobbly ownership issue crops up because mortgages have been sliced and packaged into thousands of securitization trusts. Professor of law of Iowa University Katherine M. Porter recently studied 1,733 foreclosures emanating from 2006. It showed that 40% of the creditors foreclosing on the borrowers did not have proof of ownership of the property. Another rising problem are dubious fees charged by the lenders. It amounted to almost half the loans that Porter had studied. The United States Trustee that has the responsibility of seeing to the running of bankruptcy courts said that it would take action against lenders that make false claims or charge questionable fees.

With more borrowers being duped the people are naturally looking up to the judges for redress. Some but not all of the judges are sympathetic. Recently Ohio courts have dismissed cases wherein proof about ownership could not be provided. In October 2007 federal judge Boyko dismissed 14 such cases. But judge Knece overseeing the case of the Wellmans is not agreeable to stopping the auction although at the time of foreclosure the note of assignment was not in the name of National City Mortgage – the unit pressing for foreclosure.

Wellman is 51 years old and used to drive trucks. He has lived in this locality all his life. This 11 year old battle against foreclosure has sapped his energies. In 1996 warning lights began to blink when he lost his job. Like other desperate borrowers the Wellmans filed bankruptcy. They have done so five times. Till 2004 they managed to run current with their payments. National City has time and again given them time to recover. Starting in 1990 on a two acre plot, Wellman built up the house brick by brick.