delinquent borrower, lenders, loan modifications, mortgage modifications, mortgage servicers, real estate, redefault rates

The loan modification/foreclosure debate

To modify or foreclose? That is the lenders question!

Is it better for a lender to modify or to foreclose on a delinquent borrower?

We’ve all heard the argument over whether it pays for a lender to modify the loan of an in-trouble borrower (regardless of what they are supposed to do). Does the borrower more often than not fall behind under the modified terms and re-default?

This chart from the Center for Responsible Lending shows that for the lender and for the borrower (based on a net present value analysis at various re-default rates) the modifications seem to be beneficial and should most likely be done more often.

A more detailed analysis can be found here.

Antonio Ibanez case, bankruptcy, chain of title, delinquent borrower, foreclosure mill, foreclosures, legal system, Massachusetts Supreme Judicial Court, mortgage assignment, standing, trustee, US Bancorp

Ibanez ruling in Mass. could have far reaching impact on foreclosures

The ruling by the Massachusetts State Judicial Court upheld a lower court ruling that US Bancorp did not have standing to foreclose on the loan of Antonio Ibanez.

The issue concerned the banks inability to produce a document chain that showed them as the rightful holder of the note and mortgage with the standing to foreclose.
It involved all of the ingredients and entities that make other in-progress and completed foreclosures potentially suspect including MERS, robo-signing and endorsing in blank. All these terms will be explored at a later time, but for now this is a flowchart of the Antonio Ibanez loan.

The Ibanez Ruling by the Massachusetts Supreme Judicial Court: US Bank National Association (as trustee) vs. Antonio Ibanez (1/07/2011)

FORECLOSURE NULLIFIED: Assignment of the mortgage received after the foreclosure.

1. Ibanez executes mortgage with Rose Mortgage Inc.

2. Rose allegedly assigned the mortgage to Option One.

3. Option One then assigned the mortgage to Lehman Brothers.

4. Lehman Brothers allegedly assigned the mortgage to Lehman Brothers Holding.

5. Lehman Brothers Holding packaged the mortgage with 1000 others to be sold as a security.

6. The mortgages were to be placed with Asset Securities Corp. Asset Securities Corp. was then to assign the mortgages to US Bancorp as trustee.

7. In the event of a foreclosure, it was the job of US Bancorp to do so on behalf of the trust and in the interest of the bondholders.

8. To have the court rule in their favor, US Bancorp needed only to show documentation of each link in the chain of assignments. Because they could not do so, the foreclosure was overturned.