Mortgage Servicing Fraud
occurs post loan origination when mortgage servicers use false statements and book-keeping entries, fabricated assignments, forged signatures and utter counterfeit intangible Notes to take a homeowner's property and equity.
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Sandy

"The facts surrounding your case should be examined to see if the doctrine of equitable merger applies.  First, is the current holder of the evidence of debt on both the first and second mortgage the same?  If it is not, equitable merger will not apply.  If the holder of the evidence of debt on the first and second mortgage is the same party, equitable merger may apply.

"Equitable merger usually applies when the foreclosing party has two or more deeds of trust and the foreclosure action is on the junior lien (second mortgage).   But what about foreclosure on the first mortgage only?  There’s a very interesting case with fairly broad language:

A merger ordinarily occurs only when it is intended by the parties. However, a merger can also be presumed when equity demands. The general rule with respect to equitable merger is that when the value of the property is equal to or exceeds the debt represented by the mortgage, “justice would demand and equity presume, a merger.” Centennial Square, Ltd. v. Resolution Trust Co., 815 P.2d 1002, 1005 (Colo. Ct. App. 1991)."

More here:

http://preview.tinyurl.com/3g424yo

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FnDoomed
This guy is practicing leading edge law and soliciting the opinions of others.
 
"The main determinant here is the value of the property: is it equal to or more than the amount of both mortgages?  If so, and the party foreclosing is the same party, the doctrine of equitable merger may apply."

The kinds of situations where the house is worth more than both mortgages strikes me as what one mortgage broker once told me was called a "wish loan". 

Example: My brother bought a house in 1974 for $24,000.  That house was worth well over $300,000 during the bubble.  He had remortgaged it now and then over the years and had a $30,000 first in place. 

That is a "wish loan" ... The bank wishes he would default. 

If he then took a second mortgage with the same company and got into foreclosure trouble, then I think that equitable merger would work to take some of the sting and remove some of the added insult to injury out of the situation.

I'm unclear on what makes this a foreclosure defense though.  I also didn't give it much study...

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Sandy
FnDoomed, do you think equitable merger is the issue that caused the recent reports of BOA notices of transfer?

I'm trying to figure out why BAC transferred loans back to Bank of America, N.A. for servicing, including some already in foreclosure with MERS AOM to BAC.  Could that transfer help to defend against foreclosure somehow?

If BAC Home Loan SERVICING, LP is claiming to be owner or holder of the note, with standing to sue, what was accomplished with the transfer to the parent company for servicing? It seems to me that a transfer like that with a property in foreclosure would be court suicide for BAC. Or at least call attention to the two entities conveniently switching places for a while.  Even more confusing, the notices of transfer of the first mortgage from BAC to BOA, N.A. were mailed from a third entity: Bank of America Home Loans.

In some cases I've seen, BAC transferred the second mortgages to the investor, with servicing left with BAC and MERS listed as the party to receive legal notice. That means BAC Home Loan Servicing, LP is foreclosing on the first mortgage and servicing the second.

I just can't figure out why these transfers were done this way. I think it possibly relates to avoiding an equitable merger when the home has retained value close to the amount of first and second mortgages combined.


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FnDoomed
It is confusing to say the least - equitable merger seems to relate more to who holds the underlying obligations, as opposed to the servicing rights though.   The holder of an obligation can have that obligation serviced by anybody they choose.


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