OUR OPINIONS: Owning up to a crisis Georgians faced with foreclosure have a right to know who exactly holds their mortgage The Atlanta Journal-Constitution Published on: 03/26/08
Under state law, only the owner of a mortgage can foreclose on a home. But now that mortgage lenders originate loans and sell them to a secondary market, where they're in turn sold again to investors, many Georgia homeowners cannot begin to figure out who the owner of their mortgage might be.
The General Assembly is attempting to reduce the confusion by requiring clear proof of mortgage ownership before a foreclosure can proceed. But its efforts have been stymied by banks reluctant to come clean on ownership, and there are suggestions the Legislature may put off definitive action until next year.
That would be too late for many Georgia homeowners. It would also be too late for legislators who are certain to be confronted by voters back home demanding to know what they've done to ease the state's foreclosure crisis.
"We want to be able to be certain that our clients are being foreclosed on by the legal entity that has standing," says William Brennan, director of Atlanta Legal Aid's Home Defense Program. "And we want to know who to talk to about the foreclosure. Now, we often don't know who holds the note."
At a hearing Tuesday before a House subcommittee, the mortgage industry noted that the question of ownership has become complex. "You talk about mortgage-based securities and you can have 10 investors, 50 investors or 500, all of whom have a piece of that mortgage," said lobbyist Mo Thrash, who represents the Mortgage Bankers Association of Georgia.
While true, that's not the whole truth. Even if 5,000 investors own a piece of a mortgage, the mortgage owner is considered to be the trustee bank that manages the pool. But rather than have to deal with desperate homeowners, those banks prefer to let contractual servicers —- companies that collect the monthly payments or record the deeds —- become the public face of foreclosure while they lurk in the shadows.
Those servicing agencies have no incentive to negotiate with borrowers. Lawyers have complained to the Legislature that they can't even get a live person on the phone to talk about a pending foreclosure, leaving homeowners stranded.
The Georgia General Assembly isn't the only governmental body hearing a song and dance from the mortgage industry. In dismissing 14 foreclosure cases in October owing to Deutsche Bank's failure to prove it owned the mortgages in question, Christopher A. Boyko, a federal judge in Cleveland, chided bank attorneys for claiming that the workings of the secondary mortgage market were too complex for him to understand.
Such a claim, Boyko wrote, "reveals a condescending mindset and quasi-monopolistic system where financial institutions have traditionally controlled, and still control, the foreclosure process."
It is time the General Assembly gave a tiny bit of control back to homeowners.
, for the editorial board Maureen Downey http://www.ajc.com/opinion/content/opinion/stories/2008/03/26/foreclosed0326.html