Who Actually Owns My Mortgage? No One Seems To Know...

[JFN1]

I called my mortgage company this morning, and asked them if they own my mortgage. The customer service chick hem-hawed around a bit, then finally got a supervisor, who basically pulled the same stunt, but she did steer me towards 'Executive Services'. Their intake person listened to my question and told me she'd have someone call me back.

All day passed, and I figured I would not get a call. But 'lo and behold, I just got off the phone with them. Here's how the conversation went (pleasantries omitted):

"So - I want to know if OMC* owns my mortgage."

"No, we only service your mortgage."

"Okay, what does that mean?"

"It means we facilitate the administration of the loan."

"Uh-huh."

"We ensure the terms of the mortgage are met."

"Right. So - who does own my mortgage? OMC doesn't. So who does? Who am I really doing business with?"

Long silence. "I don't know how to answer that question."

"What do you mean you don't know how to answer the question? It's very simple: Who gets the money? Who owns the loan?"

Another long silence. "I'm not really sure."

"Well, who does know? Can I talk to them? I want an answer."

"I'll have someone get back to you."

Now, we're not having any problems with our mortgage, and we've been homeowners for almost 15 years now (5 years to payoff). But I wonder what is going to happen to loans like ours when this bailout happens, since our loan "servicer" cannot seem to answer the simple question as to who actually owns the paper. Do they already package older, established mortgages up and sell them like they do the high risk ones? If so, what does that mean for homeowners like us? Does anyone know?

* OMC = Our Mortgage Company

[lynettebro440]

1. In a few days if they get their way

you will be the proud owner of your own mortgage company....LOL

[slackmaster]

2. It's very unlikely that any person in a loan servicing department is going to have easy access

To that kind of information, and it can change at any time without necessarily affecting servicing. In the terminology of mortgage servicing, the present owner of a loan is known as the investor.

In May 2003 I went shopping to refinance my mortgage. My old loan with Countrywide was at 7.125% fixed for 30 years, with about 27 years remaining.

Countrywide was one place I checked with. The best they could offer was something like 5.75% for 15 years, which was way higher than the going rate. And they wanted to charge a bunch of fees.

I landed a new one from a company called MortgageSelect, 4.75% fixed for 15 years. A bit higher payments than my old loan but a much better deal in the long run.

As expected my new loan was sold to someone before the first payment due date.

I don't know who owns my loan now, but the current servicer is...















...Countrywide.

[zeemike]

3. I 'll bet those people you talked to never thought of that before.

It is a strange and scary thing when no one knows where the money is going.

[slackmaster]

4. Oh, someone knows exactly where every penny of the money is going

Don't worry about that.

[Demeter]

5. We Had This Same Problem With Our Co-op

Our mortgage on the property had been "securitized", bundled with a bunch of other loans, then sliced and diced and sold to Credit Suisse and possibly other places.

The court in Ohio ruled that nobody could foreclose on a property without proper documentation of ownership of the mortgage.

Technically, somebody gathers a pool of money together, lends it out to various debtors, processes the loan payments and sends the proceeds to the creditors.

Whoever signed the other side of your mortgage probably still owns it, since a transfer would have to be legally brought to your attention...and that could be the one servicing the loan, or the broker who arranged it all, or possibly some other party.

The only time this matters is when something interrupts the money transfer process.

Our co-op wanted to negotiate with our lender--and we couldn't! Because there was no lender of record, and National Cooperative Bank, which set up and services the loan, is so badly run, they don't realize that they (probably) still own the loan, because they are all overpaid or underpaid morons (depending on job title). They sold off the income of the loan, but they most likely still own the mortgage....

[shadowknows69]

6. My mother just took out a home equity loan and I'm terrified for her

I don't understand any of this shit and she is so easily taken by people. Mom's far from stupid but from a more innocent time and far too trusting.

[heliarc]

7. Sounds like the kind of waste....

that Republicans have been trying to remove from our Federal Bureaucracy... "The Private sector is more efficient than government" and so on...

So answer me this Republicans... Why the eff do there have to be so many lending agencies all charging a fee and running up people's monthly payments. Why don't you have to go to one bank who owns the loan... I'm sure they will say "competition" there has to be competition, but I've heard more horror stories of these "service" companies going belly up and people having to start new negotiations with the buyer mid stride. This is a true nightmare America ... WAKE THE EFF UP!

[Blue Diadem]

8. They may not know. From what I understand it's one of the ways

homeowners could fight foreclosure. Legally, if the "bank" claiming foreclosure didn't own the mortgage, they couldn't foreclose.

Snip:

"And with the fact that these loans then started to become sold seven, eight, nine, 10 times in the process, there are even legitimate legal issues as to whether or not the person filing the foreclosure has the legal right to file a foreclosure because they don't have ownership of the mortgage note."

http://www.usnews.com/articles/business/real-estate/2008/04/21/how-ohio-is-tackling-the-foreclosure-crisis.html

[SmileyRose]

9. I think most of them are bundled and sold off in pieces.

When I paid off my house over the summer, I got a letter from the mortgage company telling me the loan had been paid off and they were obligated to drop the lien in county records within 60 days. They also included my originally signed promissory note stamped paid, with a bunch of initials on it.

Afterwards, I found out said mortgage company never did "own" my mortgage. They were merely an originator and administrator. They bundle the loans together and sell the whole herd off in pieces - there are formulas regarding how much those loans will ultimately be worth based on a variety of factors - for instance this sold package may have half it's value in zip code 10000 - which averages 15.2 yrs before the house is either paid or the house is sold and the loan satisfied in the sale. So to the buyer of the bulk loan package, that package with worth what can be made in the next 15.2 years, but they pay just a little over the principle value of the loans.

And sometimes, with swaps or derivatives or whatever they are called, the bulk loan packages are divided up into shares and buyers actually buy a stake in the ultimate payoff on those bulk loans. And I don't think there are any rules on who can buy these loan packages. For all you know al Queda could own your mortgage.

As far as I can tell, the days of taking out a loan at the local bank and have them actually own your mortgage has been long gone for a long time.

[sixmile]

17. Demand a full accounting from Congress!

Only until I see who bundled these loans as Credit Defaults, who sold them and was paid a fat commission, who bought them thinking they were appropriate investments for ANY portfolio, and who now is left at the end of the Ponzi scheme holding the bag, I refuse to be agree with any government bailout of these suckers.

This is what needs investigating. The American people are being sold a bill of goods, and hopefully we are mature enough to ask the right questions before we REALLY get screwed. Refuse to get screwed!

[SmileyRose]

18. Almost ALL credit is handled this way.

This whole derivative thing (bundling loans and selling off shares to investors) has been a vehicle for businesses of all sorts to clear their books of accounts receivable and raise cash for more business. It's a useful business strategy used in the right hands - but not greedy unregulated hands. Where the whole house of cards came crashing down was housing values tanked so in one sector of this giant juggling act, the underlying foundation gave way -- although, because of the recession and multiple bankruptcies for some time now - the market can absorb the losses to a point but it snowballed on them and ka-pow.

[Phoebe Loosinhouse]

10. There has been a successful stay of foreclosure in Florida

When the person being foreclosed on proved that the entity trying to foreclose on him could not prove a chain of title to his mortgage that entitled them to foreclosure privilege. He is still living in his condo, paying no rent or mortgage fee to anyone.

[ReadTomPaine]

13. I wonder how many more homeowners fall into this grey zone. Interesting. n/t

[lib2DaBone]

14. Yes.. I would say you may be in a good position...

If your loan has been stripped down and sold in pieces as part of MBS (mortgage Backed Securities) they can't prove jurisdiction and therefore they can't foreclose. I'm not a lawyer... but it sounds like something to investigate? Tell them if they give you $700 Billion by Friday you'll consider dealing with them.

[dipsydoodle]

11. If it was the UK

the mortage would be registered as a charge against the property at our Land Registry Office. So - if the mortage was assigned to another party the charge would need to be re-registered in that parties name. Do you have an equivalent of our Land Registry Office ? If so they could provide an answer for you

[JFN1]

15. Not really

My understanding is that unless the mortgagor who actually owns the note changes the records in the county, it is recorded with the loan originator as the leinholder.

[Lance_Boyle]

20. the Register of Deeds n/t

[Guaranteed]

12. That's hilarious. nt

[4 t 4]

16. I heard that Fannie May and

Freddie Mac owned 50% of all mortgages in the United States ?

[LiberalEsto]

19. It was probably sold to Fannie Mae

which bundled it with other mortgages and sold it to investors.

[HamdenRice]

21. I can tell you what, but not specifically who

When a mortgage is securitized, the specific entity that buys it is almost always in the form of a trust. So if your mortgage was securitized, the owner is a trust. That trust will have a non-descript name like (depending on who did the transaction), "Lehman Mortgage Trust Series 15-A."

That trust purchased not just your mortgage, but hundreds or thousands of mortgages. Although Lehman created this trust, it has no financial connection to Lehman; great care is taken to ensure that there is no financial responsibility between the trust and its creator.

That trust then sold mortgage backed securities in the form of "trust certificates." The buyers of those trust certificates would be a diverse group of financial companies, including banks, and even foreign banks. Although they are not the legal owners of your mortgage, they get most of the economic benefit of your mortgage payments.

More confusingly, however, the trust is basically passive and has no officers or staff. The trust is always managed by a "trustee." The trustee exercises all the legal powers of an owner, but no creditor of the trustee or anyone else with a gripe against the trustee can touch the property of the trust. The trustee's trust property (eg your mortgage) is legally separated off from trustee's own property.

That trustee is likely to be a specialized department of a large commercial bank. For example, Chase has a very large department called its "corporate trust" department. They actually administer the money. If some document has to be signed relating to the mortgages, it will be signed by an executive at Chase's corporate trust department (John Smith) and if memory serves me, the signature page will be pretty complicate and will say something like:

"John Q. Smith <his actual handwriting>
LEHMAN MORTGAGE TRUST SERIES 15-A
By: John Q. Smith, Vice President,
Chase Corporate Trust Department,
as trustee of Lehman Mortgage Trust Series 15-A".

Keep in mind that it's your local mortgage company that "services" or administers your particular mortgage. It collects your money and sends it in to the trust. But it is the trustee that administers the money of the entire trust, taking in money from dozens or hundreds of "servicers" like your mortgage company, and then sending out checks (actually electronic transfers) to the owners of the "trust certificates."

Just to add one more layer of confusion, most owners of "trust certificates" don't actually take possession of the trust certificate as pieces of paper. In order for the system to operate more smoothly and paperlessly, when the trust certificate was sold, say to Bank of China, Bank of China agreed for the trust certificate to be left with a "depository" institution on Wall Street or maybe in Geneva or London. Again this will be a non-descript company that is part of the subculture of Wall Street, with a non-descript name like Depository Trust Company.

So to summarize, your monthly check goes to the servicer, OMC; OMC, the servicer, sends payment to the trust through the corporate trustee, Chase; Chase collects all these payments and makes payment to the trust certificate holders by sending the money to their accounts at the Depository Trust Company; Depository Trust Company then sends the money to some account of the Bank of China.