Countrywide Decision: Investor is owner of loan

BofA’s Countrywide loses court ruling on mortgages — Modifications Not Authorized By Investor May be Invalid

As per LIVING LIES reporting:
There is lots of significance about this decision. First it shows that if the investor is going to sue it is going to be against the intermediary pretender lenders and not the borrower — because they don’t want to expose themselves to liability for predatory loan tactics, usury, securities violations, TILA, RESPA and HOEPA violations. Second it shows that as we have said all along here, the servicers don’t have the right or authority to actually negotiate and execute a loan modification. And third it shows that the investor who bought bonds that were mortgage backed securities are the OWNERS OF THE LOAN. This decision is essentially fatal to ALL foreclosure actions based upon securitized loans. It identifies the investors as the owners of the loan and negates the alleged authority of intermediary pretender lenders to do ANYTHING in the way of enforcement, modification, collection through legal means etc. because they simply have no standing (because the alleged debt is not owed to anyone other than the investor). The foundation is crumbling. These decisions are coming out one after the other because of a simple fact — the tacit deal between Wall Street and loan servicers and loan data administrators (MERS) may exist, but it has no legal effect without the investor and the borrower signing on to these new terms with extra conditions and co-obligors.August 20, 2009, 7:42 am NEW YORK (Reuters) – A federal judge has ruled that Bank of America Corp (NYSE:BAC – News) cannot have a lawsuit by investors seeking to force it to buy back mortgages heard in federal court, saying he lacks jurisdiction to decide the case. Tuesday’s ruling by Judge Richard Holwell of the U.S. District Court in Manhattan means the case will move to state court. Holwell did not decide the merits of the case. “Congress passed two statutes within a year of each other to address the mortgage crisis,” the judge wrote. “In neither of these statutes did Congress federalize the case.”The ruling is a win for investors, to the extent that Holwell rejected a claim by the bank’s Countrywide Financial Corp unit that new federal laws to encourage loan modifications to help struggling borrowers stay in their homes govern this case. Countrywide had argued that the laws negated obligations it might have had to buy back modified loans. In 2008, Countrywide agreed with some 11 state attorneys general to modify $8.4 billion of loans made to roughly 400,000 borrowers.Investors who own mortgage securities typically receive interest and principal payments. If servicers modified the underlying loans to reduce borrower obligations, investors would be harmed because they would receive lower payments.Holwell did rule that investors bear the burden of showing that pooling and servicing agreements for their loans, taken “as a whole,” require Countrywide to buy back the loans.Bank of America could not immediately be reached for comment. A published report said a spokeswoman agreed that the court did not rule on the merits of the plaintiffs’ claims.The current case was brought by two investment funds holding Countrywide mortgages, Greenwich Financial Services Distressed Mortgage Fund 3 LLC and QED LLC. These investors complained they would be harmed if Countrywide shifted the burdens of loan modifications to 374 trusts into which loans had been repackaged and securitized.These investors would rather Countrywide repurchase modified loans for the full unpaid amounts. Countrywide had been the largest U.S. mortgage lender before Bank of America acquired it last July for $2.5 billion. The case is Greenwich Financial Services Distressed Mortgage Fund 3 LLC and QED LLC v. Countrywide Financial Corp, U.S. District Court, Southern District of New York (Manhattan), No. 08-11343. rule that investors bear the burden of showing that pooling and servicing agreements for their loans, taken “as a whole,” require Countrywide to buy back the loans.Bank of America could not immediately be reached for comment. A published report said a spokeswoman agreed that the court did not rule on the merits of the plaintiffs’ claims.The current case was brought by two investment funds holding Countrywide mortgages, Greenwich Financial Services Distressed Mortgage Fund 3 LLC and QED LLC. These investors complained they would be harmed if Countrywide shifted the burdens of loan modifications to 374 trusts into which loans had been repackaged and securitized.These investors would rather Countrywide repurchase modified loans for the full unpaid amounts. Countrywide had been the largest U.S. mortgage lender before Bank of America acquired it last July for $2.5 billion. The case is Greenwich Financial Services Distressed Mortgage Fund 3 LLC and QED LLC v. Countrywide Financial Corp, U.S. District Court, Southern District of New York (Manhattan), No. 08-11343.