Just because your original paper has been bought and sold it doesn’t do anything to your original obligation nor does it interfere with your payoff of the final payment.
Not necessarily, no. But as we're seeing in thousands of cases it most certainly could. Some were assigned in violation of state and federal law.
Some were fraudulently assigned to two parties at the same time.
Some are being collected on by entities with no agency from the creditor.
Some are pursuing court actions to collect that which they have no standing to do so.
And myriad other issues that affect the obligation to pay and to have a debt cleared all due to very shady packaging, selling and assigning methods.
DITTO. People think because the bank does not have the note they cannot foreclose. Wrong!! States have procedures for dealing with lost notes/titles. Banks have to hire lawyers and auditors to back track and find the last known location of note/title. If it was lost due to a service company or old holder going out of business, the rep for that company (usually a lawyer) will fill out a statement under oath to attest that the note/title was lost. These procedures always existed to account for natural disasters or businesses going out of business and documents being lost due to the chaos. The whole process will take more time, and additional funds spent by bank to document the process and events. The homeowner can still challenge the documentation but if done properly it will be much harder then original issues of robo signing. This process will gunk up the legal system because each foreclosure will be reviewed by a judge. The borrower may have just brought himself an additional 12 to 18 months from eviction.
However the legal issues for mortgage backed securities are different. These investments are sold with a prospectus which must be accurate in its declarations. If Bank of America publishes a prospectus for investors to read before they buy the securities, the info must be accurate and not false. There are SEC procedures and checkpoints that a bank must go thru before publishing such a document. Failure to do so or intentionally not doing that and releasing the prospectus to unsuspecting investors is FRAUD!!! Investment bankers can handle the homeowners, but lawsuits from the pension funds, Freddie Mac/Fannie Mae, foreign governments and other investor funds that brought the mortgage backed securities are another story. Maybe that is why the Feds took a chunk of the TARP and paid off foreign banks who brought a sizable chunk of MBS. Maybe both sides figure it was better to settle with US taxpayer money then drag it out in court with its costs and consequential bad PR.
But that IS THE POINT. IT DOES change. Try getting paid on an IOU that you lose. Or pay for something that with a $100 bill that you have lost. If you lose the note, then you lose the chance for payment.
The obligation is to the note holder, who has an obligation to prove that they've properly assumed and secured the note, including title to the home which can legally be transferred upon completion of payment of obligations under the terms of the contract.
I used to work in the Mortgage industry for ABN AMRO and spent two years in their mortgage division before the housing meltdown. I know of what I speak here. If the bank cannot prove they hold clear, unadulterated title as the holder of the mortgage note, the BANK itself has violated the terms of the contract and the Home owner has no obligation to continue making payments until the Bank as the holder of the note rectifies the problem.
That does not mean the "homeowner" gets a free house, far from it. What it means is they'd best take all legal steps to protect themselves and their interest in the home by obtaining legal counsel and escrowing their mortgage payments into a separate bank account until the problem can be resolved.
Myself, I discovered six months ago that Wells Fargo had acquired my mortgage note and sent me a letter indicating such. Asserting my legal rights, I requested proof that they had both the note and title to the home so that I could be sure when I paid off my home I'd receive clear title.
Six months down the road, Wells Fargo still hasn't done so. Not only that, they have the address of my property wrong on their statements, the description they sent of my property is incorrect, and the township to which I pay my taxes on their paperwork is incorrect. The only thing they have right thus far is my legal name (and that's questionable since I'm a "Jr." and they don't list my suffix on their paperwork as it appears on my mortgage) and the PIN# of my property.
Am I going to try and "shake them down" for a free house? No. I'm 9 years into a 15 year mortgage and frankly what's left to pay off on my house is such as small amount it wouldn't be worth the aggravation for me. What I am interested in is paying off my house (I hate Wells Fargo) and getting the hell out of Illinois (I hate this state!) and moving somewhere more climatically and politcally temperate than here. I can't do that if I can't get clear title to my house and sell it.