Does Securitization of Your Home Loan Constitute Fraud?
Let me explain: When a homeowner purchases a piece of property they often do not understand all the details of what goes on behind the scene. For instance, if you are a homeowner, do you know whether or not your home loan is securitized or not? Do you have any idea what this means? Because the term securitized loan isn’t used every day it’s likely you do not know what it means.
Here is a small fact for the homeowner: 95% of all home loans are securitized. So what does that mean to the homeowner?
If your home loan originated after 1995 there is a good chance that your loan was securitized. In 1995 many lenders adopted a practice called MERS in order to become more profitable and efficient in the home loan business. MERS was basically a stock market practice in which lenders would bundle up large portfolios of mortgages. They would break the loans up and disperse them out in smaller bundles to the secondary market to a wide variety of investors.
So why is it important for the homeowner to know about this fact? Well during the years of 2001 – 2009 something occurred that caused lenders the inability not to verify if they actually owned the property or not. During this time the recording of the transfers was not done properly. This resulted in a broken chain of securitization of the mortgages. It became increasingly difficult, if not impossible, to find out who had purchased and then sold these “bundles” in the market. This turn of events caused the banks to have problems identifying who actually held the mortgage. Would it later be possible that the homeowner, who thought that they securely held the title to their home, have someone come back and say to them that the home was not theirs?
Finding out if your home loan was securitized can be a huge lifesaver to you the homeowner if you are about to lose your home to foreclosure. It has been determined that if your home loan has been securitized or bundled out and the bank tries to foreclose on the loan or home, that act in itself constitutes fraud on the lenders part. You as a homeowner can in turn sue the lender for fraud because they do not actually hold the loan.
So what can you do to find out if you potentially can protect yourself and your property? You can have a securitization audit done. This audit will go through the documentation of your loan and trace back if or if not the loan was securitized. If the loan was securitized they will locate who the holder of the loan actually is. This documentation is so thorough that it can actually be used as court evidence should you need to.
So it is advisable if you are homeowner who purchased your home between the dates of 2001 – 2009, to delve into the history and location of your loan. Have a securitization audit done to set your mind at ease about your loan.