Mortgage Nightmare Deepens--"Who Owns Your Note?"

Tom Ice Part 1

Tom Ice Part 2

A record 1.2 million U.S. homes are expected to be taken over by banks this year, up from 1 million last year and 100,000 in 2005, real estate data company RealtyTrac Inc. says.

Faced with a rising tide of foreclosures, lenders employed so-called "robo-signers" -- middle-ranking banking executives who signed thousands of affidavits a month claiming they were knowledgeable of the cases.

However, some lenders, prodded by legal challenges, now say officials were not aware of details in all of the cases and vow to resubmit them. It is unclear how many cases are involved but it is believed to be in the tens of thousands.

The securitization of home loans meant many have been sold off to other investors. Banks still own some, but frequently serve as loan servicers on behalf of the actual owner, whether it is another bank or an investor pool.

Some mortgages can be tracked in an electronic system known as MERS, or the Mortgage Electronic Registration Systems, that traces transfers among member banks. But the mechanism is not fully reliable, Ice said.

A recent sample among some 400 foreclosure cases Ice's law firm is handling revealed 71 percent with possible discrepancies in detailing the owners of clients' loans.

Scott talks with Florida attorney Tom Ice who has been involved in some of the legal challenges.

Read more at Reuters

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Posted on October 14, 2010 .