A securitization audit in foreclosure defense is like going into the belly of the beast, except in an audit, the beast is a synthetic creature made up of tranches of mortgage-backed securities.
What is a Securitization Audit?
A securitization audit is a comprehensive investigation into the ownership of your loan. Who owns your mortgage loan? The owner is the entity who [should] exclusively have the legal capacity to foreclose.
But the complex nature of how “banks” pool loans and sell those loan interests within the investment community blurs lines of ownership or even makes ownership almost invisible. If your supposed bank no longer owns your loan then, who exactly is foreclosing on your property?
A securitization audit answers a lot of questions, like what’s the relationship between the foreclosing party and the homeowner. You shouldn’t be surprised to learn that there’s simply no relationship at all. Here’s why.
A securitization audit can show that the foreclosing entity not only has sold your loan, but converted your loan from an already complicated mortgage backed security to an even more complicated certificate worth [God only knows how much] to a unique investor class.
What does this all mean? Probably nothing depending on what state the foreclosure action is taking place and what specific claims your synthetic bank is representing in the foreclosure. Much of the success of a foreclosure defense action depends on how well the specific bank allegations are challenged and what laws are establish in your particular state that can dictate the outcome of the foreclosure proceedings.
A securitization can dig deep, but how useful is the information once you have it?
Foreclosure Laws Matter
A securitization audit is certainly no silver bullet because there are so many moving parts. For example some states won’t allow the homeowner to challenge a foreclosure on grounds of lack of legal standing because of the closed nature of foreclosure proceedings [in those states] being between the bank and a Trustee.
In contrast, states like New York have laws and court rules that are very homeowner friendly and can be used to dismiss a foreclosure action without having to delve into the complicated securitization issue. Homeowners in the state of California can now challenge a bank's foreclosure on the grounds of legal standing thanks to the recent court ruling otherwise known as the Glaski case. As a result of this case, a securitization audit by a homeowner facing foreclosure should be the standard in the state's foreclosure defense practices.
If you have a lawsuit, and can’t make heads or tails of it, fax it over to (516) 750-9050 and let’s take a look. Then you can determine if a securitization audit makes sense for your situation.