Saw this on Lou Dobbs tonight (Thursday Jan 29) - the strangest ep of his show I have seen in that I agreed with everything he had to say!!
Basically, Congresswoman Representative Marci Kaptur of Ohio (democrat, of course) is telling foreclosed homeowners to stay put, and exercize squatters' rights - while availing themselves of competent legal representation. Her premise is roughly this:
The banks got into trouble in 2 main ways:
1. foisting mortgages (with bad terms, usurous interest rates and complex, cryptic structures and language) on people that couldn't possibly afford them or understand them who inevitably defaulted on those mortgages; this we call the subprime mess.
2. In the old days, a lender held a loan; you owed the bank you borrowed from until it was repaid. Over the last 10 ys or so, banks have been bundling mortgages together, and selling the debts they originally created on to other parties, in the form of securities. Sometimes they chopped up various mortgages (even other loans) and created strange securities to sell.
So when a person defaults on their mortgage payment, they are not defaulting against the originator of the loan, but against whichever party or parties holds the weird securities containing the person's mortgage.
And it is often the case that it is not clear exactly who in fact owns the debt; it may be multiple parties! Foreign parties! No longer-existing parties, like hedge funds or bankrupt or bought out institutions!
The point being that, under real estate law and banking law, unless the debt holder can 1/ be located, 2/ produce the note the defaulter defaulted against, the foreclosure can't go through!!! Hee hee!
See Representative Marci Kaptur of Ohio tells foreclosed homeowners to stay put
Here is part of the Lou Dobbs transcript:
from: CNN.com - TranscriptsGRIFFIN: Elected officials are saying Toledo is not in a recession, it is a depression. It is this bleak backdrop that inspired Toledo Congresswoman Marcy Kaptur to take the floor of the House earlier this month to tell her constituents to stay put.
REP. MARCY KAPTUR, (D) OHIO: So I say to the American people, you be squatters in your own homes; don't you leave.
GRIFFIN: Kaptur says she has had it with government bailouts for Wall Street banks, but nothing for homeowners. She is advocating for a legal revolution, a demand that not one of her constituents leaves their home without an attorney and a fight.
(on camera) Even if they've been foreclosed on, don't leave?
KAPTUR: If they've had no legal representation of a high quality, I tell them stay in their homes.