This time it's a legal proceeding gone upset for the banks!

This bank filed 14 more foreclosures only to find the rules had changed and the cases were thrown out of court...for now. This judge wanted them to be on the title as having been assigned the note. They had not been and probably wouldn't be on title for another year.

Preforeclosure Real Estate Notes and Real Estate Notes Sold

Many times, the banks will sell "packages" of notes - some defaulted preforeclosure real estate, some not. They could be selling up into the billions of dollars worth of note and mortgages. That means that the note changes owners - assigned to another bank that will collect the debt from the person who borrowed the money - the debtor. The buyers (Wall Street) probably don't even know what properties they bought.

There could be notes from all over the country, some $20K notes, some $2,000,000.00 notes. They don't take the time to RECORD the new buyer by filing assignment papers at the court house. Which is this case. These notes were owned by Duestch Bank and Trust and no documents were filed at the court house to support it. When title was pulled at the court house, it shows the previous note holder not being Duestch Bank and Trust. But Duestch Bank were the ones trying to file the foreclosure.

Who Can File Foreclosure on PreForeclosure Houses?

Only the current note holder can foreclosure. (Just like an eviction. Only the current owner can evict. A friend can't evict a tenant for someone else. An attorney can on the owners' behalf but the friend couldn't because they don't own the property). When these titles were pulled, a different name came up as note owner than who was actually foreclosing. So the court said they couldn't foreclose and threw out 14 cases.

Why? When this has been the PreForeclosure Process for a Long Time?

When someone goes to buy the house as an REO (Real Estate Owned-by the bank) the house is still titled to the homeowner that went to foreclosure-not the bank that bought it back at foreclosure sale months earlier. Meaning, the person (or bank) on title should be responsible to pay any expenses while they own the property.

If it goes from the foreclosed homeowner to a new buyer and the bank is never on title, the bank never pays any expenses incurred during their ownership. The city does. Taxes, nuisance ordinances, bandon car fees, and especially houses than need to be boarded up and are costing the city money to keep it safe, cut grass, etc.

The borrower/homeowner has gone to foreclosure and has no money and no responsibility to the house. The city doesn't know who the new owner of record is and has no one to go after to pay the
city's fines, fix eye sores or neighborhood nuisances.

Until an investor or owner occupant buys the property as an REO buyer and gets the title in their name - after waiting weeks to get the assignment papers and the title in the previous bank/owners' name, the city now has a real person to go after for any code violations, etc. Somebody with money. But they won't pay for expenses incurred when they did not own the house.

The city will if they can't find the bank or who bought it at foreclosure sale.

Fallout of Preforeclosure Real Estate

Apparently, the court and the mayor were talking about how to cut city costs and help with the city housing blight due to the high foreclosure rates in Cleveland for the past 6-7 years. The more "city blight" came into the conversation in conjunction with preforeclosure real estate the more determined they were to find an answer.

Knowing who files foreclosure and who buys the house at auction gives the city an owner to pay the expenses. This became their solution. Finding the note holder and forcing them to file the
correct paperwork would allow them to know WHO to collect expenses from and why the judge felt so
strong about having the correct note holder on title.

This could keep people in the house longer, leaving less vacant preforeclosure real estate all over town, less break-ins, copper theft, less uncut grass and more people still living in their homes. Even if they weren't making payments to the bank, the homeowner staying in their house helps the city.

Preforeclosure Real Estate Solutions in Other Cities

I've personally sat on city foreclosure committees in Cincinnati and that has always been a sore point with the officials. The banks own many VACANT homes. They sit empty, let them continue to sit empty and don't accept offers to sell because the offers are too low even as the house continues to teriorate. The city ise harmed and the city doesn't know WHO to go after to stop harming the city. The owner is still shown as the owner but they have defaulted and have no money.

Knowing who filed the foreclosure and who bought it at sale will cure that problem.

More info on your stop foreclosure information search:

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