Who owns your mortgage? I’ve asked this question before, http://pulse.ncpolicywatch.org/?author=52, and have been pleased to note that local media are asking it too. Today’s News and Observer picked up an AP article, http://www.newsobserver.com/business/story/1409682.html, describing one woman’s efforts to keep her home by asking the court to require that the foreclosing entity prove they own her debt. The foreclosing entity featured in the story hasn’t been able to provide that proof, so the woman in the story remains in her home for now.

There is a local angle on this story; homeowners in North Carolina are raising this defense in their foreclosure hearings. I encourage local media to continue to shine a spotlight on the glaring problem of note ownership in the North Carolina foreclosure process. Coverage will help homeowners and their attorneys educate the clerks of court and superior court judges who hear foreclosure cases.

Hopefully we’ll see the last of entities with insufficient proof of ownership foreclosing on beleaguered homeowners.

Does the bank foreclosing on your home own your promissory note? This question was once ridiculous, but in the face of securitized debt and asset-backed securities, it is, sadly, very relevant.

Lenders and debt buyers were (and I hope this isn’t news to anyone at this point) greedy and made money hand over fist for a while by selling mortgages and then moving them into loan trusts and then getting investors to buy stock in the trust funds. When the cycle of greed started to lose its spokes, the trust funds started to foreclose in huge numbers.

But the evidence that the trusts own the mortgages is often weak, and is sometimes a sham. The trust’s lawyer shows up a foreclosure hearing with an affidavit from the trust fund. The affidavit says that the trust owns the borrower’s promissory note. That’s it. In this seemingly alternate universe, I could walk into court tomorrow and swear that you owe me $100,000. And the court would allow me to take your home to pay myself. That’s all it takes. That’s all the proof necessary, at least in the clerk’s offices and courtrooms of North Carolina, to take someone’s home.

Now, you might think (if you’ve been sleeping Rip Van Winkle style) that the trust would only foreclose if it knew that it owned the promissory note. But you’d be wrong. Foreclosure proceedings were recently initiated by two DIFFERENT entities against a Florida woman; both entities claim to own the promissory note. There are plenty of local examples as well, but none that I know of have links to press coverage yet.

No entity or person should be permitted to foreclose on a home unless it can prove that the borrower actually owes it money.