MERS and the US foreclosure mess

[Ajax]

Isn't there a huge difference between US and Australia.

In the US the lender owns the property until the loan is paid out. In Australia the borrower owns the property but subject to the mortgage to the bank.

That may mean that this securitisation issue and diffulty in ascertaining who has the rights to foreclose are less likely to be an issue in Australia.

 

[alexlee]

In the US the lender owns the property until the loan is paid out. In Australia the borrower owns the property but subject to the mortgage to the bank.

Where did you get this idea? The property is owned by the borrower. That's whose name is on the title, both in the US and Australia. If the lender actually is listed as owner, why do they need to foreclose?

That may mean that this securitisation issue and diffulty in ascertaining who has the rights to foreclose are less likely to be an issue in Australia.

Wrong. It's the same issue, IF the courts decide that the mortgagee can't prove that they are the mortgage holder. The question as to whether it's less likely in Australia has to do with how good the paperwork is with the Australian securitisation system.

 

[Indifference]

Wrong. It's the same issue, IF the courts decide that the mortgagee can't prove that they are the mortgage holder. The question as to whether it's less likely in Australia has to do with how good the paperwork is with the Australian securitisation system.

Exactly.... sort of....

In the US, the rampant 'onselling' of 'securitized bundles of toxic mortgages' by Wall St, has maligned the ownership of the promissory note from Lender A to Lender B, and in many cases, they have been lost or destroyed along the way.

If anyone really wants to understand the issue, they should look up Mortgage Backed Security (MBS) and how bonds are created and sold, then relate to this to legal right to claim to be the lien holder, without any promissory notes for the individual securities backing the MBS bond. Sounds confusing, I know, hence the current headaches in the US at the moment.

Australia doesn't appear to have much cause for concern due to statutory reform in property dealings and use of the Torrens Title System. The difference between the US and Australia is not just about securitization and without proper consideration of the legal, financial and property law differences which underpin the current US issues, it is extremely difficult to make any meaningful comparisons.

This is why I have recently posted my thoughts on jumping into the US property market. I have very little knowledge of it personally, but it is obvious that many ppl have far less appreciation and are over simplifying the issue and trying to make broad comparisons that are entirely irrelevant IMHO

my 2 cents anyhow...

Update: BTW, I am not disagreeing with alexlee. Quite the contrary, I am merely elaborating on what I see as a pertinent observation.

 

[Token Funder]

*snip*
In any case, the 3rd party creditor might be able to enforce all those nice little contract clauses that you thought that a reputable bank lender would never enforce but had included for technicalities.

Cheers,

Rob

Nothing in a contract is included for "technicalities". Everything's in there for a reason.

Your view of banks is cute.