Facts: A borrower obtained a loan secured by their home. The loan was pooled with other loans in a securitized investment trust. The borrower later defaulted on the loan and the lender initiated foreclosure.
Claim: The borrower sought to prevent the foreclosure, claiming the lender did not have the right to foreclose since it no longer held a secured interest in the borrower’s home after pooling the borrower’s loan in a securitized investment trust.
Counterclaim: The lender sought to retain its right to foreclose, claiming it still held a secured interest in the borrower’s home since pooling the borrower’s loan in a securitized investment trust did not alter its authority to foreclose.
Holding: A California court of appeals held the lender may foreclose since it held a secured interest in the borrower’s home as pooling the borrower’s loan with other loans in a securitized investment trust did not eliminate the lender’s security interest in the property. [Jenkins v. JP Morgan (2013) __ CA4th__]
Since this has been ‘in the news’ consistently, perhaps the article should address the issue of whether or not the next-in-line lender was also provided the original note to enable them to reconvey if the loan were paid off, as well as the robo-signing issues. This is ALL good stuff, but the lenders got away with an incredible amount of fraud, and this summary appears to take them off the hook without a full explanation. Thanks.