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Missouri had been impenetrable. Things change. This case finds that neither the GSE nor anyone else in the chain had the power to enforce the paper because they did not really have ownership of the loan, that their title was false, that quiet title is granted to plaintiffs, that foreclosure was wrongful, that compensatory damages are awarded and that punitive damages would be awarded. Total Judgment $3 million +.
Important takeaways —
- The tide has turned. Courts are no longer looking the other way on intentionally sloppy foreclosures that cover up a larger fraud on investors. The courts are not clear on how that occurred, partially because nobody has been allowed to present it, but they have enough of a feel of the situation to see that there is something fundamentally wrong with the mortgage origination and foreclosure practices.
- Quiet title can be awarded supported only by a finding that the mortgage is unenforceable. Whether this will stick on appeal is unknown. My view is that the mortgage stays although there is nobody (yet) claiming a genuine right to enforce it.
- At this point, if the foreclosing parties don’t have it right, it is viewed as an intentional or grossly negligent act, giving rise to compensatory damages, attorney fees, costs, and punitive damages.
- The value of a wrongful foreclosure case might be $3 million + which falls into line with other decisions.
- Judges are getting angry over the fact that they accepted false representations in the past.
- Judges are perceiving the difference between the debt and the paper that purports to describe the debt — i.e., the note and mortgage. While it is not expressed in so many words, this decision and others like it, sees the paper as largely fictitious even though there is a genuine debt out there. By implication, the courts are saying the debt has no paper that applies and that therefore nobody should be allowed to enforce the paper. It is close to declaring the mortgage void ab initio.