Proposed Colorado constitutional amendment initiative would restore fundamental fairness to home foreclosures
By Seth Richardson
Tired of waiting for the Colorado legislature to do the right thing instead of the wrong thing, citizens are proposing to amend the state Constitution to require banks that foreclose on property to first prove that they have the legal right to do so because they actually own it. Initiative 84 is being prepared for petition circulation, and when it comes to your community, you should sign it.
Predictably, bankers, in the persona of the Independent Bankers of Colorado, a community bank trade group, are objecting to the notion that they should not be allowed to simply assert that they own your house and then force you into an expensive foreclosure that may not even be legal or justifiable. The group wants the issue to be dealt with by the state legislature rather than by amending the state Constitution.
But the state legislature refused to do so when it rejected a bill sponsored by Rep. Beth McCann, D-Denver, in a House committee, leaving an initiative as the only option for this no-brainer correction of a gross inequity perpetrated by the banking industry itself in cahoots with the state legislature back in 2002 and 2006. Inserted deep in the depths of a much larger piece of legislation, the law now says that all a bank has to do is get a lawyer to file a “statement of qualified holder,” which is nothing more than a bald assertion by the bank’s lawyer that they own the paper and have a right to foreclose, but does not require the bank to prove with documentary evidence (like the actual deed signed by the homeowner) that they either own the mortgage or that the homeowner has actually defaulted on the loan.
Worse, if your mortgage holder sells your note to someone else and then fails to tell you where to send the payments, causing you to send them where the original contract specifies, you not only have to sue them to get back the wrongfully-collected funds, but you also have to make those missed payments to the new mortgage holder, if you can find out who that is before they claim a default and foreclose on your home. The fact that you made the payment as specified in your contract is now meaningless as a protection against default if the bank you signed with fails to forward that payment to the new owner.
That’s an intolerable injustice.
Proving that you own a debt owed by another with credible, verifiable evidence is a simple core requirement of any legitimate attempt to collect on a debt. I can say that you owe me money, but if I don’t have some proof of this allegation, my claim can, and should be rejected by you and by the courts. There is no reason to give community bankers, or anyone else, a free pass to claim ownership of a debt that would legally permit them to foreclose or collect that debt without adequate proof, and many reasons not to do so.
To the banks, this is, as usual, about money. For them to prove ownership of a mortgage they would have to record each transfer of the mortgage with the county clerk and recorder in the county where the home is each time the mortgage is sold to someone else. This is a nuisance to the bankers, and costs them money…all of ten bucks for the first page and five bucks for each additional page, plus the time and trouble of sending someone to the county clerk’s office to record the transfer, so they played shenanigans with the law to keep them from having to do so without any concern for the rights of the homeowner. The bankers whine that this will “dry up the secondary mortgage market” according to CBA executive director Don Childears.
Cry me a river. Also, hogwash and balderdash.
If a bank or other mortgage holder claiming ownership of a mortgage and a right to foreclose can’t produce the original mortgage signed by the homeowner along with a recorded chain of title showing that they have clear title to the note, then the law should forbid them from beginning foreclosure proceedings at all. Proving lawful ownership and proper chain of recorded title should be a requirement to even file the paperwork.
And just to make things even more clear, if the putative owner loses the original signed mortgage paper, screws up the chain of title, or fails to immediately notify the homeowner that his mortgage has been sold, and specifically to whom it has been sold along with accurate contact information for the new owner so he can send the payments to the right place and the entire debt should just evaporate and be unenforceable as a penalty for fraud, incompetence and un-professionalism.
That would make bankers and mortgage brokers, and companies that bundle mortgages and try to peddle them as securities to overseas investors, which is precisely what caused our current economic recession, dot their “i’s” and cross their “t’s” and act like banking professionals instead of acting like rapacious and evil banker Henry F. Potter from “It’s a Wonderful Life.”
Requiring mortgage owners to show proof they own the mortgage (in the form of the actual piece of paper signed by the borrower), that they obtained it legally, and that they have just cause to foreclose on the note before they are allowed to foreclose is not just the right and moral thing to do for Colorado, it’s the right and moral thing to do nationwide.
Not only should this ballot initiative be passed by a landslide, the concept should make its way to the Congress and should become the law of the land nationwide. If it dries up the overseas toxic-mortgage derivatives market that nearly destroyed our economy, and did destroy many homeowner’s lives, so much the better. Bankers will just have to be satisfied with the profits they will make on the original mortgage, or they will have to proceed carefully and thoroughly when selling it to someone else.
Demand that they do their jobs properly…what a concept.
As for the costs to the bankers…well, they’ll just fold those costs into whatever they charge for the mortgage, as they should, and it won’t impact either their bottom lines or the availability of the secondary mortgage market one little bit. It’ll just put a stop to one of the most heinous frauds ever perpetrated on homeowners by the Colorado legislature.
Carving this requirement in stone in the state Constitution is the only way to prevent the banker’s sycophants in the General Assembly from doing again what they did before.
“Show me the the mortgage” should be the rallying cry for everyone who is falsely or wrongly foreclosed on in this country, and “no show, no go” should be the rule of law for lenders attempting to foreclose without the proper proofs.
© 2012 Altnews