Lawyer Argues Banks Don’t Have the Right to Foreclose

Adversity breeds ingenuity. And one Florida lawyer has come up with an ingenious way to fight back against foreclosures: force banks to prove they have the right to foreclose in the first place.

The same convoluted system that helped collapse the mortgage lending structure in the first place could hold the key to stopping many foreclosure proceedings. That’s if attorney April Charney’s argument catches on nationwide.

She contends that, since a lending bank typically turns mortgages into bonds — which are put in trusts as collateralized debt obligations (CDO) — and then “sells” the right to collect revenue, the bank no longer legally owns the mortgage or the right to foreclose on it.

According to the New York Post, her strategy is working in Jacksonville. So far, she’s forced banks to admit they don’t have legal ownership and stopped foreclosure proceedings many times over. Her argument has “spread virally around the country and now thousands of foreclosure lawsuits are sitting idly — in legal limbo.” Charney has one case that’s been in limbo since 2004 because the bank simply hasn’t come back to court.

Now Charney is traveling the country giving seminars and recruiting other lawyers to use this defense. Brooklyn judge Arthur M. Schack told the Post he denied 13 out of 14 foreclosures last summer based on the same principles:

“I want to see the servicing agent’s power of attorney, I want to see all the paperwork before I approve it,” he said. “If the paperwork is garbage, I deny it. If you’re going to take away someone’s home, it should be done properly.”

I totally agree with the judge’s — and Ms. Charney’s — sentiments. Foreclosing on a home shouldn’t be done hastily or taken lightly. Banks need to treat each and every foreclosure with the same weight and severity that its outcome inflicts on the homeowner.

What do you think of April Charney’s approach? Will her tactic change the course of the nation’s foreclosure epidemic? Or is it just another band-aid waiting to get yanked off?

Tags: avoid foreclosure, foreclosure help, legal foreclosure help, stop foreclosure

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