Securitization of Mortgages

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Securitization is the process of pooling financial assets, like mortgages, and selling them as securities to investors. This allows lenders to free up capital for new loans while offering investors a way to participate in the mortgage market.

Here's a simplified breakdown of the process:

1. Origination: Borrowers take out mortgages from lenders (banks, credit unions, etc.)

2. Pooling: Multiple mortgages are grouped into a pool based on specific criteria (loan amounts, credit scores, etc.)

3. Tranches: The pool is divided into tranches, representing different risk levels and offering varying returns to investors.

4. Selling Securities: These tranches are sold to investors as Mortgage-Backed Securities (MBS).

 

What a Securitization Audit Report Is (and Isn't)

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A securitization audit report is a document, often created by non-legal professionals, that claims to identify flaws in the securitization process. These reports allege that errors in how the mortgage was bundled into security can invalidate the foreclosure process.

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Why Securitization Audits Are Unlikely to Help

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While errors can occur during securitization, courts generally don't view them as grounds to dismiss a foreclosure unless they directly impacted the borrower's ability to repay the loan. Here's why securitization audits may not be a sound strategy:

• Burden of Proof: The borrower has the burden of proving that the securitization errors caused them harm. This can be difficult and expensive to demonstrate in court.

• Focus on Repayment: The core issue in foreclosure is the borrower's failure to repay the loan. Even if securitization errors exist, the court might still rule in favour of the lender if the loan default is undisputed.

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Alternatives to Consider

If you're facing repossession, consider these options that can potentially help you save your home:

• Loan Modification: Work with your lender to modify the loan terms, such as reducing the interest rate or extending the loan term, making the payments more manageable.

• Loss Mitigation: Many lenders offer loss mitigation programs to help borrowers avoid foreclosure. These programs may include forbearance agreements or short sales.

It's important to remember:

• Repossession is a serious legal matter..  it is also a physically and mentally challenging development

• Don't rely on unproven methods that could delay seeking effective solutions.

• Consulting with a qualified legal professional is crucial for navigating repossession and protecting your rights.