Arizona Mortgage Default Rules

Controversial method of storing deeds ruled legal

In a case with national implications, the 9th U.S. Circuit Court of Appeals rejected arguments by several Arizona homeowners that their mortgage lenders had committed fraud through the use of a centralized system to store deeds of trust. That process separates the deed from the actual promissory note. And in Arizona, a lender needs both to begin foreclosure proceedings. More to the point, Callahan said the borrowers cannot show that they were misinformed about the operation of MERS, that they relied on any misinformation and, specifically, that they were injured based on any misinformation. She specifically rejected the claim that the system is a "sham' and that it denied the homeowners the ability to contact the people holding the loan to seek a new payment schedule. In recent years, though, the transfer of loans became popular, with lenders bundling groups of loans and selling them to investors as mortgage-backed securities. Callahan said MERS was set up as a private firm by buyers and sellers of loans to avoid the need to record multiple transfers of the deed. It serves as the nominal holder of record for the original lender and any subsequent buyers of the loan. "The deed and note must be held together because the holder of the note is only entitled to repayment, and does not have the right under the deed to use the property as a means of satisfying repayment,' she wrote. "Conversely, the holder of the deed alone does not have a right to repayment and, thus, does not have an interest in foreclosing on the property.' "The plaintiffs have failed to show that the designation of MERS as a beneficiary caused them any injury by, for example, affecting the terms of their loans, their ability to repay the loans, or their obligations as borrowers,' Callahan wrote. And she rejected arguments that the homeowners were "deprived of the right to attempt to modify their toxic loans, as the true identity of the actual beneficial owner was intentionally hidden.

Fannie Mae's Defaults Sink to 2 Year Low-Phoenix Arizona Short ...

The percentage of mortgages in default more than 60 days in the portfolio of Fannie Mae fell to its lowest level in two years, another sign that the defects are slowly but surely down more of homeowners pay their mortgages on time. This is true even in the hardest hit markets such as Phoenix.

Serious defects of single-family conventional mortgages fell to 4.08 percent in June and July, compared with 4.82 percent in July 2011. Serious defects peaked in February 2010 when they reached 5.59 percent of all mortgages in the portfolio of Fannie. Fannie currently owns about $ 728 billion dollars of mortgages in its portfolio.

Government-controlled mortgage company Fannie Mae said Friday that its second quarter loss widened as it continues to look for loan modifications to help reduce the flaws in the midst of current difficulties in the housing and mortgage markets.

Earlier this month Fannie Mae announced that it will seek $ 5.1 billion in Treasury funds to reduce its losses by reducing default through loan modifications for borrowers having difficulty paying their mortgages .

Fannie Mae said it aims to reduce credit losses while keeping as many families as possible in their homes and protecting property values.

"We remain the main source of liquidity to the U.S. mortgage market, and we are committed to creating a long-term value by helping to build a stable market, a sustainable housing for the future", President and CEO Michael J. Williams said in a statement at the time.

Fannie completed more than 80,000 single-family loans in the second quarter drive, with more than 59,000 of them involving loan modifications, repayment plans and abstentions.

The rescue of Fannie was a government bailouts of the most expensive. He has received nearly 100 billion by the Treasury to stay afloat.

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