It seems one of the big problems with the mortgage crisis is that no one seems to know who actually owns the mortgages:
They are among thousands of delinquent borrowers caught in the maze of modern mortgage financing as they desperately try to save their homes. Unlike in the last real estate bust, when local banks and credit unions wrote nearly 80 percent of mortgages in Massachusetts, most home loans issued today pass through a nationwide chain of brokers, lenders, service companies, Wall Street firms, and investors. That makes tracing ownership difficult, if not impossible.
In a rising real estate market, the system worked well, spreading loan risks among various players and expanding credit and homeownership.
But as foreclosures mount, the system is proving ill-suited to respond, analysts said. The reason: Spreading risk muddled responsibility.
“It’s perfect deniability,” said Patricia McCoy, a University of Connecticut law professor who specializes in financial services. “When there’s a problem, each person in line says, ‘Don’t talk to me, talk to the other person.’ “
Interesting. No accountability. Where have I heard that phrase before? This works both ways, actually. If someone were to, say, default on some credit cards, like some have done, aside from the credit damage and the debt being written off by the card-sponsoring bank, that’s the end of it. Once a debt is sold to a collector, it’s very hard for that collector to have any legal standing because they can seldom prove the card debt belongs to the person they are hounding for repayment, since they have no documentation that would stand up to legal scrutiny. This is particularly true with debts that have been sold more than once, down the food chain of collectors. Past a certain point, it’s a financial whispering game. Debt doesn’t equal wealth.