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> After those CDOs got sold a few times, people lost track of who actually owned a particular loan. When borrowers defaulted, it was in many cases impossible to
by ams6110 9y ago
> After those CDOs got sold a few times, people lost track of who actually owned a particular loan. When borrowers defaulted, it was in many cases impossible to prove who was legally entitled to collect on the debt.
Sounds fishy. The borrower was paying somebody at least up until he defaulted. Would not that entity be the one entitled to try to collect? Or were loans actually in default being sold around?
- derekp7 9y agoThey would be paying the loan originator (the bank where they got the loan from), who is still servicing the loan (in exchange for a fee from whoever they sold the loan to). But the original paperwork goes to the new owner of the debt.
- goialoq 9y agoNot quite, they'd be paying the servicer, whoever the loan holder contracted that to.
- ChuckMcM 9y agohttp://www.nolo.com/legal-encyclopedia/produce-the-note-defense-foreclosure.html http://www.nolo.com/legal-encyclopedia/produce-the-note-defe... for some more detail. But it was, initially, a good strategy if you were being foreclosed to demand the person filing the motion could prove they held the note.