OwnIt’s defaulting Homeowners, what happens?

[no_such_reality]

The other day, I posted a thread on the follow-up to OwnIt Mortgage Demise .

When reading another thread today, I realized, I don’t know what happens to the homeowners of those $195 Million dollars worth of defaulting loans since OwnIt is being asked to take the loans, but OwnIt is defunct, nobody’s working there and it is seeking BK protection.

Can anybody lay out the timeline and process for what a defaulting homeowner in California is facing if they have one of OwnIt’s loans?

Did they already get foreclosed and evicted or is the holder of the MBS going back to OwnIt and saying, “hey, they haven’t paid in 6 months, take it back and start foreclosure process?”

Is it possible that the defaulting homeowners have hit the jackpot and it’s going to take years for anybody to figure out who should be collecting and who has rights to do the NOD?

[Cow_tipping]

I think the defaulters get a free ride atleast for 6-12 months. If you are one of those that OwnIt sold earlier and that sale stuck you’re out of luck but if they were still holding on to it you’re good. IMHO.
However B of A owns a part of OwnIt. maybe they would start turning the screws.
Cool.
Cow_tipping.

[ocbuyer]

OK:

great question. few things to understand from a macro level.

first – the $126M worth of mortgage backed securities has a ton of fluff wrapped in there. fees upon fees that the various wall streeters have added. interest, penalties etc.

second – just because they are forcing ownit to buy these back doesn’t mean that they are in default as a mortgage. it just means they’re in default as a mortgage backed security. that can occur from a number of things depending on how they were packaged and sold, the % they were paying the investors for their risk, and the market they are in. some packages can adjust in risk JUST BECAUSE their value drops lower than it was appraised. Most common reasons are, late pay, more than 30 days late, DTI (debt to income) ratio increase, or default/foreclosure/REO.

third – they will not and probably have not hit the “jackpot” a servicer usually is in touch with a homeowner as things in the foreclosure process progress.

fourth – dallas isn’t returning fwd’ing his emails and the hard money guys behind ownit CIVC say talk to him.

fifth – wall st is all about velocity and the bottom line,they won’t get anything out of ownit, but a nice carry fwd, so they’ll package the non-performings loans, consolidate the good ones and sell the bad ones off at 30 cents on the dollar.

b of a has part of ownit? didn’t read that, but they’ve acquired so many people who knows. merrill owns a solid piece, CIVC owns a chunk, and dallas owns a piece.

ownit is screwed and so are most in the subprime world.

they’re just not screwing home owner they’re really screwing the pensioners that have half their cash in these mortgage backed securities. in socialist and communist countries those pensions are everything.

things are going to get interesting.

thanks wall st. thanks idiot consumers. thanks highly leveraged sub prime guys.

[no_such_reality]

third – they will not and probably have not hit the “jackpot” a servicer usually is in touch with a homeowner as things in the foreclosure process progress

OCbuyer, good info.

The third point is kind of the crux of my question. If the loans that wall street want bought back are basically non-pays that the servicer hasn’t been able to collect.

If the Wall Street Firm with the MBS is trying to force OwnIt to take loan “A123” back, is the servicing firm still serving or is OwnIt expected to serve? Are they still collecting or have notices gone out to homesquatter that payments now go to OwnIT Mortgage? Does the servicer still have rights to conduct forclosure? How many of this issues will create easy techinicality blocks to eviction and foreclosure?

Somebody somewhere is going to be coming for the money, that I’m confident, but how long will it take to legally sort out who has rights to the money?. My question is basically three fold:

1. How quickly will the defaulting homeowner of A123 get the boot? IOW, will they get evicted on a pretty regular NOD default timeline or not? Highly dependent on the exact status of your loan. However, if you’ve already received a notice statement your loan was transferred from A to B and B is BKed…

2. With the attempted return of the loan to the originator for servicing and ownership, how long will it take for the legal owner of the property to complete foreclosure, REO the property and return it to marketplace?

3. If say, Morgan Stanley attempted to return “A123” from an MBS to OwnIt, but OwnIt hasn’t repaid the debt and went BK, who actually owns the loan A123? OwnIT? or Morgan Stanley?

My concern is a surge in properties going NOD and returned to the sub-prime originators that sprung up like poppies in the spring during 2003-2005, will those properties essentially fall out of the housing pool for two, three or five years as bankruptcy and ownership of the loan rights sorts out? Will confusion with loan ownership as MBS’s return loans and originators BK essentially drop homes into a legal blackhole were they can’t be bought for a few years?

More importantly, will a crafty home squatter be able to use California’s laws to delay eviction on technicalities or due process even though they are not paying because of uncertainty in whom should be paid?

[Anonymous]

What if YOU own a home

with a subprime Ownit mortgage? Might you not be concerned about payments you send to a loan servicing company that is dealing with a lender in bankruptcy? I’d sure as hell be concerned that my payments were being recorded correctly and not flying off into bankruptcy land.

Remember that once an entity files for federal bankruptcy protection, the court appoints a receiver for that entity to handle financial transactions. Much of this should be transparent to the borrowers affected; i.e., they in all likelihood will continue making their payments as usual and having their loan balances reflected as usual. I would take extra care to make sure that any escrowed funds for taxes and insurance are properly accounted for. It might be a good time to call the county and the insurance company and just verify that things are on the up-and-up.

[Author]

Posts