Bankruptcy and Loan Mod Dilemna: Do You Know Who Your Mortgagee Is?

Today’s NY Times has an interesting article about a key issue facing bankruptcy and loan modification attorneys: who holds their client’s mortgage? This is not always so easily answered as Wells Fargo and its borrower discovered. Wells Fargo now finds itself subject to possible sanctions from a Bankruptcy Judge as a result of the confusion created by its internal systems. Read the article here.

In my personal practice, I’d estimate that at least 75% of my clients are confused over who holds their mortgage. Many have experienced the stituation where payments sent to the original lender prior to an assignment were not credited to the account by the assignee. Other clients have complained that they do not even know who to pay. It is sometimes difficult for lawyers to identify which lender or servicing agent to communicate with but at least they can contact the attorneys for a lender if there is a pending foreclosure or bankruptcy case. Borrowers who are pro se are asking for trouble here. They often find it difficult to communicate with lender’s outside counsel. They may lose precious months trying to sort things out, all while accumulating interest, late fees and attorneys fees which are added to their principal.