Does Green Tree Servicing really hold your mortgage?

green treeIn a Massachusetts bankruptcy case, a judge has been asked if Green Tree Servicing LLC can prove it really hold the mortgage it wants to foreclose on.

In the Martin case (October 9, 2013), the married debtors house was underwater, they hadn’t made a mortgage payment since 2011, and they were perfectly willing to let it go to foreclosure as long as they got bankruptcy protection. But in a surprise move, the trustee on the case (the enigmatic Janice Marsh) stepped in and filed her own objection to a foreclosure sale.

Quizzed by bankruptcy judge Melvin Hoffman as to why she would do such a thing if there was no equity in the property for the benefit of other creditors, the trustee intimated that she would be seeking to have Green Tree’s secured claim invalidated, because Green Tree had not produced either the actual note secured by the mortgage, or a substitute affidavit allowed by Massachusetts law.

Judge Hoffman wasn’t biting in this particular instance, and ruled that Green Tree could proceed with the foreclosure process, because Massachusetts law allows separate entities to hold the note and mortgage, and because the trustees’ right to file a lawsuit on this matter still available to her.

But the case highlights a couple of interesting points on the current state of bankruptcy law in the Bay State:

First, with case filings declining, trustees as a group are getting more and more aggressive in their tactics as they try to make money in the legal system.

Second, the alphabet soup type of roulette game Massachusetts mortgages have become is still the bane of any lawyer having anything to do with them. The Martin’s mortgage had already traveled from National City Mortgage (NCM) to PNC Bank, to Green Tree (as servicer) in its brief life, and the note itself had been endorsed in blank, meaning anyone who picks it up could claim to be the debt holder.

Trying to figure out who “owns” a Massachusetts mortgage? Good luck!

 

By Doug Beaton

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