Foreclosure hearings, called Rule 120, may be too limited to help borrowers - The Denver Post

Foreclosure hearings, called Rule 120, may be too limited to help borrowers - The Denver Post:

"Confusion still exists

Among the arguments borrowers sometimes raise but that aren't accepted in Rule 120 hearings is that lenders didn't follow disclosure rules or committed outright fraud in originating the mortgage.

Judges in judicial states have also thrown out foreclosures based on the legal concept of 'real party of interest.' A lender who doesn't control the note or deed of trust doesn't have legal standing to initiate a foreclosure.

Robinson, who has successfully used that legal argument, said much more confusion about the ownership of mortgages exists than the lending industry is willing to admit.

He has had cases where a bank claiming to act as trustee for a mortgage pool really wasn't the trustee. And some borrowers have faced foreclosure actions from competing lenders claiming to hold the deed of trust.

Robinson has also fought cases where lenders didn't properly endorse the promissory notes they obtained from other lenders, or did it long after the fact.

Such confusion exists because mortgages are often sold and transferred multiple times before they end up in loan pools owned by hundreds of investors.

Colorado law tries to address that issue by requiring those initiating a foreclosure to certify they are the 'qualified holder' of the note and the deed of trust."