The Bizarre Mortgage “Settlement” Negotiations « naked capitalism: "Frankly, the best we can hope for is that no deal results. The Arizona Senate, by a 28 to 2 margin, passed a bill that would void foreclosure sales that lacked a full title history. The language is draconian:
ANY PERSON WITH AN INTEREST IN THE TRUST PROPERTY MAY FILE AN ACTION TO VOID THE TRUSTEE’S SALE FOR FAILURE TO COMPLY WITH THIS SECTION AND IS ENTITLED TO AN AWARD OF ATTORNEY FEES AS WELL AS DAMAGES AS OTHERWISE PROVIDED BY LAW IF THE PERSON SUBSTANTIALLY PREVAILS, INCLUDING AN AWARD OF ATTORNEY FEES FOR ANY INJUNCTION OR OTHER PROVISIONAL REMEDIES RELATED TO THE CLAIM.
The award of attorney’s means servicers have a lot to lose (sadly, the losses on the inability to foreclose are borne by the investors, not the servicer). If the failure to convey notes to trusts is as widespread as we believe it to be, having one or two of the epicenters of the foreclosure crisis effectively halt foreclosures (by only letting servicers that really do have standing to proceed), investors are not likely to take that sitting down. This may force them to pull the trigger and take action against trustees for falsely certifying that notes had been conveyed to securitization trusts in accordance with the terms of the pooling and servicing agreement"