"The dog ate my mortgage"

A column in Sunday's New York Times explores the way that homeowners, aided by various courts across the country, are pushing back against foreclosing lenders. At the peak of the past real estate boom, I remember a busy attorney telling me that the entire financial system was geared to rapidly executing and recording mortgages so that they could be shipped off to Wall Street and repackaged for investors. The complaint was that the entire system was electronic and fast until it reached a standstill at the paper-based registry of deeds. It seems that our financial system never got in sync with our recording system, so now lenders commencing foreclosure proceedings often do not have the documentation necessary to show that they in fact hold the mortgage. Such was the case in a New York bankruptcy case. The end result? The judge ruled that the debt secured by the mortgage was void and unenforceable. While that is undoubtedly an extreme case, it is in some ways indicative of what is happening around the country.