But suppose your friend has a friend in the bank and that person is in charge of preparing the papers for closing. The friendly bank person switches out the name of the borrower from you to your friend. The closing agent collects the money from the bank and gives your friend the loan. When the loan goes into default the bank finds that it loaned the money to the wrong person. Having no rights against you they are limited to pursuing your friend who by now is long gone. Unless they prove you had something to do with it, they have nothing on you.
Next, assume your friend goes to the closing for you and he has a power of attorney from you, saying you are out of town or whatever excuse he can think of. The closing agent will most likely not accept the power of attorney unless told to do so by the Bank. The Bank will most likely refuse because powers of attorney are subject to cancellation by death or disability.
If your friend adds that he is your successor because you died and he is the personal representative of your estate, there are even more problems and fewer chances that the bank will accept the successor argument or the power of attorney. The assumption would be that something screwy is going on and the Bank wants no part of it. Suppose the power of attorney is a forgery? What if you are not really dead?
But in the modern era of foreclosures the very same succession and powers of attorney are accepted without question FROM the same banks who would turn it down if it were offered TO them. THIS is why you need forensic auditors to give you a report on where the weaknesses are in the chain of title and the money trail. The best way to determine if an assignment is actually valid is to look at the consideration. Who paid how much to whom? And that is the heart of aggressive discovery. The Banks don't want to get into that because they would be shown to be strangers to the transaction and that the assignment or transfer never actually occurred.
When you went to your loan closing or your client went to their loan closing, there was an assumption that was not true in most cases ---- that the payee on the note and the mortgagee on the mortgage was giving the borrower a loan of money. But they didn't. The money came from investors rather directly through the investment bank that acted as a depository for the funds until they withdrawn for their own fees or to fund mortgages like yours. The party that SHOULD have been on the documents was the actual lender --- i.e., the investor or a group of investors in a REMIC trust if indeed the trust was ever funded, which we are finding is increasingly unlikely.
Now the Banks are saying that just because they had their own reasons not to write the right parties and terms on the loan in violation of their duties to the investors, that the Bank is entitled to foreclose! AND if you look closely you see all the succession language and powers of attorney, endorsements, and mergers, all of which lack consideration for any transfer of any loan because the loan was funded from the beginning by the investors who were forced out of the room.
In Court when the judge enters a final judgment of foreclosure or allows the sale to proceed the Judge is unintentionally stripping the investors of their security rights and stripping the investors of any claim for payment against the borrower --- which was the ONLY reason they advanced money in the first place. This in turn gives the borrower nobody to talk to to find out the real balance of the account receivable, or to address issues of modification.
If the Judiciary wants to see this bulge of foreclosure cases go away, then enforce the mortgages the same you did when there was no securitization. They will vanish in a flash.
Powers of Attorney: A Potential For Fraud