Why your bank may not be able to reposess you

$$$_12

Hilarious goings on in yesterday's Torygraph. The basics are that a big German bank - having sliced and diced it's mortgage debt - is having a bit of trouble proving it has a right to foreclose in the US.

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/11/16/cndeutsch116.xml

Putting 2 + 2 together, with a dash of wild speculation, and making 7 is anyone wondering if this might apply to the Northern Rock? And if so this could be bigger than reclaiming illegal bank charges!

ruby2

Thanks for the post $$$

It will be interesting to see how this plays out.

maninthestreet

What's 'hilarious' about this? It ceases to be funny when the first bank goes to the wall as a result of this. A full blown banking crisis is not a laughing matter.

Ian_W

Putting 2 + 2 together, with a dash of wild speculation, and making 7

Rather an understated health warning IMHO! :rolleyes:

is anyone wondering if this might apply to the Northern Rock?

You obviously are but I don't really understand why. AFAIK NR has no exposure to US sub-prime lending so why would it go to the US courts to evict someone who defaults on one of their mortgages here?

And if so this could be bigger than reclaiming illegal bank charges!

Didn't know the US courts had ruled on bank charges - or the UK ones yet, for that matter.

Why your bank may not be able to reposess you

Why? Don't see the relevance of what a US district judge, who may be appealled, has to do with the price of fish in Grimby!
You may have missed it but a few hundred years ago the Yanks decided [shortsightedly in my view] to leave His Majesty's Empire and strike out alone. Since then they've even enacted laws some of which are quite different to ours and they even have their own courts and no longer use the Privy Council as the supreme court.
Upstarts who'll never prosper IMO - but there you have it.

ManAtHome

$$$ wrote: »

this could be bigger than reclaiming illegal bank charges!

Certainly could be - how quickly do you think you could adjust to a world without money.

LOL - you'd have to change your username for a start...

geordie_joe

Ian_W wrote: »

Why? Don't see the relevance of what a US district judge, who may be appealled, has to do with the price of fish in Grimby!

I think you missed the point, which is as I see it........

A bank lends you money to buy your house, it then sells your debt to another bank, or banks. It doesn't keep records of individual debts, just that it sold a billion to this bank, a billion to that bank and another billion to the other bank.

You then don't repay the debt and the bank tries to repossess your house. But the bank can't prove that it didn't sell the debt you owe to another bank, therefore can't prove you owe them the money.

As the bank can't prove it still owns the debts, because it didn't keep records, the judge says the bank can't reposes the house.

It doesn't matter what countries are involved, or what banks, if the bank hasn't kept a record of individual debts but has sold some it can't prove who owes it money and who owes the bank it sold some of it's debts too.

The person who suggested this could be bigger than reclaiming bank charges is right.

If the banks haven't kept a record of which debts they have sold and which they still own they can't prove anyone owes them money. If they can't prove you owe them money they can't make you pay it back, and they can't reposes your house.

geordie_joe

ManAtHome wrote: »

Certainly could be - how quickly do you think you could adjust to a world without money.

We had money for at least a thousand years before banks were invented, and we could do it again.

ManAtHome wrote: »

LOL - you'd have to change your username for a start...

Why, pennies, shillings and pounds were around long before banks were, and will be long after banks are gone.

Banks didn't invent money, banks were invented to take money from people.

ManAtHome

And how much money do you have on you at the moment and how much is in a bank? And your employer/customers - how long before their cash runs out if there is a run on all banks?

Also as there is little or no actual backing for for most money currency in circulation what is there to trust on these little bits of paper? (Un)fortunately, things have moved on a lot over thousands of years...

lr1277

If this happened in the UK, I suspect the Chancellor would bail out NR.


Oops! Silly me, he is already doing this.

Ian_W

geordie_joe wrote: »

I think you missed the point, which is as I see it........
I think you might be right - because I've certainly missed it again now you've kindly explained it.
A bank lends you money to buy your house, it then sells your debt to another bank, or banks. It doesn't keep records of individual debts, just that it sold a billion to this bank, a billion to that bank and another billion to the other bank.
Right, so Mr Barclay rings up Mr Lloyds and says I've got a £billion squids worth of mortgages I can let you have on the cheap, save faffing about we haven't bothered putting a legal charge on the property at the land reg or getting the borrower to sign a mortgage agreement. Hmmm, with you so far.
You then don't repay the debt and the bank tries to repossess your house. But the bank can't prove that it didn't sell the debt you owe to another bank, therefore can't prove you owe them the money.
Ha, ha. So it didn't put a legal charge on the property or get you to sign an agreement, now I'm with it. But you said it had sold the debt
As the bank can't prove it still owns the debts, because it didn't keep records, the judge says the bank can't reposes the house.
Assuming, of course, it really didn't keep records.
It doesn't matter what countries are involved, or what banks, if the bank hasn't kept a record of individual debts but has sold some it can't prove who owes it money and who owes the bank it sold some of it's debts too.
No I really agree that the fact it's a German bank trying to repo American's homes would have absolutely no influence on a US district judge, would have been just the same if it had been a US bank that the judge held shares in, I'm sure.
The person who suggested this could be bigger than reclaiming bank charges is right.
Well if what you say is right then it would be as every bank would be bankrupt, which would mean so would almost every business and public body including the UK Government would also be bankrupt. Yiphee, no-one would have to go to work on Monday, oh but nobody would have any money or savings. Might take a bit of adjusting to when you think about it.
If the banks haven't kept a record of which debts they have sold and which they still own they can't prove anyone owes them money. If they can't prove you owe them money they can't make you pay it back, and they can't reposes your house.
Of course the banks may have actually kept records and put legal charges on each property and in the vast majority of cases not sold mortgages to other banks.

Only my opinion and I could be wrong.

geordie_joe

ManAtHome wrote: »

And how much money do you have on you at the moment and how much is in a bank? And your employer/customers - how long before their cash runs out if there is a run on all banks?

Yes but, as with NR everyone who went and demanded their cash back got it.

Obviously if it was more widespread then the banks wouldn't have enough cash to give out, but currency is produced all the time. It would just mean that more would need to be produced.

ManAtHome wrote: »

Also as there is little or no actual backing for for most money currency in circulation what is there to trust on these little bits of paper?

The same trust we have always put in them. If we have currency we can swap it for goods and services, and the person accepting it trusts that he/she will be able to swap it for goods or services.

ManAtHome wrote: »

(Un)fortunately, things have moved on a lot over thousands of years...

Yes but the principle of handing over cash for goods or services is still here. Just about everybody in the country is involved in a cash transaction every day.

I just don't see how you can say that if the banks went out of business we would not have money any more! Maybe some people would lose a lot of their money, but that has happened before and we recovered from it.