The recent financial crisis has shed light on the details of investment devices which, until the crisis, were little understood by the public and sometimes even less understood by investors. One of these was mortgage-backed securities, also known as MBS (or RMBS, for residential mortgage backed securities). Previously a term little used outside of Wall Street, the term is now synonymous with risky investments.
In this second paper in a series, Attorney Daniel J. Langin summarizes the flaws in the securitization process that led to the halting of foreclosure cases throughout the country and looks closely at securities litigation in MBS, potential tax and trust law violations, and pending legislation. Attorney Langin discusses a new means of establishing account level chain of title for mortgages that can prevent a recurrence of the current “catastrophic” problems, and create a new standard for documenting assignment and authenticating ownership and default status of mortgage accounts in securitizations.
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