INSULTED JUDGE'S REVENGE
DEUTSCHE BANK LOSES KEY SUBPRIME FORECLOSURE CASE
November 15, 2007 -- A ticked off federal judge in Cleveland could complicate the subprime mortgage mess.
In a recent ruling, Judge Christopher Boyko tossed out a bunch of real estate foreclosure claims made by Deutsche Bank because he said the Wall Street firm couldn't prove that it was the owner of the property.
Worse for Deutsche Bank, a trustee for the mortgages, Judge Boyko took exception when the bank's attorney claimed the jurist just didn't understand how the complicated mortgage business works. Boyko's ruling came last month but is just now coming to light on Wall Street.
A bank will lend money to someone who wants to buy real estate. But then the bank usually takes the loan and sells it to Wall Street.
Wall Street puts that loan together with many others and creates a security that is sold to investors.
Often homeowners don't even know this transaction has taken place because they continue to send their monthly payments to the bank that granted them the mortgage.
If Judge Boyko's decision stands up to appeal, retrieving assets through a foreclosure could be more difficult.
And while Wall Street and the banking community could obviously fix the paperwork problem, the Boyko ruling could complicate pending foreclosures.
In a footnote to the ruling, Judge Boyko said "Plaintiff's 'judge, you don't under stand how things work,' argument reveals a condescending mind set and quasi-monopolistic system where financial institutions have traditionally controlled, and still control, the foreclosure process."