Countrywide Document Fiasco

Posted by Kevin on November 23, 2010 under Bankruptcy Blog | Be the First to Comment

Last week, Judge WIzmur came down with a written opinion in Kemp v Countrywide.  In that case, Countrywide filed a Proof of Claim which was challenged by the debtor on the grounds that Countrywide lacked standing.

What happened was that Countrywide securitized Kemp’s loan,  Bank of New York (BONY) was the trustee and should have possession of the note.  But, Countrywide never transferred physical possession to BONY.  The Court found that BONY could not be a holder under the UCC because it did not have possession of the note.  BAC, the new Countrywide entity, was not a holder since it was the servicer.  As servicer, it could file the proof of claim as the agent of BONY.  However, since BONY never had possession of the note, it was not the holder and, therefore, could not delegate the task of filing the proof of claim to the servicer.

More of the case details will be posted later this week on my blog at fightforeclosurenj.com.