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Motions For Relief From Stay Come Under Fire

John O'Connor
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The ever so common motion for relief from stay is an everyday occurrence in the bankruptcy world. Creditors looking to bypass the expansive protections of the automatic stay file motions so that they may attempt to take back their precious collateral. Any party making a motion for relief from the automatic stay must have standing to do so as a party in interest. In most cases, the moving party should be the mortgagee or note holder seeking to proceed with a temporarily frozen foreclosure. This relatively simple process has been complicated by the widespread securitization of mortgages. When a note has been assigned four or five different times only to be held in a ‘REMIC’ that exists for tax purposes, who makes the motion for relief from stay? Can Wachovia Bank Commercial Mortgage Trust, Commercial Pass Through Certificates Series GG-6 2006 make a motion? In March alone, at least three courts in at least eight cases have denied motions for stay relief on the grounds that the moving party failed to show that it was entitled to the relief sought. Although there is often no pecuniary benefit, trustees are objecting to motions for relief from stay based on standing. In many of the March decisions, the motion for relief was filed in the name of Mortgage Electronic Registration Systems Inc. (MERS). MERS is the mortgage industry’s registration and tracking system that tracks the ownership interests and servicing rights in mortgage loans as they change hands after an assignment. However, MERS is not owed any money on mortgage obligations, is not a lender and lacks standing to make lift stay motions.

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John O'Connor

About John O'Connor

John O'Connor is the founder and president of the National Bankruptcy Forum. He began his legal care... View Profile »

One Comment

  1. John O'Connor
    Brian June 25th, 2011

    So if the pretender lender has fabricated assignments to make it look as though the debt was transfered to them properly how can they prove standing if i have correspondance from the bank that fannie mae owns the loan and we both know fannie dont own it either the wall street boys bought ll those certificates to the fannie remic trust
    Would you say in your opinion the trustee in this bk 7 will challange any and all purported creditors to standing?
    I have not filed yet and also the woman who assigned the the note and deed together as one ,was the assignor and the assignee wearing the hat of three different banks on the same day and she is being sued in another state for robo signing
    Any insight would be grateful
    Thanks Brian

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