I was researching a New Jersey loan last week, and as I looked at the Pooling and Servicing Agreement, I realized the loan was originated well past the closing date of the particular pool that claimed to have authority to foreclose in their lawsuit. And frankly, the Foreclosure Complaint was one of the sloppiest I’ve ever seen — you can certainly tell that these foreclosure firms are stretched in terms of their workload.
During my research, I also checked to see if the Mortgage Loan Schedule was attached to the PSA. It was not.
However, as I was digging around in the securities information, I stumbled upon the Free Writing Prospectus, which looked an awful lot like a mortgage loan schedule.
I just stumbled onto all of this, and what I’m about to share isn’t 100% tested.
The Free Writing Prospectus (“FWP”) is a section of the prospectus where the party making the offering can tell prospective buyers more about the offering/security. In the case of the loan I mentioned above, the FWP was essentially a list of the loans that the pool identified to be transferred into the pool before the closing date. It appeared that it was a “look at the list of loans we’ll be putting into this pool” document.
There were pages and pages in this list; I used the tools I described in DIY Mortgage Review for Borrowers from the sections on researching the securitization of your loan.
My thought is the same party was not preparing all PSA’s, so I’m not sure if the elusive mortgage schedules have been hiding in plain sight or if this was just coincidence.
Regardless, I would encourage you to spend a little extra time looking for the Free Writing Prospectus and see what additional details the offeror gives about that particular pool in that document. I looked at another PSA for a different case and didn’t see one, so I think this may only be on some PSA’s.
If you want to look for the FWP, the prospectus is the initial document that explains the securities offering. If they are going to use it in the manner I described above, the FWP should be among the earliest filed documents for the mortgage pool.
If you find a FWP for the mortgage pool you’re researching, look to see if something that looks like a loan schedule is on that document. If so, use the information in the DIY for Borrowers or DIY For Professionals on researching securitization to determine whether your loan is in that pool.
In the instance I gave above, I already knew that the loan was originated well after the closing date, so I would have been really surprised to find it among the loans listed on the FWP. Based on my research, the bankers knew exactly which loans were going into each pool well before the closing date — would they have formed these pools if they had no idea which loans they would invest in? That’s a big risk, so I’d say no.
So why would a bank bring a lawsuit in the name of the wrong pool? Well, because 1) they don’t know which pool owns it, 2) check out this old post I did in 2011 about how they packaged these loans. I think they got their drawers mixed up, or more than one pool thinks they own it.
It’s always fun to find evidence that may help the homeowner keep their home! You may remember that Dave Campbell survived a Motion to Dismiss in Arizona on this same issue. New Jersey is not nearly as difficult when it comes to case law, so I am very hopeful that this particular homeowner will get a great outcome.
If you research your loan using the information in this post, please let me know!