One of the side effects of our modern economy has been the development of investment banks from a special entitled entity, with specific functions, to a fully functional part of the banking complex. Unlike commercial banks and retail banks, investment banks do not take deposits. From 1933 until 1999, the United States maintained a separation between investment banking and commercial banks, but today, things are changing.

Primarily, investment banks do two things today. First, they act as an agent by underwriting or acting as a clients agent in the buying and selling of securities. Secondly, they act as a researcher in assisting companies involved in mergers and acquisitions, and provide ancillary services such as market making, trading of derivatives, fixed income instruments, and a variety of other transactions.

In recent years, investment banks have been delving into sub prime loans in the housing industry. Numerous investment banks between 2005 and 2009 went belly up exercising this practice. Today, the investment banks surviving the financial crisis of 2009 have scooped up the mortgage loans from the other defunct banks at a large discount. One of the side effects of this practice has caused aggressive investment banks to seek out bargain foreclosure loans. In effect, they are literally fishing for foreclosures.

A commercial mortgage bank, in a lot of cases, is all too willing to cut their losses, and sell the foreclosure loans. Such might have been the case after the Bank of America foreclosed on one of its mortgage loans. Following are excerpts of a news article of the event posted on June 2, 2011, on The Atlanta Journal Constitution website and written by Tammy Joiner:

“A Bank of America branch manager in Riverdale faces jail time if the banking giant continues to ignore city orders to demolish a vacant, fire-damaged home. The bank, however, says it can’t comply because it doesn’t own the home. Riverdale city officials have tried for more than six months to get the bank to tear down the dilapidated property, and the bank has ignored requests to appear in court, city attorney Deana Johnson said.”

It use to be we all knew who we were dealing with when we financed our homes, but today, the new banking rules, or the lack thereof, have changed things. In the news story, even the city officials are not in the know of who owns the property. Maybe, the Bank of America has made a mistake and doesnt know for sure whether or not they own it, but most likely, they sold the mortgage loan to an investment bank. On the other hand, they may contend the homeowners never transferred the deed, but their action is going to raise the question of whether ownership of a home goes with a houses deed, foreclosure proceedings, or mortgage loan contract. It will be interesting to find out just how the local courts decide on this issue.

The city is currently fining Bank of America $500 everyday the house has not been raised, and a city judge has set a hearing for June 28th for the bank to show cause why the local branch manager should not be arrested for contempt of court. This past Wednesday, the bank hired an Atlanta law firm to handle the case.

Foreclosures are one of the leading causes for forcing a debtor into bankruptcy protection. Fishing for foreclosures seems to complicate the issues. Bankruptcy laws and foreclosure laws are sometimes very complex, and common sense dictates you might need either a bankruptcy or foreclosure lawyer to help you understand how these laws may apply in your particular situation.

If you determine you are in need of relief from the stress associated with debt and you live in or around the metropolitan area of Syracuse, New York, contact us here today at . We will help you find a bankruptcy attorney in your area that will help you with any questions you may have on bankruptcy law.

 

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