Bank of America in Deeper Mess: Securities Trustees Never Received Notes

By Kyle Chezum Updated on 11/30/2010

11/30/2010

According to Bank of America employee Linda DeMartini, a team leader in the company’s mortgage- litigation management division, Bank of America regularly kept the promissory notes attached to home loans that had been bundled into mortgage backed securities and sold to investors.  Securitization contracts almost always require that such notes be transferred to the purchasers.

Because the bondholder trustee was not in possession of the promissory notes, U.S. Bankruptcy Judge Judith H. Wizmur overturned a recent foreclosure claim brought by Bank of America against homeowner John T. Kemp.  The homeowner was allowed to keep his home.  This could set a precedent for future foreclosure cases.

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