Delaware court hears cases on sub-prime mortgage documents
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TEXT OF INTERVIEW
JEREMY HOBSON: All the mortgages that brought us into this economic downturn are nothing more than pieces of paper. So you can imagine the worry associated with the outcome of two hearings today in Federal Court in Delaware. At issue is whether two bankrupt sub prime mortgage lenders can trash thousands of boxes of original loan documents.
Marketplace’s Alisa Roth is with me live here in the studio in New York with more. Good morning.
ALISA ROTH: Good morning.
HOBSON: What exactly are these hearings about?
ROTH: Really, as you said it’s about the fate of thousands of boxes of documents. In one case there are 18,000, in the other it’s around 4,000. Again, as you said these are two similar, but distinct cases we’re talking about — about sub-prime mortgage lenders that went bankrupt. Now, the problem is — it’s expensive to store these documents. So the question is, whether it’s okay to get rid of them. You remember those cases where banks had to stop foreclosures because it wasn’t clear they had the legal right to foreclose on those properties. Now the original paper work like the ones that may be in these boxes turned out to be very important for those cases. In at least one of these cases the U.S. attorneys are arguing that destroying these documents could threaten to impair federal law enforcement efforts, that is the government may need some of these documents to prove whether banks have the right to foreclose on certain properties.
HOBSON: Alisa, do we know much more about what’s in the boxes that are at issue today?
ROTH: It really depends who you ask. Supposedly, all of the document that are left are related to very old mortgages that are more than eight years old. Other people say that’s just not true. Nobody’s gone over the documents properly and that they might still have important papers in them, and those could be papers investors would need if they’re going to foreclose.
HOBSON: Marketplace’s Alisa Roth here in New York, thanks so much.
ROTH: Thank you.
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