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Foreclosure-Gate: Countrywide “Oops, We Still Have the Note” Snafu

Sports fans, this is a very big deal. As Georgetown law professor Adam Levitin remarked, This opinion could turn out to be incredibly important. It provides a critical evidence for the argument that many securitization transactions simply failed to be effective because non-compliance with the terms of the transaction: failure to properly transfer the mortgage meant that the mortgages were never actually securitized. So ‘natch, Bank of America has to discredit the really damaging part of the testimony, which is that this failure to transfer the note was standard practice at Countrywide. As an attorney said as soon as he read the decision, “That’s exactly what I’d do.” So let’s peel this back layer by layer. First we get the expected denial, as reported by Jody Shenn at Bloomberg: A Bank of America Corp. employee who said that Countrywide Financial Corp.’s policies were to retain mortgage notes later clarified her testimony in a New Jersey bankruptcy case, a lawyer for the company said. “Countrywide’s policy and practice has been and remains to fully comply with the pooling and servicing agreements, including forwarding any necessary documents to the trustee,” Larry Platt, a lawyer at Kirkpatrick & Lockhart, said in an e- mailed statement… “The associate whose testimony was cited in the ruling was asked about a process outside her normal scope of responsibilities and in an entirely different department from where she worked,” Platt said. “A review of her testimony shows she later clarified that she was not comfortable testifying about the circumstances under which original loan documents would move, or whether and to what extent they ever are moved. This would include the initial delivery of original loan documents to the trustee,” he said.

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