Several years ago we tracked down what appears to be a "little-known"
fact about credit extended via the Federal system: The only true
security a bank or mortgage company has is mortgage insurance. The
property financed does not secure the loan. In all cases, the borrower

pays for mortgage insurance, and in the event he is unable to pay the
debt, the financial institution has recourse against the insurance.

It takes a Philadelphia lawyer to figure it out, but if you study
Regulation Z (12 CFR § 226) and follow leads from there, you can
unravel the maze. The borrower, in the event he is unable to pay, has
the right to rescission.

Anyway, about two weeks ago Gail sat with her son-in-law at an Enid
hospital while her oldest daughter had surgery. While they were
shooting the breeze, she told Wayne about the mortgage insurance thing.
Normally he isn't too attentive to law subjects, but he must have
picked up something in the course of that particular conversation.

Last weekend while he was at his National Guard weekend, one of his
longtime friends was down in the mouth. The guy suffered a work-related
injury about six months ago and has missed work, as well as Guard
meetings, for most of that time. Due to the financial broadside, his
home was at the brink of foreclosure. Wayne recited what Gail told him

about mortgage insurance.

Monday the guy marched himself into the mortgage company and informed
them to collect on the mortgage insurance in order to catch payments up.

The guy was so excited when he called Wayne that Wayne didn't recognize
his voice and had to ask who the caller was. Evidently the mortgage
company account officer completely changed disposition when the guy
requested relief via the insurance policy.

"Oh, we forgot about that," was the supposed excuse. "We will take care
of it. Don't worry about a thing."

Technically, fraud is the only reason a bank, if it had standing, could
foreclose a mortgage. The insurance is available for the eventuality of
default regardless of cause other than fraud.

The irony is that the guy who made it work doesn't know anything about

law. He's a working Joe who so far as I know doesn't have anything to
do with the patriot community. When he heard that he had been paying
for the mortgage insurance since taking the mortgage (banks and
mortgage companies never give you a copy of the policy), he bellied up
to the bar and demanded to collect on it. In other words, he
spontaneously did what I've been thinking on off and on for the last
several years and was successful because he had the confrontation
before the situation got to the point of foreclosure litigation.

I would suggest that people who have mortgages request copies of
mortgage insurance policies from the financial institution or the
insurance company. You pay for it, you just as well know how to collect
on it.

Dan Meador