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Why real estate is making me crazy

Ann borrows money from Big Bank secured by mortgage on her house. Big Bank borrows money from Conglomerate Bank and assigns Ann?s note and mortgage to Conglomerate. Big Bank doesn?t tell Ann about the assignment. No one does. Ann makes all her payments to Big Bank.

A little while later, Ann sells her house to Steve and by the closing, Ann pays off Big Bank in full. Steve moves into his new house. Steve is happy. Ann moves into her retirement community. Ann is happy.

Big Bank declares bankruptcy. Conglomerate has never seen a dime from Big Bank. Conglomerate is not happy.

Conglomerate doesn?t think it can get anything from bankrupt Big Bank, so it can sue for payment on the assigned note and mortgage:

A) Ann
B) Steve
C) Both
D) None of the above (tough sh*t, Conglomerate)

___________________________

Obviously, there is more than one correct answer, depending on the "it depends." But the fact that any approach leads to anything but D blows my mind. Comments later today (or sometime thereafter) will have an explanation.

Full post as published by Butterflyfish on December 08, 2008 (boomark / email).