The nation’s process of securitizing residential mortgages is sound and legal, the American Securitization Forum said Tuesday, as banks and attorneys general squared off in the Senate Banking Committee hearing over the nation’s foreclosure crisis. The ASF issued a white paper Tuesday on the heels of a report on mortgage irregularities from the Congressional Oversight Panel. The COP has called on the Treasury Department to investigate documentation problems in the industry. It's a threat, the panel said, that could call into question the validity of 33 million mortgages in a worse-case scenario. "In its report, the oversight panel reviews previously reported information and offers a troubling interpretation of the facts and laws surrounding the securitization process," said ASF Executive Director Tom Deutsch. "We are confident that the process in which market participants assign and transfer mortgage notes and mortgages is valid, sound and legally binding." The ASF white paper clarifies legal principles and processes underpinning the assignment and transfer of home mortgages and the creation of mortgage-backed securities. "As the study articulates, many of the principles underlying the transfer of mortgage notes and mortgages are centuries old and validated through extensive case law," the ASF said. "Recently, however, in the midst of the worst housing crisis since the Great Depression, some have questioned whether these traditional principles can be reconciled with modern securitization systems," according to the ASF. "The study makes clear that the answer is an unequivocal yes. Common law, as well as the Uniform Commercial Code, continue to validate the legality and enforceability of proper ownership rights in securitizations."
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