CitiMortgage modified D’Amelio’s mortgage but she defaulted anyway. Now she claims that Citi cannot foreclose upon her because Fannie Mae is the owner of her mortgage. Her lawyer argues that the mortgage was improperly assigned to Citi, and is contesting the foreclosure on those grounds.
Let’s grant D’Amelio not only the facts but also her interpretation of foreclosure law. Perhaps Citi, which purchased the mortgage in late 2006 and sold it to Fannie Mae in early 2007, shouldn’t be able to foreclose. Maybe the MERS system somehow vitiated any security interest attached to her house through the mortgage.
If Citi doesn't own the mortgage then the woman doesn't owe them any money. If Citi doesn't own the mortgage then it isn't the case that "perhaps" they shouldn't foreclose on her, it's the case that they have no legal right to foreclosure. Citi can't just take possesion of a house, or decide someone owes them money, just because they say so.
And, yes, maybe one day Fannie will get around to a foreclosure process, but Citi cannot just assert control of the mortgage and the property on their say so.
...adding, the view just seems to be "well, she deserves to lose her house so it doesn't really matter who takes it from her."