MAMIE RUTH PALMER isn’t a celebrity. People magazine doesn’t chronicle her every move. The paparazzi don’t wait for a photo op outside of the modest Atlanta home where she has lived since 1987.

But in some mortgage circles, Ms. Palmer, a 74-year-old former housekeeper, has earned her moment of fame. After enduring six years in foreclosure hell, almost losing her home twice, Ms. Palmer has escaped intact.

Mamie Ruth Palmer won a fight against the Bank of New York, which tried to foreclose before it owned the note on her

Last month she received a settlement from the Bank of New York, the trustee for a vast pool of mortgages that included hers. Under the terms of the deal, the bank reduced Ms. Palmer’s loan balance to $59,000 from about $100,000 and has agreed to accept the proceeds of a reverse mortgage in full satisfaction of her obligation.

The settlement also eliminated about $12,000 in foreclosure fees added to her debt and called for the installation of central air-conditioning in Ms. Palmer’s home.

Roughly $10,000 in legal fees billed over five years by Ms. Palmer’s lawyer, Howard D. Rothbloom, will be covered by payments she has made toward her mortgage while she was battling foreclosure.

“I feel good,” Ms. Palmer said last week. “It’s been a long time coming.” To celebrate, she said, she is going to Florida to fish with her nephew.

Ms. Palmer’s case is hardly unique. It’s just one of a swelling number that revolve around the thorny issue of who owns the note on a home when it’s forced into foreclosure proceedings.

In the seemingly long-ago era when banks held on to the mortgage loans they made, this was a straightforward matter. But today, amid the freewheeling packaging of mortgage loans into securities that are sold off to investors, it’s much less clear who controls the note — all of which promises to cause banks enormous legal and financial headaches as foreclosures mount.

The added twist is that some judges are taking the borrowers’ side in foreclosure disputes, precisely because of murkiness surrounding notes.

In 2002, Ms. Palmer filed for bankruptcy protection to protect her home from a quick sale on the courthouse steps. She continued to make mortgage payments, to the bankruptcy court.

Mr. Rothbloom took her case in 2003, suing the Bank of New York for levying fees on Ms. Palmer that had not been authorized by the bankruptcy court. The note securing the property was assigned to Bank of New York in September 2002, two months after it had begun foreclosure proceedings against Ms. Palmer. As a result, Mr. Rothbloom maintained, the bank had no standing to foreclose.

The two sides battled for five years, until last month.

“The Ms. Palmers of the world can’t afford to resolve these types of disputes,” Mr. Rothbloom said. “So they usually wind up losing their homes.”

Bank of New York declined to comment on the settlement.

The problems associated with banks that begin foreclosure proceedings when they do not have proper legal standing are now looming larger in the mortgage meltdown. Loans were heaped into trusts with little documentation of ownership or proper loan assignments — it was all about volume and the fees that came with it — and now that sloppiness is hurting both lenders and borrowers.

Mr. Rothbloom said he had another case in which the lender’s representative has been unable to prove ownership for two and a half years.

Meanwhile, consumer lawyers fear that borrowers are being pushed out of their homes by companies that have no right to do so. Such a prospect is particularly worrisome for residents in states that allow lenders to foreclose without court supervision, known as nonjudicial foreclosure states.

Georgia is one; its borrowers can lose their homes on the courthouse steps less than a month after foreclosure notices have been posted.

To try to protect its borrowers, Georgia just instituted a law requiring that lenders moving to foreclose on a borrower must file proof in county records that they own the underlying property before the home goes to foreclosure sale.

“We believe that many of these companies can’t find the assignments,” said William J. Brennan Jr., director of the Home Defense Program of the Atlanta Legal Aid Society. “If they can never prove ownership, then they can never foreclose.”

Another provision in the Georgia law requires that troubled borrowers know whom to call if a foreclosure is imminent. Lenders must send a warning letter that lists the name, address and phone number of the financial entity involved in the foreclosure that has full authority to modify loans or work out repayment.

Not knowing whom to call is another effect of securitization. In the past, lenders knew their borrowers and vice versa; today the holder of the note securing the property is a faceless investor represented by a trustee, like the Bank of New York.

Yet another middle man is the company servicing the loan; it has an obligation to the investor to extract all the money it can from the borrower. And because the foreclosure process can generate lucrative fees, servicers have an incentive to drag out the process, experts say.

April Charney, a consumer lawyer at Jacksonville Area Legal Aid in Florida, said she was happy to see judges across the country demanding more of lenders and their representatives. In addition to demonstrating that they have the right to foreclose, they are also being asked to certify the accuracy of documents outlining such things as amounts owed by a borrower.

When lenders cannot prove that they have the standing to foreclose, Ms. Charney said, offers of settlements or loan workouts often follow. But if the lenders don’t have the standing to foreclose, they may not be able to settle either.

“I ask them to show me some authority to settle, and they don’t have an ability to show that,” Ms. Charney said. “If you realize the loans were not transferred in compliance with the securitization trust, then who does own the loan? As a lawyer I am perplexed.”

Arthur M. Schack, a justice on New York State Supreme Court in Brooklyn, is one of the judges who is putting lenders’ feet to the fire. In 14 published foreclosure decisions handed down since Jan. 1, Justice Schack has granted only one lender the right to foreclose. Of the 13 other cases, he dismissed one outright and dismissed 12 without prejudice. That means if the banks can cure the problems identified by the judge, they can bring the cases back to his courtroom.

“If you are going to take away somebody’s house, you have to do it the right way,” Justice Schack said. “You have to have due process, and the law has to be followed.”

Now that’s a concept.

www.nytimes.com/2008/07/27/business/economy/27gret.html