Bad Signatures the Least Concerning Foreclosure Trend

Over the last two weeks, the entire foreclosure industry has been turned upside down. Bank of America's recent decision to put a halt to all of its foreclosure proceedings in the United States last week was the biggest shoe to drop, after weeks of other banks looking into their own potentially flawed foreclosure processes

These news-making decisions hinge on one specific element of the foreclosure process: the banks' signing of affidavits confirming the promissory note. In addition, other signatures, including those of notary publics, have been found deficient, thus forcing a halt to thousands of foreclosures nationwide.
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Several bank employees have testified and acknowledged in recent months that they have not adequately examined these required (in most states) documents before signing off on the foreclosure process. As a result, many inaccuracies and flawed affidavits are leading to orders of foreclosure. The trail of potentially illegal activity includes forgeries and incomplete examination of title documents, with some employees signing off on thousands of documents each month (as many as 250 per day), with hardly a glance at the information contained within the affidavits.
Thus far, Bank of America and GMAC Mortgage are the only lenders to put a delay on foreclosures in all 50 states. JPMorgan Chase & Co. has shut down foreclosures in 41 states. Wells Fargo & Co. is currently investigating its own processes, but has not halted proceedings during its internal analysis. 
So what's to come of this mess? There is already a joint investigation underway with attorneys general from every state and the District of Columbia to reconsider the entire foreclosure process. Initial meetings took place on Oct. 13, but more are on the way, with a potential federal law in the works. In the meantime, states are considering having an independent authority appointed to examine documents related to foreclosure.
Perhaps the most important change might come in the form of increased efforts to modify existing loans. 
Whatever the change, this foreclosure break will allow the courts and lenders to pause for a moment, reconsider the entire foreclosure process, and make some much needed changes.

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  • Two issues raised by the Nightly Business Report last night were that (1) because the mortgages have all been sold, the banks created an entity called MERS that is doing most of the signing, and the banks have not taken any responsibility, and (2) again because the banks are selling the mortgages all over the place, sending the payment to the bank who the mortgagor thinks is servicing your mortgage doesn't result in the payment being credited, and foreclosure proceedings are instituted even though the mortgage is current.

    Thus, it isn't just "scrivener's error," but substantive negligence by the banks and fraud by their agents or assigns. Again, it appeared from the NBR piece, that it takes a vigilant lawyer to look beneath the robo signatures to find the real fraud.

  • It is unfortunate to hear how negligent these banks are. And it is true that they are negligent. Bank employees are as human as you and I and are prone to make mistakes or overlook documents. I have been working with people in my community and helping them resolve mortgage issues. For the most part, BOA is the worst bank to deal with. It's a shame this big banks received a bailout.

    Perhaps, the biggest shame is the economic experts who give testimony on all the news shows claiming the recession is over. They have lost touch with economics of "Main Street." Foreclosures are up and unemployment is not decreasing. Unfortunately, life goes on for the millions of people who are not economic experts.

  • In reply to althav:

    I thought that BoA was taking too many hits for bailing out Countrywide and Merrill Lynch, but it should be responsible for errors in what it is processing now.

    As for your second paragraph, it is a matter of definitions. Recession means "negative economic growth" (an oxymoron itself), but apparently the country dug itself into such a hole that actual economic growth will have to continue for a sustained period before we get out. If is sort of the same issue as if you lose 50%, you have to double to get even. With all the funny money supply exemplified by derivatives now out of the system, it will take a long time to get back to "normal," whatever that is.

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