Being forced to move from one’s home because one can no longer afford to make the payments is a problem devastating thousands of families throughout the United States in today’s tough economy. Borrowers whose equity has evaporated in the struggling economy have little or no excess funds to use to save their homes. Mortgagees have turned to the banks for assistance with home loan modifications and refinances as an alternative to the unavoidable humiliation and financial disaster resulting in a foreclosure, making it difficult – if not impossible – for them to maintain or acquire a new home mortgage for years after.
How bad is it? RealtyTrac, the online foreclosure listing service, reports that during the three summer months, the number of default notices, scheduled auctions of foreclosed homes and bank repossessions climbed to 930,437, up by nearly 4 percent from the previous quarter. During this period, one in every 139 houses in the United States received a foreclosure filing. Foreclosures in the United States grew 21% in 2009. At this time, there is no set number for 2010; however, one can bet it will be a daunting figure.
Foreclosures involve documents that must be properly submitted before the actual foreclosure can proceed legally. Homeowners, lawyers and analysts have been citing problems with foreclosure documentation for the last few years, but it appears to have reached such intensity recently that banks are beginning to re-examine whether the foreclosure papers are being prepared properly and whether homeowners are receiving proper statutory notice prior to foreclosures.
Today it is not uncommon for the original note and deed of trust signed by the parties to be sold to a mortgage servicer who does not maintain the original signed documents on-site. A deed of trust contains specific foreclosure language and procedures that must be followed in the event of a default. The servicer therefore has no clue as to what notices may exist in the note and deed of trust.
One of the leading culprits of the foreclosure crisis is a lack of communication within the banks themselves. While the loan modification department begins working with mortgagees to refinance and/or modify their existing loan, the delinquent loan is forwarded to the foreclosure department to initiate foreclosure proceedings. In some cases the home mortgagees are told to stop making payments so their loan will become “toxic.” They are led to believe that this will assist with the modification being pushed through. Unfortunately, by the time these families find out that they do not qualify for the loan modification, the home is already set on the foreclosure block or sold without proper notice to the homeowner.
Lawyers are discovering documents signed by Lender employees who say they have not verified crucial information such as the amounts owed by homeowners. Other problems involve questionable legal notarization of documents, in which, for example, the notarizations predate the actual preparation of documents — suggesting that signatures were never actually reviewed by a notary. Affidavits are placed on foreclosure documents that swear to the accuracy of the foreclosure proceeding even though the procedures stated have not been followed. Frequently the “affiant” has no personal knowledge when the affidavits are signed.
Other problems occur when notarizations take place so far from where the documents were signed that it was highly unlikely that the notaries witnessed the signings, as the law requires.
On still other important documents, a single official’s name is signed in such radically different ways that some appear to be forgeries. Additional problems have emerged when multiple banks have all argued that they have the right to foreclose on the same property, a result of a murky trail of documentation and ownership.
The sad shame of it all is that the industry that helped create the home mortgage crisis, is now feeding the crisis through bad business practices. Many believe the foreclosure crisis is having a ripple effect, a drop in city revenues, a spike in crime, more homeless and vacant properties. Cities are cutting revenues.
If you have received notice of foreclosure or you believe that your home has been improperly foreclosed on, contact counsel immediately. It is far easier, more effective and less costly to stop a foreclosure from taking place before the fact than it is to reverse a foreclosure after the fact.
