October 21st, 2010
Amidst the Government’s halt on foreclosures, Bank of America has stopped seizing foreclosed homes in all 50 states, but is continuing to sell homes that have already been foreclosed on and is still processing new foreclosures.
Outside the major banks and even in states that do require a judge to look over the bank’s shoulder, foreclosures are going forward at a head-spinning pace. The nation’s regrettable mortgage crisis continues. One million residences have fallen into foreclosure since 2006 and an additional 5.9 million are expected over the next four years. Lenders and investors will have to acknowledge huge losses and try to figure out how to keep borrowers making at least some monthly payments.
However, when the housing disaster ends, the lenders’ contention that they have done as much as possible to limit foreclosures and follow appropriate laws in doing so is hollow at best. The industry simply has not stepped up to address the volume of the problem. And as the crisis moves forward, more people are falling through the cracks.
For lenders and loan servicers, civil lawsuits claiming deceptive sales practices or violations of consumer protection laws are becoming more prevalent as foreclosures grow in numbers. The Mortgage Electronic Registration System, which was created to handle mortgage transfers between member banks, is facing its own legal problems. A lawsuit filed on Sept. 28 in federal court on behalf of Kentucky homeowners claims that MERS was part of a conspiracy to create false promissory notes, affidavits, and mortgage assignments to be used in mortgage foreclosures. Similar class action suits have been filed in Florida and New York.
Title insurers will also be in court bringing and defending lawsuits. The insurers will be going after banks or whoever has assured them there was a clear title. The costs for title insurers to defend customers and reimburse for lost properties rose 14 percent, to $480.5 million in 2010’s first half.
Persons buying homes in foreclosure are facing their own worries as paperwork errors raise question about the validity of the titles needed to prove ownership. Defective documentation has created millions of blotched titles that will plague the nation for the next decade.
Meanwhile, as public outrage continues to mount, many homeowners are reclaiming their homes through the Courts.
In general, Judges are unlikely to look favorably on a bank that claims paperwork flaws do not matter because the borrower was in default on the loan. There must be some integrity in the foreclosure process and the conduct of lenders pursuing their right under loan documents.
Tags: Bank of America, dallas board certified attorney, false promissory notes, foreclosed homes, foreclosures, halt on foreclosures, MERS, mortgage assignments, mortgage crisis, Mortgage Electronic Registration System, mortgage foreclosures, new foreclosures, of consumer protection laws, Texas Foreclosures, title insurers
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September 15th, 2010
In the continuing foreclosure crisis, millions of people are losing their homes. Disorganization within big banks that service mortgages is making a growing problem even worse. The number of cases is growing wherein the breakdown within the banking system is so absolute that it leads to mistaken and/or premature foreclosures. Many have lost their homes. Some homeowners, however, with the assistance of an attorney or housing counselor, have been able to reverse a foreclosure.
In the worst case scenario banks actually work at odds within themselves, with one arm of the company foreclosing on the home while the other arm offers assistance to the homeowner. This problem is occurring even among the servicers participating in the administration’s current $75 billion Home Affordable Modification Program. Servicers operating under the year-old program are forbidden from auctioning someone’s home while a modification decision is pending. However, homes are still being foreclosed on and auctioned off anyway.
The problem seems to lie in a lack of enforcement, lack of punishment and oversight. The Treasury Department has failed to penalize the servicer for breaking the program’s rules. Treasury officials overseeing the program say they’re aware of the problems and have moved to fix them. However, some states are moving forward to protect the homeowners with recent rules that stop the foreclosure process if the homeowner requests a modification.
Many homeowners have sought assistance through the courts to reclaim their homes. At a minimum 50 homeowners have recently filed lawsuits alleging a servicer foreclosed on their home while a loan modification was pending and while they were on a payment plan.
Homeowners commonly wait 6 months for a decision on a loan modification request. The new federal program for encouraging loan modifications includes a 3 month trial period, after which servicers are to decide whether to make the modifications permanent. Some homeowners are saying they have waited as long as 10 months for an answer only to be turned down resulting in misrepresentation and failure of the modification.
Millions of struggling homeowners have inundated banks and other servicers – Bank of America is the biggest, followed by Chase and Wells Fargo Bank – for assistance in an effort to avoid foreclosure proceedings. Communication breaks down because of the way in which the servicers are structured. While one division typically deals with loan modifications, another division deals with foreclosures. Often one division is not communicating with the other division.
Homeowners need to beware of companies that state they work with large banks to avoid foreclosure and of companies charging fees for their assistance. Many homeowners are entering into the loan modification process only to learn that while the modification is being reviewed their home is being foreclosed on and ultimately losing their home.
Under the new federal program, servicers must give borrowers a written denial before foreclosing. However, the servicer is allowed to push along the foreclosure process and even set a sale date. This allows the servicer to foreclose more quickly if it is determined that the homeowner doesn’t qualify for a modification. Ultimately, a homeowner may find that they get a modification offer one day and a foreclosure notice the next.
It is possible to contest a foreclosure under the new federal program. New rules issued by the Treasury Department say the servicer must first give the homeowner a shot at a modification before beginning the foreclosure process. If your home is being foreclosed on and you have sought to modify your existing loan, make sure you seek proper legal advice. The sooner the better and preferably, BEFORE the foreclosure date.
Tags: avoid foreclosure, avoid foreclosure proceedings, dallas home foreclosure, foreclosure, foreclosure process, foreclosures, Home Affordable Modification Program, home foreclosure attorney, home foreclosure process, home loan modification, housing counselor, loan modification, reverse a foreclosure
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