How is there a gray area in home foreclosure

[dejr_8]

In the news there is talk about improper paperwork associated with home foreclosures. How can there be any gray area? You have either paid your mortgage or you haven't. Isn't that what it comes down to?

No Politics please.

 

[LuvOrlando]

I tend to think what was happening is that banks started to gear up on enforcing these foreclosures because they want/need their money. Lots of people have stayed in homes that should have been foreclosed on for a long time because banks decided lived in was better then abandoned. Well, at some point the piper needs to be paid. I've been wondering what was going on with the unpaid property taxes these properties are accumulating... the dollar values must be in the untold millions nationwide. The banks now putting the squeeze would mean 2 things. #1, more homeless people so where do we put them? #2, undervalued homes begin to flood the markets bringing down the value of homes even more which further reduces wealth ect. Personally, I think this was just a last ditch effort to force banks into slowing down the inevitable mess that is heading our way. It's not going to be pretty but it is inevitable, the banks will sort this out then march on. The banks are taking heavy hits and taxes still need to be paid, there is a lot of pressure on both sides. The whole thing scares me half to death to be perfectly honest.

FYI, I think the whole thing could be turned around if banks would relax refinancing requirements for people who already have mortgages with them. IF people could more easily refinance what they already have more disposable income would be introduced into financially stable households and the extra spending could push us out and over the bump via the Multiplier (my favorite little worker bee). I looked at out numbers and am checking into a refi that would put hundreds more in our pocket each month for spending, but the banks are skittish which is weird since they are already dealing with me anyway. But what do I know, I'm just a SAHM

 

[Sanchez]

I don't think the gray area is whether the borrowers are delinquent. You are correct in that there are very few substantive defenses to a foreclosure action. Most defenses are procedural and that is where the problems lie.

Foreclosures, like all legal actions, have a defined procedure under state law. Failure to follow the procedure may cause defects in title (or possibly violate the rights of the borrower) making the asset difficult or impossible to sell down the line.

Lenders are inundated with foreclosure actions and it is not a stretch to assume that significant mistakes are being made along the way. Add that to the fact that some states do not require a court to approve the foreclosure and it is entirely possible that significant violations of property rights may occur.

With that said, it appears that the primary reason for some lenders instituting a moratorium is political pressure. I think that one can make a good argument that a universal moratorium will hinder any recovery of the real estate market. Lenders need to get these bad assets off the books.

 

[mikehn]

Banks are expected to ensure all the paperwork is in proper order, just as borrowers are expected to pay on time. It goes both ways.

 

[dejr_8]

I don't think the gray area is whether the borrowers are delinquent. You are correct in that there are very few substantive defenses to a foreclosure action. Most defenses are procedural and that is where the problems lie.

Foreclosures, like all legal actions, have a defined procedure under state law. Failure to follow the procedure may cause defects in title (or possibly violate the rights of the borrower) making the asset difficult or impossible to sell down the line.

Lenders are inundated with foreclosure actions and it is not a stretch to assume that significant mistakes are being made along the way. Add that to the fact that some states do not require a court to approve the foreclosure and it is entirely possible that significant violations of property rights may occur.

With that said, it appears that the primary reason for some lenders instituting a moratorium is political pressure. I think that one can make a good argument that a universal moratorium will hinder any recovery of the real estate market. Lenders need to get these bad assets off the books.

I think this is where I am lost. If you stopped paying your mortgage I really don't see how you have any rights left. I guess that is just an over-simplification of the process to foreclose.

 

[Sanchez]

I think this is where I am lost. If you stopped paying your mortgage I really don't see how you have any rights left. I guess that is just an over-simplification of the process to foreclose.

What if foreclosure proceedings were started against someone who is not delinquent? Someone who has a forbearance? Those types of mistakes would certainly violate the rights of a borrower.

 

[Sanchez]

As to potential procedural rights, you should review the note you signed at closing. You will find that the lender has certain notice requirements etc. I understand what you are saying, but failure to pay does not mean a you give up all rights.

 

[allison443]

I think this is where I am lost. If you stopped paying your mortgage I really don't see how you have any rights left. I guess that is just an over-simplification of the process to foreclose.

Well, in order to foreclose on a mortgage, the bank has to get an order from the court. They just can't foreclose without meeting the standard of proof and producing the documents, etc. to demonstrate to the court that the court should issue the order of foreclosure. Would you want your house to be sold out from under you just on the say so of a bank employee? There could be errors, clerical mistakes, etc.

 

[jen0610]

The gray area as I understand it is how they handled the paperwork. Take the lady I work with.

They last paid a morgage payment December 2008. In July 2009, they submitted to the morgage holder to refinance. They had to submit about 50 pages worth of information. I helped her fax it, so I know how thick the stack was. A month later, they had to submit it again. In Oct of 2009, they find out that the government has closed down their morgage holder and that the morgage has been purchased by BOA - when they got to a meeting at the courthouse that was to be between them and the morgage holder. They are given the contact info for BOA to see about the refinance and to stop foreclosure. BOA says there is nothing in their paperwork to indicate that they had been working on this with the previous company.

BOA tells them to send them all the information that they had on the refinanace. REFAX everything - all the pulled paperwork (plus coplies of these records updated) and any and all correspondence. This was almost 100 pages. She has been sending everything both via fax and overnight. Two weeks after she sends it, they get the foreclosure notice. She calls BOA and talks to the girl she sent the paperwork to - faxed and overnight went to the attention of the same girl. She doesn't have ANYTHING. RESENDS AGAIN.

It's now 4 weeks after they got the foreclosure notice and they are scheduled to do a conference call with their lawyer and BOA. They get to the courthouse and NO ONE from BOA is there. The lawyer calls BOA and according to them that meeting was cancelled, as they had not received all the paperwork for this morgage from the proir holder. When asked why BOA did not let them know this, BOA said they didn't have any contact info for my co-worker. BOA is the one that set up the meeting, notified co-worker and hubby by certified mail, but they don't have any contact info to let them know the meeting is cancelled.

She has since the end of Jan/begining of February, resubmitted all the paperwork they have asked her to another 4 times. When they finally meet with BOA back in June, they were told that BOA couldn't help them out, it was to far out and that if they had contact them earlier they might have been able to work on a refinance for them.

My co-worker is beyond livid!!! She has done everything that was asked of her. Yes, she knows they fell behind, but once they asked for help, it has been one issue after another with the two morgage holders snafus that have let it go on this long. And while I don't agree with them not paying the morgage or a portion of it for the last almost 2 years, I do understand her fustration with the morgage companies and their dropping the ball, then blaming them for not doing something about it sooner.

And yes, I do know what she has had to do. She has asked me to make sure she had all the required paperwork in order every single time she has sent it. So I do know what all was sent and when and to whom it was sent. So, do I feel like there is a gray area all over her situation, I sure do. Someone within the BOA company did not cross their T's and dot their I's, when handling this ONE CASE. If they handled this one this way, how many others got handled in the same manner???

 

[Christine]

In one instance, a BOA employee "robo-signed" 8,000 foreclosure packages in a 30 day period. He admitted to not reading the paperwork. Whether you paid your mortgage or not, the banks owe it to the homeowner to make sure that every foreclosure package has been prepared and reviewed carefully and that the situation has met the terms of foreclosure. It is suspected that this robo-signing has been done at more places than BOA.

 

[WheresFigment?]

That has to do with obtaining a refi, not with foreclosure. If BOA was not legally prohibited from doing so, they could foreclose on your coworker's home. It doesn't matter if she was trying to refinance. She was trying to refinance with a bank that no longer exists, and now has not paid a mortgage in almost 2 years.

The issue here is paperwork for foreclosure. There is a procedure and there is an argument that the bank should have to prove they correctly followed the procedures before seizing someone's home.

Personally, given the number of people I know who have decided not to pay their mortgages since they're now "underwater" I think it is a mistake on the government's part to allow that to continue to happen.

This zero-consequence state we're living in is a real problem. It really sucks that some people lost their jobs and lost their homes, but 10 years ago it would have been your own problem, now suddenly because the economy is bad it's the government's problem. Sorry, no, it's not.

 

[Geoff_M]

Jen0610,

Investigations I've seen have reported much of what you posted, plus issues regarding missing signatures on paperwork, backed-dated signatures, post-dated signatures, banks acting on properties that they are in the process of acquiring from other holders but legally don't own yet, etc. etc.

 

[laurie31]

This article explains the paperwork mess a bit:

http://www.businessweek.com/news/20...age-faced-foreclosure-anyway-ann-woolner.html

Oct. 8 (Bloomberg) -- Jason Grodensky paid cash for a South Florida home last December. With no mortgage and full ownership, he had no fear of foreclosure.

And yet, Bank of America foreclosed on the house seven months later, according to the South Florida Sun Sentinel. The court-ordered foreclosure took place July 15.

Grodensky tried for months to get answers from the lawyers and lenders involved. He got nowhere until he contacted the newspaper which started poking around. Now, Bank of America says it will straighten out the mess at its own cost, the Sun Sentinel reports.

and wow, it's about BOA too. Guess I'll steer clear of them!

Apparently no one was actually READING the forclosure papers in this case, to see that the bank did not now, nor ever, hold a mortgage on that property.

I agree that people who bought too much house are now sadly facing their come uppance, but honestly the banks shouldn't have made those loans in the first place. Both share responsibility. I do think it falls on the borrowers to know what they can afford, but when we bought our house we were really pressured to borrow a LOT more than we did. One place even insinuated that we were stupid for not "saving" $800/month by getting an ARM with a balloon at the end. I can imagine that someone who is less financially savvy, or who believes if the bank says they can afford it, it must be true, could easily be taken in by such crap.

The idea that banks aren't even bothering to keep up with paperwork on their own loans is very disturbing!

 

[LuvOrlando]

Personally, given the number of people I know who have decided not to pay their mortgages since they're now "underwater" I think it is a mistake on the government's part to allow that to continue to happen.

This zero-consequence state we're living in is a real problem. It really sucks that some people lost their jobs and lost their homes, but 10 years ago it would have been your own problem, now suddenly because the economy is bad it's the government's problem. Sorry, no, it's not.

You are right in theory, but think about this. The volume of foreclosures is so incredibly large that if all those houses hit the market en masse only asking for the unpaid balance of the loan how can anyone who is trying to break even ever compete? Everyone in the market for a new home would buy a foreclosed one, to do otherwise would be foolish. This influx of cheap supply would drive down the prices sellers can get for their houses to unmanageable lows. This would then become everyone's problem because our personal wealth would be diminished greatly considering the fact that most American's wealth is sunk into our homes. Personally we could absorb a big cut because our home doubled in value since we bought it 14 years ago but the people who bought recently would be in serious trouble on paper.

The consequences here are staggering

 

[castleview]

We just refinanced and our attorney told us that a ton of homeowners AND their mortgage companies don't have the proper paperwork. Even though it can benefit those not paying their mortgages, a ton of people were foreclosed on without proper documentation.

 

[leight]

There is definately a 'grey area' in foreclosures because lenders have massive black holes.

For example- dh & I were buying a home via the short sale process- one part of the bank(Loss Mitigation) approved the short sale and we were less than 30 days from closing when I went to the home and saw a new for sale sign and lock box. The foreclosure dept of the SAME bank had foreclosed and actually put the home to auction. It didn't sell at the first auction and was brought back but we had to actually work with the Bank's legal department to get the Foreclosure rescinded in the court and to work thru the short sale process. We actually completed the process but it took an extra 3 months and was torturous. That was late 2008. There are many more short sales and foreclosure properties now.

My aunt and uncle bought in late 2007- the high point and were drastically underwater when he had to retire a little early for medical reasons. They worked with the gov'ts plan to refinance at a lower rate and lower principal value and were approved and had paid the new mortgage amount during the trial period of 6 months -only to find out that the bank didn't actually own the mortgage only serviced it and they had to go thru the whole process thru the owning bank- they were foreclosed on because the actual bank who owned it didn't accept social security as income and they didn't accept them into the program.

The big problem is that banks bundled up mortgage's and sold them as investments and the paper trail is so muddied that the government wants to make sure that the right mortgage company is foreclosing on the right owners in default. I've heard about people who sold via a short sale and were later foreclosed on by a separate bank who actually owned the mortgage. The new owners no longer owned the house and the original homeowners had two black marks on their credit- short sale and foreclosure. SO it is important to make sure that the right paperwork is finalized. These steps are long over due but it will make a bad situation much worse before it get s better. Hopefully the gov't realizes that they have to keep banks out of the investment markets!

 

[jodifla]

This article explains the paperwork mess a bit:

http://www.businessweek.com/news/20...age-faced-foreclosure-anyway-ann-woolner.html




and wow, it's about BOA too. Guess I'll steer clear of them!

Apparently no one was actually READING the forclosure papers in this case, to see that the bank did not now, nor ever, hold a mortgage on that property.

I agree that people who bought too much house are now sadly facing their come uppance, but honestly the banks shouldn't have made those loans in the first place. Both share responsibility. I do think it falls on the borrowers to know what they can afford, but when we bought our house we were really pressured to borrow a LOT more than we did. One place even insinuated that we were stupid for not "saving" $800/month by getting an ARM with a balloon at the end. I can imagine that someone who is less financially savvy, or who believes if the bank says they can afford it, it must be true, could easily be taken in by such crap.

The idea that banks aren't even bothering to keep up with paperwork on their own loans is very disturbing!

Holy smokes! This is eye-opening.

 

[tvguy]

Gray areas could include anything from a minor error in paperwork or procedure, to a massie mistake.
We have done stories on people who were being foreclosed upon by banks they didn't have mortgages with.....and in some cases the homeonwer never even had a mortgage, paid cash.

 

[sparklynails23]

They are waiting until after November or early next year. Why put all those foreclosures on the market before Spring when that's the best time for the banks to recoup their losses?

 

[okeydokey]

I think this is where I am lost. If you stopped paying your mortgage I really don't see how you have any rights left. I guess that is just an over-simplification of the process to foreclose.

You still have the right for the process and the paperwork to be handled correctly.