I just saw that segment on 60 Minutes, too. Scary! It was breathtaking to see the disregard throughout the entire industry (not just a few rogue banks) of administrative/legal basics, such as signatures on documents, during the mortgage securitization heyday.
We’ve all heard anecdotes about this stuff, but the 60 Mins piece showed how pervasive the ineptitude (or worse) was throughout the whole banking industry. Loans were being made and then sold off so fast that the process was concluded before the original bank actually signed the loan documents. As a result, homeowners facing foreclosure have a gigantic loophole to help keep them in their homes.
Any homeowner who sees this segment who is anywhere near getting foreclosed on would be crazy not to demand to see the actual signature page of the loan documents proving that the institution that’s foreclosing on the house OWNS the house. The segment made it seem like most institutions would not be able to produce the document/proof needed.
Leslie Stahl interviewed Sheila Bair, who is urging the banking industry to pay into a cleanup fund to provide for settlements of future homeowner litigation on this issue. She basically said that paying into such a fund would be less costly to banks than having to produce the legal proof that they own the houses they’re foreclosing on, which it sounded like they literally would not be able to do…not just a few rogue banks, but basically most of the industry.
