Untangling The Foreclosure Mess

[jpinpb]

Good interview w/Gretchen Morgenson, who covers the world financial markets for The New York Times.
Untangling The Foreclosure Mess

Since the housing bust two years ago, when millions of homeowners fell behind on their loans, the foreclosure industry has grown into a multibillion-dollar business. To deal with the thousands of defaulted loans needing to be processed, banks relied on thousands of temporary employees who often had little experience and training to handle the foreclosure paperwork.

This resulted in many mistakes being made throughout the foreclosure process. Reports of sloppy documentation — including the questionable notarization of documents, the loss of key paperwork needed to begin foreclosure proceedings and missing paperwork on original mortgages — temporarily halted foreclosure proceedings across much of the country in early October. It also triggered at least five separate federal investigations into the ways mortgage lenders have handled foreclosures.

Morgenson explains that for every mortgage, there are two pieces of paperwork necessary to complete the transaction: the note, which is the homeowner’s promise to repay, and the mortgage, which is the lien on the property.

“Then the note and the mortgage are supposed to be in the loan file, so that if there is a foreclosure we understand that everybody knows that these are the right parties that are interacting here: the institution that has the right to foreclose and the borrower who has to deal with the foreclosure,” she explains. “What has ended up happening is in the loan file, there’s no note. The note’s gone missing.”

In other cases, she says, the dates on the paperwork necessary to foreclose come after the foreclosure proceedings — resulting in judges telling banks they don’t have the right to foreclose on the property. In some cases, notarized signatures on the foreclosure documents are clearly forged — or signed in a completely different location, meaning the loan officer didn’t look at the paperwork.

A few weeks ago, Bank of America, GMAC, JPMorgan Chase and other major mortgage lenders across the country announced that they were temporarily halting foreclosures to examine the paperwork filed in many of the cases. But Morgenson says proceedings have restarted in many states after the banks said they reexamined all of their paperwork — and that could be problematic.

“I think that this is a whistling-past-the-graveyard exercise because there is just no way that they can know that all of these practices are sound given the really horrible, horrifying examples that we’ve seen and these scary depositions that we’ve read from employees at some of these firms about how lackadaisical some of the practices were,” Morgenson says. “I don’t see how the banks could really have ‘solved’ this problem because it’s really so loan-by-loan. It’s so labor intensive. I just don’t think it’s over.”

The audio is different than the text. They talk about investors in the pool who may later try to get recovery for the losses. She even said that something to the effect that someone buying a place today might have problems 2 years from now if a bank comes back and says they are the rightful owners of the loan and have title to the property.

What a mess.

[bearishgurl]

[quote=jpinpb]They talk about investors in the pool who may later try to get recovery for the losses.[/quote]

jpinpd, I DO believe this will happen. All these “investors” are not gonna just “sign away their rights” (in a “short-sale” or “deed-in-lieu” transaction) without something in it for them. That is, unless they’re “wiped out” by non-judicial foreclosure. Even then, I see some of them suing if they perceive the defaulting trustor has assets, even if they bought the note for a fraction of its face value.

[quote=jpinpb]She even said that something to the effect that someone buying a place today might have problems 2 years from now if a bank comes back and says they are the rightful owners of the loan and have title to the property.[/quote]

For the life of me, even though this MERS mess has been well-known to all the “players” for months, mortgage loans are STILL being recorded TODAY in the names of “MERS” or “[Name of Servicer] and MERS.” I find this absolutely astoundingly unbelievable!

[bearishgurl]

[quote=jpinpb]They talk about investors in the pool who may later try to get recovery for the losses.[/quote]

jpinpd, I DO believe this will happen. All these “investors” are not gonna just “sign away their rights” (in a “short-sale” or “deed-in-lieu” transaction) without something in it for them. That is, unless they’re “wiped out” by non-judicial foreclosure. Even then, I see some of them suing if they perceive the defaulting trustor has assets, even if they bought the note for a fraction of its face value.

[quote=jpinpb]She even said that something to the effect that someone buying a place today might have problems 2 years from now if a bank comes back and says they are the rightful owners of the loan and have title to the property.[/quote]

For the life of me, even though this MERS mess has been well-known to all the “players” for months, mortgage loans are STILL being recorded TODAY in the names of “MERS” or “[Name of Servicer] and MERS.” I find this absolutely astoundingly unbelievable!

[bearishgurl]

[quote=jpinpb]They talk about investors in the pool who may later try to get recovery for the losses.[/quote]

jpinpd, I DO believe this will happen. All these “investors” are not gonna just “sign away their rights” (in a “short-sale” or “deed-in-lieu” transaction) without something in it for them. That is, unless they’re “wiped out” by non-judicial foreclosure. Even then, I see some of them suing if they perceive the defaulting trustor has assets, even if they bought the note for a fraction of its face value.

[quote=jpinpb]She even said that something to the effect that someone buying a place today might have problems 2 years from now if a bank comes back and says they are the rightful owners of the loan and have title to the property.[/quote]

For the life of me, even though this MERS mess has been well-known to all the “players” for months, mortgage loans are STILL being recorded TODAY in the names of “MERS” or “[Name of Servicer] and MERS.” I find this absolutely astoundingly unbelievable!

[bearishgurl]

[quote=jpinpb]They talk about investors in the pool who may later try to get recovery for the losses.[/quote]

jpinpd, I DO believe this will happen. All these “investors” are not gonna just “sign away their rights” (in a “short-sale” or “deed-in-lieu” transaction) without something in it for them. That is, unless they’re “wiped out” by non-judicial foreclosure. Even then, I see some of them suing if they perceive the defaulting trustor has assets, even if they bought the note for a fraction of its face value.

[quote=jpinpb]She even said that something to the effect that someone buying a place today might have problems 2 years from now if a bank comes back and says they are the rightful owners of the loan and have title to the property.[/quote]

For the life of me, even though this MERS mess has been well-known to all the “players” for months, mortgage loans are STILL being recorded TODAY in the names of “MERS” or “[Name of Servicer] and MERS.” I find this absolutely astoundingly unbelievable!

[bearishgurl]

[quote=jpinpb]They talk about investors in the pool who may later try to get recovery for the losses.[/quote]

jpinpd, I DO believe this will happen. All these “investors” are not gonna just “sign away their rights” (in a “short-sale” or “deed-in-lieu” transaction) without something in it for them. That is, unless they’re “wiped out” by non-judicial foreclosure. Even then, I see some of them suing if they perceive the defaulting trustor has assets, even if they bought the note for a fraction of its face value.

[quote=jpinpb]She even said that something to the effect that someone buying a place today might have problems 2 years from now if a bank comes back and says they are the rightful owners of the loan and have title to the property.[/quote]

For the life of me, even though this MERS mess has been well-known to all the “players” for months, mortgage loans are STILL being recorded TODAY in the names of “MERS” or “[Name of Servicer] and MERS.” I find this absolutely astoundingly unbelievable!

[jpinpb]

I don’t know if you listened to the audio. She said something like she was asking these questions back in 2007! Just now it’s becoming a problem.

This whole real estate bubble/crisis is like watching a train wreck in slow motion. But I wouldn’t be surprised to see title insurance companies at the trough next.

[jpinpb]

I don’t know if you listened to the audio. She said something like she was asking these questions back in 2007! Just now it’s becoming a problem.

This whole real estate bubble/crisis is like watching a train wreck in slow motion. But I wouldn’t be surprised to see title insurance companies at the trough next.

[jpinpb]

I don’t know if you listened to the audio. She said something like she was asking these questions back in 2007! Just now it’s becoming a problem.

This whole real estate bubble/crisis is like watching a train wreck in slow motion. But I wouldn’t be surprised to see title insurance companies at the trough next.

[jpinpb]

I don’t know if you listened to the audio. She said something like she was asking these questions back in 2007! Just now it’s becoming a problem.

This whole real estate bubble/crisis is like watching a train wreck in slow motion. But I wouldn’t be surprised to see title insurance companies at the trough next.

[jpinpb]

I don’t know if you listened to the audio. She said something like she was asking these questions back in 2007! Just now it’s becoming a problem.

This whole real estate bubble/crisis is like watching a train wreck in slow motion. But I wouldn’t be surprised to see title insurance companies at the trough next.

[bearishgurl]

No, I haven’t listened to it yet. I will do so tonite.

[bearishgurl]

No, I haven’t listened to it yet. I will do so tonite.

[bearishgurl]

No, I haven’t listened to it yet. I will do so tonite.

[bearishgurl]

No, I haven’t listened to it yet. I will do so tonite.

[Author]

Posts