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How Bank Fraud and Robo-Signing Froze Foreclosure Sales
On October 11, bowing to amplified demand from state attorney generals about scams within the foreclosure process, Chase, PNC Financial and PNC Financial ceased foreclosures within 23 states. Bank of America, the nation's biggest bank, went one step further and momentarily halted all foreclosures across the country. The assertions against these lenders were that they worked around the judicial process in states that required a judicial review of foreclosures. Fundamentally banks and their attorneys had to certify that the records presented were accurate and had been confirmed before being sent through the legal system for foreclosure. It was exposed that instead of actually reading and signing the documents, some individuals were essentially hired just to sign papers and certify that they were true on behalf of the finance institutions. These individuals have been called "robo-signers" and were often asked to sign hundreds of papers each and every day. Robo-signing accounted for many of the horror stories that you may have heard where banks foreclosed on the wrong house. As a result of this revelation, some judges have cast doubt on all foreclosures that are brought before them. On October 20, Jonathan Lippman, the Chief Judge in New York, ordered all bank lawyers to certify that the files that they filed to foreclose on a home were accurate. Judges have dismissed foreclosure proceedings if lawyers did not certify to the accuracy of the documents leaving homeowners that justifiably should have been foreclosed on, in a home that they have not made payments on - sometimes in years. Information that should be included in foreclosure documents, but were often missing, included the address of the property, the name of the borrower, and the original amount of the loan. Homeowners facing foreclosure might welcome this pardon, but what effect is this having on the overall real estate and mortgage industry? A major consequence of this foreclosure freeze is the effect that it has had on pending sales of previously foreclosed homes. According to RealtyTrac's U.S. Foreclosure Market Report for the third quarter, "foreclosure sales numbers for September show that overall foreclosure sales - including pre-foreclosure sales and REO [bank repossessions] - accounted for 31% of all sales during the month. REO sales alone accounted for 18% of all sales. Foreclosure sales in the 24 states most affected by the foreclosure documentation issue accounted for 32% of all foreclosure sales nationwide, based on the preliminary September data." This means that of all real estate sales within September, a full 31% percent transpired from homes that had been foreclosed on. The full impact of this foreclosure freeze on overall industry sales have not been felt, but will occur in the future. According to the Mortgage Bankers Association, while the freeze probably did not affect sales in the third quarter, it will affect the foreclosed home inventory rate in the fourth quarter and in the beginning of next year, which might then have an effect on overall industry sales. But what about home buyers that diligently saved money and shopped around for a home that they could afford; possibly a previously foreclosed home? Buyers that were in the processes of obtaining these homes are now in a waiting pattern which might cost them money. If purchasers had already acquired mortgages and were waiting to close on the home, they stand to lose good faith deposits and may have to pay their own loan originators to keep or lock in their mortgage rates - all without a guarantee that they will end up getting the home in the end. Even new homeowners that closed on previously repossessed or foreclosed homes may not be safe. Some attorneys report that previous homeowners that had been foreclosed on have contacted them about suing to regain homes that they had lost. If you are a buyer and uneasy about a previous homeowner coming back to sue you, be sure to do a title search and purchase title insurance from a well-known company. Last but not least, what about homeowners who are intentionally behind on their mortgages, but the bank is finding it difficult to prove to a judge's liking that they lawfully own the home? The jury is still out on what will happen to them. Allowing a family to keep a home that they have not fully paid for might seem like the the right thing to do, but is stiffing the bank of hundreds of thousand of dollars also fair? The impact that this might have on our economy remains to be seen. Sandy M. runs the blog, Yes I Am Cheap at http://www.yesiamcheap.com where she is documenting her attempts at out of debt, tackling personal finance issues, and sharing what she has learned along the way. You can connect with her @yesiamcheap on Twitter. Article Source:
http://EzineArticles.com/?expert=Sandy_M Stop Foreclosures
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