Banks Bad Behavior in Foreclosures
Banks Bad Behavior in Foreclosures
Banks Bad Behavior in Foreclosures
More US citizens lost their homes to foreclosure in August of 2010 than in any other month on record, as banks re claime 25 percent more homes that month than in Aug of last year. Yet the more homes that banks are taking back, the more we are revealing obvious acts of foreclosure fraud in their behavior.
This all started in 1999 when the Glass Steagall Act was overturned. In 1999, the Gramm-Leach-Bailey Act eliminated the restrictions of the GSA and banks were allowed to take risks again. Finally the US executive provided FDIC Insurance, thus, in the eyes of Senators Gramm, Leach, & Bailey, eliminated the necessity for the GSA since the FDIC was insuring the depositor's money.
Through the FDIC insurance on depositors money and by repealing the GSA, banks were given the freedom to make debatable investments knowing that their losses were now backed by the govt. 1 banks commenced making hire risk loans to house owners, packing these dodgy loans, and selling them on the secondary market for larger profit realizing that if things went south, the government would bail them out.
Here's how it would work : If Joe Public got a $150,000 loan on a place at a 6% rate, the banks would profit $173,000 over 30 years. The banks would right away take the $173,000 and sell it on the secondary market for money. Due to these moneymaking transactions, banks started easing their lending standards and more houses were being sold. As more houses were being sold, the prices were going up and loans were getting more worthwhile. Banks then created new loan packages,eg the varied types of subprime loans, that were appealing in the 1st 2 years but then became more high-priced to the borrower ( yet more profitable to the bank ). The profit equation for the banks were higher home values and higher loan amounts and higher interest rates and more transactions = higher profit. Sadly, neither risk or common sense was anywhere in the equation.
during the chaotic time of nutty profits for the banks, they didn't remember to follow some essential rules and are now discovering there are implications to their irresponsible actions. Now the market has gone south, their fake actions, short cuts, and illegal behaviour are being brought out to light. These are some of the lowlights :
* Banks are breaking into homes (some of which they don't even own) to change the locks during the foreclosure process.
* Banks used the same houses as collateral multiple times and packaged to multiple investors. This is blatant fraud.
* Banks cannot produce the note on most of these home and don't have the right to foreclose, yet are foreclosing anyways.
* Many prominent mortgage lenders have been using materially flawed paperwork to evict homeowners
* Banks have been forging documents and notary signatures on documents
* Robo-signing (signing foreclosure documents without looking at them) has been rampant. Here are some examples:
o One GMAC Mortgage official admitted during a December 2009 deposition that his team of 13 people signed approximately 10,000 foreclosure documents a month without reading them.
o One Bank of America employee confessed during a Massachusetts bankruptcy case that she signed up to 8,000 foreclosure documents a month and typically did not look them over "because of the volume"
There are currently 5 million loans that are seriously behind or are in the first stages of foreclosure. It's likely many thousands of foreclosures are now in limbo. And the number of foreclosures in limbo could grow even higher if more banks join the freeze due to foreclosure fraud. Legislators and state attorneys General are calling on finance institutions to dilate the review of foreclosure crime.
The result of this mess varies from the 'best case scenario' of simply sweeping the obvious foreclosure crime under the rug, fixing the documents, and allowing banks to keep on repos to owners suing banks stating that they do not have clear title, and as such, don't have the inalienable right to foreclose, which could put the banking industry, the housing industry, and the economy into a deeper funk for many years to come. The more justice involved regarding foreclosure crime, the terrible the consequences for the economy.
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