The Foreclosure Problem is Creating More Trouble for the Banks
The Foreclosure Problem is Creating More Trouble for the Banks
Consumers and housing advocates have been complaining for years about wrong handling of affidavits in the foreclosure process. Finally GMAC Mortgage, JPMorgan Chase and Bank of America all have taken action by suspending foreclosures.
When the news first broke, Nancy Pelosi, the Speaker of the House and the members belonging to California Democratic Congressional Delegation made a petition to the Ben Bernanke the Fed Chairperson, the Justice Department, Eric Holder, the Attorney General and John Dugan the Comptroller to make inquiries as to why the law was broken by the lenders.
For the mega banks the scenario is nightmarish if foreclosures are found to be invalid said Nancy Bush of NAB Research. This could be followed up by not just thousands but millions of lawsuits.
There would be ex-house owners claiming back their wrongly foreclosed house and new house owners battling to keep the home they have invested in. Then there are the investors across the globe who had bought securities backed by the house mortgages.
Nothing short of a miracle can save the situation. The stoppage of all processing of documents threatens to overwhelm the lenders to a point when they will longingly look back to the balmy days of 2009. At that time the federal government was in a position to act. It seems today that all that the biggest bailout in American history could do was to just delay the inevitable till today.
Looking back it seems that some of the most meaningful efforts at the local and state levels have led to the paperwork mayhem of today. During early summer last year foreclosures were flooding the courts of Sarasota County and Manatee County.
Lee Haworth, the Chief Judge of 12th Circuit had no other alternative to start off the "rocket docket" method. It was a speedier method to clear the piled up jam of thousands of cases being attended to in a single day.
At that time Haworth however did not fail to put in place safeguards to give protection to the house owners; for instance the attorneys representing the banks had to meet the borrowers for negotiations. Similar to Haworth the courts right across Florida followed suit and introduced the same steps. But the attorneys representing the house owners said that tackling so many cases with such speed was sure to create problems.
