subject: Foreclousre Moratorium [print this page] Foreclousre Moratorium Foreclousre Moratorium
A National Moratorium on Foreclosures, this is what is in the news and on all the headlines for the past month. We discussed it in the October Investment News article Repo Gate Can you Get Title.
You probably know the basics. The big giant lending institutions are working through 1000's of foreclosures on a regular basis and it seems that a few of their employees came forward to admit they were basically rubber stamping proceedings with out reviewing the minute details. They were relying on the word of other employees that everything was hunky dory and signing away, and people were loosing their house to foreclosure.
Now state and federal government officials are calling for a halt to all foreclosures so they can investigate to be sure the paper work is correct and home owners are not being treated unfairly.
Personally, I feel for the poor folks loosing their homes. Many are great people who had the misfortune to loose their jobs, get sick, have a huge financial set back or what ever and now cannot afford the house payment that they currently have, have been unable to sell their home, and the bank is knocking wanting them to pay up or get out.
Then there are the folks like a few local investors who have commercial loans on rentals, where the loans are on notes that have balloons due, never missed a payment, but where the banks used to renew the notes for another year, they have the FDIC breathing down their back and can no longer renew the note. So it's Mr. or Mrs. Investor, pay off the note, refinancing it somewhere else, or we will have to foreclose, never mind you have never missed or been late on a payment ever.
So are the banks doing foreclosures too fast?If you consider how many they are doing with so few people, probably. Are maybe all the "i"s not dotted and "t"s not crossed? Again, in many cases, probably. But are they foreclosing on people who should not be foreclosed on? I don't think so.
Case in point, the guy that was in all the articles at the beginning of the scandal. He took his lender to court and used the faulty process in paperwork to get them to stop his foreclosure and force them into a loan modification. He did not deny that he had not made payments, but he was in a situation where his house was worth less than what he paid for it and what he had a loan for, he could no longer afford his mortgage payments, and he wanted the bank to modify his loan. Sounds like the bank was fully justified in foreclosing.
Other issues coming up with this . . . .
- No foreclosures for a while, would bottle up the steady stream coming to market. A market that is kind of holding steady and improving a bit right now. Would stopping them now and then having them all start back up again in a few months, ruin the fragile gains we have had in the real estate market?
- Will this invalidate all foreclosures that have happened and cause all that title insurance we all paid for to become invalid and the foreclosed homes going back to the previous owners?
- Will we no longer be able to obtain title insurance on our bank owned purchases, homes we buy on the courthouse steps?
- All the articles mention these issues are in judicial states like Kansas. So are there no issues in the non-judicial states, like Missouri. At least in Kansas they go before a Judge. In Missouri, it's all done by paperwork and attorneys, no 3rd party even looks at them.
What are your thoughts, we would love to hear them. Please comment.
