Foreclosure Filings Investigated

The depths of underwater home values  combined with the rising tide of foreclosures caught most lenders unprepared.    In the latest scandal, congress and the US Justice Department is calling for at least three major lenders (including JP Morgan,  Bank of America and Ally Financial/GMAC), to prove they had the proper documentation to proceed with the foreclosures they processed in over 20 states.

Allegations are that, faced with  mountains of paperwork, lenders may have  handled some of the foreclosures improperly.     Title may have been transfered without proper documentation and in quantities too large to have been individually verified.

The implications of these investigations are uncertain, but we anticipate there will  be a slowing in the number of foreclosures finalized.       It is unlikely that individuals who had been foreclosed upon would get their properties back, because title insurance would be used to protect the new owner who purchased the foreclosure in good faith.      At best, the slowdown in processing foreclosures may help some sellers sell their homes via short sale, while allowing others to renegotiate their loans.   Analysts note the number of foreclosures this year was expected to be about 20% higher than last year.

To read more:

http://www.bloomberg.com/news/2010-10-06/jpmorgan-bank-of-america-face-hydra-of-state-foreclosure-investigations.html

http://www.reuters.com/article/idUSTRE6954A320101007

http://online.wsj.com/article/SB10001424052748704029304575526182962738098.html?mod=WSJ_hpp_MIDDLENexttoWhatsNewsTop