According to an article in the Washington post this morning, the attorneys general of every state, except Alabama, are joining forces to probe mortgage loan services accused of making fraudulent statements, not properly reviewing files and other violations of procedure and law.
At this point, the attorneys general are not calling for a national moratorium, although many lenders are voluntarily freezing foreclosures to review their files.
What does this mean? First, it's good news for homeowners with a genuine claim for improper foreclosures. It's also good news for homeowners attempting to work out a loan modification or short sale to prevent foreclosure. This extra time may prove useful as both loan modifications and short sales can take 4 - 6 months to complete and not all lenders are willing to postpone sale dates even when one of these alternatives are in process.
However, there are mind-blogging costs in delaying foreclosures. With nearly $7M in "shadow" inventory, adding just a month of extra holding expense equals billions of dollars. While it's nice to think that it's the lenders problem, eventually we all pay.
Seven Gables Real Estate
Direct: 714 276-7006
Fax: 714 917-2293