I was forwarded a blog post which I will include a link to here and found it to be absolutely eye opening! Essentially the news is not covering this adequately because they themselves don't understand what has happened and why.
In the rush for banks to get their mortgages securitized, many took shortcuts on the paperwork necessary. In the name of "improved efficiencies" the paperwork the banks used became digitized notes. In the old days all paperwork for a mortgage would remain in the vault at that bank. But now with mortgage backed securities, they were being used and traded in a variety of manners. When they were fist traded, they has to be endorsed but as digitation grew, that part was often overlooked or in some cases forged. Some law firms handling the foreclosures started doing document fabrication, signature forgery and more. Very illegal!
What this meas is that alot of foreclosed properties might not have been foreclosed legally. They might technically still own the property. The new buyers might not own the home legally which means trillions in law suits against the banks.
You see, a mortgage can be traded many times as long as it is endorsed. If an endorsement is missed, the clear chain of title has been broken on the actual note and the mortgage is no longer valid. Yes I said no longer valid!!! So banks have been foreclosing on people they didn't have the right to foreclose on. And those people have the right to get their homes back. It does not matter if they actually defaulted or not if that chain was broken. So now all foreclosures come into question and for that matter, all mortgages do too.
I have brushed the surface here. You can read more about this mortgage crisis on this great blog I found. Ultimately, it is implied that the mortgage business could come to a complete halt. And what about title insurance, that might be done to. So then what? How as Realtors do we get homes sold to qualified buyers? This is scary stuff!
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