The Positive Side Of The Foreclosure Moratorium
By Rob Minton & John Mazzara
At first glance, the foreclosure moratorium by several of the United States' biggest mortgage companies appears the result of banks' processing foreclosures too quickly, thereby becoming sloppy, even reckless.
You might even say that practices such as what's become known as "robo-signing," when occurring with foreclosed homes that are indeed in default are mere technicalities - that we're locking down the whole foreclosure system over the dotting of a few i's and crossing of some t's.
In fact, the house that started this whole thing, a modest house in Maine, probably deserves to be foreclosed upon. The owner, according to an New York Times article, hasn't paid her mortgage in two years. The lawyer for the homeowner, according to the article, was the one who deposed a GMAC "limited signing officer" and revealed the company's practice of the so-called robo-signing. Now thousands, if not millions, of foreclosures are being called into question.
Most, it might be revealed, will likely be valid foreclosures. It will probably turn out that the whole foreclosure situation has come to a grinding halt over what, again, seems to be technicalities.
But it needed to be done.
As someone in real estate, I know that the foreclosure pipeline is vital to the housing industry. Foreclosures make up a big part of the overall volume of sales. It's also going to be necessary to plow through all of them, clear them all, before home prices finally stabilize for good.
But also as someone involved in real estate, I firmly believe in the value of home ownership. And I hate the idea that people undeserving of losing their home might do so because of a bank's or mortgage servicing company's sloppiness or negligence. Despite the negative consequences of the foreclosure halt, it's necessary to take steps to ensure that these companies are doing things on the up-and-up.
There may be folks who DO deserve to lose their homes, but what about the people who don't? If this examination of banks' procedures protects those people, well, then it's vital.
The securitization of mortgages has been blamed before - the greediness of Wall Street seen as the profiteering culprit behind bad mortgages. The rapid buying and selling of mortgages to investors - while vital to the lending system - has gotten the attention of regulators before. Now, in particular, the electronic system by which these trades are documented has come into question.
The Mortgage Electronic Registration System (MERS) used to track ownership and servicing rights of mortgages has been challenged legally before. Whether or not its existence, which is a substitute for physically filed documents, is right, it appears that the system can fail even homeowners who are trying to make payments.
In an article by the Cleveland Plain Dealer, a couple's troubles with their mortgage being rapidly bought and sold led to foreclosure despite their claims that they never missed a payment. This may or may not turn out to be a mistake that could have been avoided, but if the foreclosure halt makes the industry take a step back and examine what has become a foreclosure machine, then the halt is worth it.
There's no doubt that this era of foreclosure activity is a necessary reality. However necessary, though, there needs to be protections in place for those who don't deserve to lose their homes. There needs to be assurances that banks are doing things the right way. No matter what comes of the foreclosure halt, all the attorneys generals' investigations, it wouldn't be the first time the mortgage industry has been looked at as having done something wrong.
The foreclosure moratorium may be painful for the housing industry in the short term, but what's right is right. Once we get this figured out, and things begin to move forward through the system, the next step will be work on the CAUSE of all the foreclosures in the first place. Simply put-it is all about jobs. No job or under employment will result in foreclosures for many. We MUST get back to an economy that grows and begins to replace the 8M lost jobs. November 2nd is weeks away. Listen to the politicians message in your community. See if their policies will really begin to create jobs. If the answer is "no", then vote them out. Don't vote DNC, GOP or Tea Party. Vote JOBS-we all depend on it.
Comments(0)