2011: A Year of Foreclosure, Strategic Defaults and Much More
Okay, so I was reading this article on the HousingWire. Here is a quote from the first paragraph, "RealtyTrac is calling 2011 the year of foreclosure litigation, strategic default, failing foreclosure law firms and shadow inventory." Kind of interesting, if you ask me. Foreclosure litigation... who would have ever thought!
I mean, really, if you get foreclosed on, it's for a good reason like you didn't keep up your end of the contract, right? But with banks failing right and left and other loans being sold and transferred (and not properly, I might add) without signatures or other processes, there have been many mistakes made. One that comes to mind is the neglect of the banks to transfer all loans into their own names - Countrywide to Bank of America comes to mind. Those deeds never were re-recorded, so does that make them invalid? Some courts say yes and others say no.
Let's take strategic default. Some would say that the house the own has a loan that is much higher than what the property itself is worth now. For some of those folks, they have chosen not to make their payments to get out from under a home that isn't worth the money. Others have said, "A deal is a deal" and know that the loan they got was/is a valid contract according to the time and value of the original contract. This has caused more of an issue with lenders as some are allowing the strategic defaults to become short sales and not foreclosures. It kind of reminds me of a parent allowing bad behaviors and then saying it wasn't their fault.
A lot of law firms specializing in foreclosure and modifications have gone by the wayside. Modifications are few and far between now and since there is legislation that doesn't allow for charging a fee up front, many agencies have stopped doing modifications all together. It puts a damper on any business when they lose a line of product and the money it generates.
This article was really interesting with more detail and subtleties than I have time for in this blog. You should really click on the link above and read about it for further information.
In the meantime, I wish you and your loved ones a marvelous New Year. Here's looking to the new and exciting prospects this brings!