The next scandal to rock the foreclosure process is about to explode onto the scene and it's not robo signing. The next scandal looks like it's going to be Notice of Default letters.The banks are about to be stuck once again the legal web of interpretation.
The Notice of Default letter is the letter that a mortgage lender or servicer sends to a homeowner who has fallen behind on payments. So the home owner goes 30 days late on their mortgage and now they can receive a Notice of Default letter in the mail. The Notice of Default letter is used in 27 states, and that's a lot of people and potentially a lot of issues.
Here's the issue. Every Notice of Defaultis supposed to have a signature on it. That's right these thousands upon thousands of Notice of Defaultletters that are issued every month should have a signature on it. Now technically according to the law, whoever has signed this letter should have direct knowledge that the mortgage is in fact in default. So these thousands and thousands of signatures every month are supposed to be done only after reviewing the documents, but that is not the case. The title companies and servicers are signing and sending out these letters. So essentially they are starting the foreclosure process. Since we are a country of laws and interpretation of those laws, one could then interpret that this is illegal. There is a case in NV right now against Wells Fargo that is arguing a foreclosure is illegal because it is being started by someone that hasn't directly reviewed the documents.
This is potentially a HUGE MESS. This could mean a huge percentage of these Notice of Default letters that have been sent out to technically start the foreclosure process are void and illegal. It looks like Pandora's Box is about to be blown wide open.
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