- Real Estate
60 Minutes Exposes a New Foreclosure Crisis
Does Your Bank Really Own Your Mortgage?
Thousands in Arizona, Florida, and many other states, wait hours in lines just to talk and find out from bankers about their mortgage and how to avoid foreclosure. Foreclosure operations of their own problems internally with robo-signing and fraud. One company, Docx, was hired by banks to process mortgage loan papers and they were unaware that Docx had hired people, working for $10 hr, simply to sign legal docs with official sounding bank officer names (like, Sr. Loan Officer, President) alleging the signors were telling the truth about the financials contained in the mortgage agreement etc. As CBS's 60 minutes indicated, none of them knew nor had any background in the banking\mortgage industry. They were told to sign a fictitious name to the document.
The new foreclosure crisis compounds the existing one triple fold because homeowners are now challenging the bank trying to foreclose on the grounds that the bank does not own the mortgage and committed fraud in signing them. True and true again. The banks themselves are scrambling to prove that they do own the mortgage, yet in many cases, they simply cannot do so. All of the big banks, from Bank America, Chase, Wells Fargo have the same problems. If the bank does not own the mortgage, they cannot foreclose! Serious challenges have caused banks to conduct extensive internal audits. If a bank is found that they did not own the mortgage, that puts another dilemma into gear, who does? This was the case on 60 Minutes, the woman was ironically, a fraud attorney!
The new foreclosure laws passed since the crisis also have caused Banks to hire armies of writers internally to create the new required documentation, both mandated by government and internally by the Bank. In essence, many of the policy and procedures are overhauled and completely redone to reflect the mountains of changes (some procedures are 75 pages). The Banks, themselves, are being forced into all this internal mayhem from their own stockholders who have lost serious money.
New home sales have plunged to record lows, down 28 percent from the year prior. There are another seven million home owners on the edge of foreclosure. The worse states hit have been California, Arizona, Michigan and Nevada.
2011 will be another very bad year for real estate.