It’s a paperwork-signing problem. The servicers are probably working this weekend to identify the foreclosures that are scheduled for next week – the ones that were signed correctly will get foreclosed, and those that weren’t, will get to start over.
Just tack another year or two on to the foreclosure mess, and know that the borrowers affected will be getting the extended free-rent program as their bonus.
There will be plenty who will be pushing it as more negative housing news.
You can bet that the main-stream media will keep making vague references to the debacle without clearly identifying the direct impact – the impact is more free rent.
Plus, with the political season due to heat up, we’ll see politicians grand-standing on the topic. I don’t know anything about this guy, but to see an example of robo-signing, go to the 6:20-mark in his video; it shows documents where different people were signing the same name:
The last half of his video is discussing the MERS problem, which is a more-complicated topic – there are some that think we’re going to see those mortgages be declared invalid. But because his shirt-and-tie combo is so hideous, we’ll come back to that another day (unless Kingside wants to comment?).
Will title companies stop insuring? This comes direct from Fidelity Title:
JACKSONVILLE, Fla., Oct. 1 /PRNewswire/ — Fidelity National Financial, Inc. FNF has noted that several lenders have announced that they have halted foreclosures and the sale of REO properties due to possible flaws in documentation used in the foreclosure process. FNF believes that this situation will not have a material adverse impact on its title business, for the following reasons, among others:
1. FNF’s title insurance underwriters issue title policies on REO properties to new purchasers and lenders to those purchasers. FNF believes that these policies will not result in additional claims exposure to FNF because the new owners and their lenders would have the rights of good faith purchasers which should not be affected by potential defects in documentation.
2. Even if a court sets aside a foreclosure due to a defect in documentation, the foreclosing lender would be required to return to our insureds all funds obtained from them, resulting in no loss under the title insurance policy.
As a result, FNF does not believe that the recent announcements regarding potential defective foreclosure documentation will have a material adverse impact on its title business.
Sean O’Toole, the owner of foreclosureradar.com, also discusses the issue here on his blog.