Pat, John, and several other readers have wondered about the recent news regarding the banks and servicers who are suspending foreclosures across the country.
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:
http://www.youtube.com/watch?v=AqnHLDeedVg
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.
If you want to pressure deadbeats to move out asap. Cities should heavily enforce property taxes and heavily fine vacant (not maintained) properties.
Ok JTR, you are going to get me to bite on the MERS thing.
The biggest problem with MERS mortgages from what I have seen, in California at least, is when a lender tries to get relief from stay in Bankruptcy Court to begin or complete a foreclosure. The standing requirements for proving an assignment of a mortgage in bankruptcy court are very strict.
Outside of Bankruptcy Court, it has been pretty easy for these lenders to proceed with California non-judicial foreclosures, especially since the foreclosure trustees they use tend to be affiliates of the lenders/servicers. The California foreclosure system is set up so there are three parties to a deed of trust: The borrower (trustor), lender (beneficiary) and trustee who can foreclose on the beneficiary’s instructions based on the power of sale contained in the deed of trust. It is much tougher for a borrower in California to stop a foreclosure in California (outside bankruptcy court) as they have to hire an attorney, and convince a judge to issue a stay of the foreclosure, which judges are hesitant to due when borrowers are not paying their mortgage. This is a very different process than judicial foreclosure states such as Florida where lenders have to go to court in order to foreclose, and have to submit affidavits to the judge, which have recently come under a great deal of scrutiny. In addition, borrowers in judicial foreclosure states such as Florida can see the details of what the lender is trying to show the judge, raise defenses on both technical and substantive, and can pick them apart in connection with the judicial foreclosure lawsuit in a way you tend not to see in non-judicial foreclosure proceedings in California. The foreclosure trustee lobby is pretty powerful in California, and there is a lot of law in California that is very favorable for foreclosure trustees.
That being said, this thing may start getting legs in California, especially with the lender/servicer foreclosure trustee affiliates, and the nervousness of the title companies.
I mentioned a few topics back that I was recently sued by one of the toxic Countrywide mortgage pools serviced by B of A for quiet title. The suit involves a MERS countrywide mortgage that foreclosed on a property adjacent to a property I recently completed foreclosure on in connection with a private money loan my pension made. B of A, after doing nothing for more than a year because of an access problem in connection with the property they foreclosed on, has now decided to claim that they have an easement over my property for access (the claim is frivolous IMHO, but that is a different subject).
So in their complaint, this toxic trust of mortgages alleges they received an assignment of the Countrywide note and deed of trust prior to their foreclosure through Recon trust, a B of A affiliate.
So naturally I am contesting their standing by asking them to produce, among other things, evidence of their assignment of the note and deed of trust, as well as the entire Recon trust foreclosure file.
I should before to long have a case study of how the MERS thing unfolded in their suit against me. I’ll keep you posted.
Great, keep us up to date on your progress – thanks for participating!
Kingside,take a look at “Naked Capitalism” there are some interesting posts and links,especially the one to a price sheet by LPS where they specify their prices for “recreating documents”. And Jim,if looks like fidelity has some new problems too. Oops. A big question that comes to mind involves the mortgage pools where so many pension funds lost huge amounts of money, It seems clear that the mortgages were no transferred into the pools… so who holds the bag?
new owners and their lenders would have the rights of good faith purchasers
Remind me again why we have title insurance companies?
It appears the title companies are looking at this stuff when claims come in. Here is an excerpt from the claim acknowledgment letter I received from my title insurer from the claim I made when the suit is submitted.
“…As an initial matter, we require information to enable us to determine whether you are a proper claimant under the above policy.
Accordingly, we require the following documents:
(1) any and all loan transfer or loan sale purchase files, including
but not limited to all assignments of the mortgage, deed of trust
or other instrument securing the loan;
(2) any and all documents regarding the securitization of the loan,
including but not limited to any indentures, prospectuses, and
trustee agreements
(3) any and all documents regarding the repurchase of the loan and
the reasons for the repurchase
(4) any and all documents reflecting agreements to service”
Who’s paying for all this free-rent to these freeloaders?