EconomyUSA: Mortgage foreclosures: Banks and financial houses slop-around with documentation

Banks and mortgage lenders have been screwing around with people's home-owning documentation, then flawnting their lackadaisical attitudes and (lack of proper) procedures. They've put many mortgaged owners in a turmoil of tainted transactions after seizing their homes and putting the owners into the streets, while tossing the paperwork (which may or may not contribute directly to the loss of owners' homes).  The paperwork in each specific case may be  "fraudulent documents" at the core of the banks' and mortgage financials' modus operandi.  

Reports Gretchen Morgenson and Andrew Martin, reporting in New York Times,  "Battle lines forming in clash over foreclosures" (Oct20,2k10) wri+t of "a potentially seismic legal clash that pits big lenders against homeowners and their advocate concerned that the lenders' rush to foreclose fluts private property r+ts."  They continue: "Banks “have essentially sidestepped 400 years of property law in the United States,” said Rebel A. Cole, a professor of finance and real estate at DePaul University. 'There are so many questionable aspects to this thing it’s scary.' " While some ... banks have ... suggested they can wrap up faulty foreclosures in a matter of weeks, some judges, lawyers for homeowners and real estate experts like Mr. Cole expect the courts to be inundated with challenges to the banks’ actions.

“This is ultimately going to have to be resolved by the 50 state supreme courts who have jurisdiction for property law,” Professor Cole predicted.

Defaulting homeowners in states like Florida, among the hardest hit by foreclosures, are already showing up in bigger numbers this week to challenge repossessions. And judges in some states have halted or delayed foreclosures because of improper documentation. Court cases are likely to hinge on whether judges believe that banks properly fulfilled their legal obligations during the mortgage boom — and in the subsequent rush to expedite foreclosures.

The country’s mortgage lenders contend that any problems that might be identified are technical and will not change the fact that they have the right to foreclose en masse.

“We did a thorough review of the process, and we found the facts underlying the decision to foreclose have been accurate,” Barbara J. Desoer, president of Bank of America Home Loans, said earlier this week. “We paused while we were doing that, and now we’re moving forward.”

Some analysts are not sure that banks can proceed so freely. Katherine M. Porter, a visiting law professor at Harvard University and an expert on consumer credit law, said that lenders were wrong to minimize problems with the legal documentation.The Morgenson-Martin article is a good 3-pages long, chock full of significant details.  I urge everyone concerned about their homes, their banks, and the economy generally will find t+m to read this excellent work of economic journaletics.  Learn about robo-s+ning on the articles page 3.  Oh, don't miss the detail about bank use of counterfeited documents to take an owners' home.

Thanks to Lawt for some great advisory conversations!

-- EconoMix