Foreclosure Process Under Review

There has not been much good news lately. This latest wrinkle in the foreclosure mess had got us talking to ourselves.

"A top federal bank regulator said Thursday that he has directed seven of the nation's largest lenders to review their foreclosure processes after learning about the widespread mishandling of homeowner evictions by the industry." [Washington Post]

These are some of the banks contacted by regulators. J.P. Morgan Chase, Bank of America, Citibank, HSBC, PNC Bank, U.S. Bank and Wells Fargo. GMAC put a hold on foreclosures in 23 states.

We heard news stories last week where bank employees signed off on documents without reading them. They were likely told by the boss that they had to keep it moving along and are buried under a pile of what they call "files" and what we call peoples homes.

Foreclosures are on the rise again. The foreclosures that have been in the pipeline are starting to hit the local market which is bad news for most but bargains for some. We're sure when the smoke clears it will be found that some mortgages were foreclosed upon unlawfully. Ponder this: what will happen to the people who now own the homes if they were taken back by the bank and then sold again. Title insurance is likely to offer protection.

"Old Republic National Title Insurance told agents Friday it would stop insuring homes foreclosed by JPMorgan Chase & Co (JPM.N), The New York Times reported Saturday, citing a company memo." [Rueters News]

With all that has happened in the last few years involving mortgages and foreclosures nothing surprises us. We have worked fairly closely with some banks these past years. When we see it all up close and personal our impression is that no matter how much it costs the bank their preference is to foreclose on the delinquent mortgage! We would not have sais this two years ago but it must be so because we have seen several cases where both banks and home owners would have come out ahead with a short sale or a loan modification....and the lender still foreclosed.

We can't prove it with numbers other than our own and those of our fellow associates at this point, but loan modifications are almost unheard of and there are far too few short sales that actually result in a closed sale. The programs set up to help distressed home owners don't seem to help any of them, hardly ever. They may provide some counseling and maybe give money management advice to struggling home owners but in most cases people will not be able to pay their mortgages with advice or counseling they will need more money. (reposted from the St. Paul Register)