Flawed foreclosure documents have made a tangible impact on homeowners across the country in recent weeks. Both borrowers who watched their houses wrongfully go to auction and buyers who planned on getting a deal by purchasing a foreclosed property only to find it taken off the market have been significantly affected. Buyers who gave up rental property or sold their own homes in favor of inexpensive foreclosed properties are now finding themselves homeless as the banks auctioning off the properties realize they made grave errors in the foreclosure process across the country.
In a year and especially after a summer that some of the lowest home sales numbers in recent memory, the housing market will have a hard time withstanding such a blow. The economic crisis of the last few years is hitting the housing market in full force, more so even than it did in the months directly following the market collapse.
Now some major lenders are acknowledging the problem - whether by choice or by legal force, with lawsuits directed at major mortgage companies such as Bank of America, GMAC and JP Morgan Chase springing up around the country. These companies initially halted foreclosure proceedings in the 23 states where they needed a judge's approval to sell a home at auction, but the impact is spreading.
Recently, Bank of America has indefinitely halted foreclosures in all 50 states. In response to ongoing investigations into whether there are flaws in their foreclosure process, they have decided to stop foreclosures in states beyond the 23 where a court's approval is necessary to foreclose on a property.
All three major lenders are also preventing Fannie Mae from carrying out foreclosures on any loans that they sold to the company. Since Fannie Mae received the majority of the loans sold by all of these lenders, it has largely been the party contacting real estate agents to let them know that homes have been temporarily removed from the market. Fannie Mae is informing these agents that the freeze will last somewhere from 30 to 90 days, but no one feels comfortable putting a definite timeframe on this national foreclosure freeze.
The revelation that foreclosure proceedings must be halted came with the discovery that employees at all of these major lenders had signed foreclosure documents on properties without determining the accuracy of the material provided to them through the file. The main focus is on the affidavits provided by homeowners that explain their hardship. Employees signed off on foreclosure documents that were in some cases fraudulent, thereby violating law concerning foreclosure proceedings. The foreclosures now put on hold join the hundreds of thousands of other loans that are also pending foreclosure sale.
Sen. Harry Reid is now calling on all major lenders across the nation to do the same. So what does this mean for you? The fear is of course that this will just mean delaying processes all around, including loan modifications and short sales that would serve as alternatives to foreclosure. For borrowers looking to save their homes against the ticking time bomb of foreclosure, continued effort by the banks is desirable, but the issue at stake is whether the process is fair and accurate, especially in checking and uploading the many documents homeowners are required to provide to lenders.
The federal government is facing the same struggle for balance between efficiency and justice, requesting the halting of wrongful or questionable foreclosures as it urges the banks to continue with processing accurate documents so that homeowners are still on their way to receiving loan modifications or short sales if their finances qualify them.
Amidst all the current confusion in the world of home foreclosures, borrowers should not go it alone. Legal advice and advocacy is a must when facing suspicion about fraudulent documents and unfair foreclosures. We can help provide you peace of mind knowing your loan has been fairly and properly dealt with as the federal government continues to crack down on the foreclosure process of major lenders nationwide.
