The Real Estate Bloggers

Document Flaws Slow Foreclosures and Bank Owned Property Sales

Posted: 02 Oct 2010 08:00 AM PDT

Back in early 2009 we talked about how to Fight Foreclosure and telling the banks to produce the note. Well, the failure by the banks to keep proper records of the mortgage documents as they sold the loans in so many directions is coming back to bite them.

GMAC and JPMorgan are admitting they committed missteps in handling there foreclosures and title companies are refusing to write title insurance on these properties. What this means is the mistakes the banks have made are so bad that the title insurance companies see to much risk to write insurance.

That means the problem is bad.

So who are the beneficiaries of this problem with poor document management and ethics at the banks? Those who are facing immediate foreclosure have a great deal of ammunition to fight the foreclosure. They can get a lawyer and challenge the banks ability to foreclose based upon the fact that the documentation has to be exactly right.

GMAC and Chase are in trouble because, overwhelmed with foreclosures, they tried to process them as quickly and cheaply as possible, defense lawyers say. The companies say they are reviewing their procedures to take care of any violations.

The missteps stemmed from the affidavits the lenders file as they seek a quick or summary judgment in thousands of foreclosure cases. The affidavits state certain facts about the case, including the amount owed, which the signer indicates he has personal knowledge of. Without the affidavit, the lender would have to prove the facts at trial.

In depositions taken by lawyers for homeowners, executives at GMAC and Chase said they or their teams signed 10,000 or more affidavits and related documents a month. That did not give them time to review the cases.

Defense lawyers say the disclosures are symptomatic of the carelessness, if not outright fraud, that lenders have been exhibiting for years in their rush to file cases. Many necessary documents have disappeared, with defense lawyers saying the lenders often do not even have standing to foreclose. via the NY Times

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Document Flaws Slow Foreclosures and Bank Owned Property Sales