In New York , three of the largest banks implemented a freeze on foreclosures amid concerns of illegitimate filings and erroneous documents. According to the Mortgage Bankers Association, NY has upwards of 80,000 mortgage loans in foreclosure. When JP Morgan Chase, Bank of America and GMAC prompted the freeze, it certainly brought much needed attention to the problem. Last week, it was made public, although not officially announced. Shortly thereafter many other banks followed suit. Apparently Attorney Generals from forty states are calling for a freeze, including New York Attorney General Andrew Cuomo. It is widely reported that Cuomo stipulated that the biggest mortgage lenders immediately halt all foreclosures.
Just as the foreclosure crisis began a new wave of court proceedings, a more pressing crisis unfolds. Not only does Cuomo plan to extend the freeze beyond the BofA, JPM Chase and GMAC, but he wants the halt to include evictions, and foreclosure sales.This is probably good news to hundreds of thousands of home owners across the country who are struggling to stay in their homes, with little or no alternatives. The freeze is anticipated to pause the process for at least one year - enabling homeowners to go without the pressure of making mortgage payments. At least for a few homeowners, this may be just the extra time they need to get their finances back on track, or at the very least prepare an alternative living situation for their families.
Why the Drastic Freeze?Apparently what is described as “faulty” paperwork, ranges from affidavits that do not stipulate who originated or owns the loan, to forged documents. This could mean that countless foreclosures may be overturned, which puts the many recent buyers of foreclosed properties on shaky grounds at the very least. Oh What tangled web we weave, to quote Sir Walter Scott. This essentially puts the last two years of foreclosed property sales in uncertain territory. Meanwhile, Back on Wall Street, this spells deep trouble for the big three, and many other mortgage underwriters. Although Wells Fargo and CitiGroup maintain that their documents are straight, that remains to be seen. It is hard to phathom the entire mortgage industry is pausing to resolve a nationwide scandal involving erroneous foreclosure documents, yet Wells Fargo and CitiBank mortgage documents are 100% clear of any errors.
Massive Costly Clean Up Ahead: As courts from state-to-state take on the daunting task of sifting through thousands of documents to verify the true mortgage holders, banks will have to expend costly legal support to prove their position. The costs on both sides of the fence will ultimately translate to higher interest rates for borrowers, and yet another nightmare for tax payers. It is difficult to determine how deep this crisis really is, but I imagine that this is just the tip of the iceberg.
K. Reilly
Cohn-Reilly Report
This is sad. People do make mistakes themselves by signing documents before even reading them. Felonies and then foreclosure freezes are happening everywhere now a days.
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