The current state of the nation’s real estate market was not organically created. The scenario is an unfortunate side effect of greed, toxic subprime mortgages and unethical behavior by predatory lenders. The naughty behavior from Wall Street has immersed Main Street U.S.A. into a pool of foreclosure activity and the undoing of the American Dream of homeownership. For the past year, many borrowers have lost their homes courtesy of the mistakes made by "robo-signers," (automated systems used by some of the biggest banks to expedite the foreclosure process), and the lack of human oversight in the system has been sited as the cause for the errors. Apparently, Santa is fed up with the practice and several naughty boys and girls are not only getting coal this holiday season, but have the additional burden of defending their actions in court.
In fall of 2010, the robo-signer crisis was unearthed as the process created a steady stream of illegal foreclosure activity. Since that time, authorities have stopped foreclosure proceedings in 23 states where private lenders such as Bank of America, Chase and Ally have all been caught skipping the documentation review process (required by state law) and instead allowed bank employees to sign the affidavits en bulk. The discovery of the lack of legal steps prompted a joint investigation from federal regulators and Attorney Generals from all 50 states. Now it seems that the matter is going to hit the court circuit as local lawmakers have decided that enough is enough.
IA Seeking Jail Time For Foreclosure Processors
Since the news of robo-signers first came to light, legal authorities in states including California, Connecticut, Illinois, Iowa, Maryland, Massachusetts, North Carolina and Texas have been looking for answers. So far the responses from the lenders in question have been limited, and that has encouraged the Iowa Attorney General to publicly support criminal prosecution against bank executives found guilty of breaking due process laws in regards to foreclosure proceedings.
Iowa Attorney General Tom Miller recently spoke at a gathering in Des Moines, Iowa as a way to address the concerns of citizens affected by the mess. In response to the questions and opinions voiced by the audience, Miller unflinchingly stated "We will put people in jail" and plans on developing other retribution packages for the victims of the rushed foreclosure proceedings.
NJ Demanding Mortgage Lenders Prove Their Case
The robo-signing crisis occurred coast to coast, and New Jersey residents also fell victim to the illicit activity. As a result, a multitude of the country's biggest mortgage providers are being summoned to the New Jersey state Supreme Court in order to legally prove (and defend) their foreclosure processes. The request came from Garden State Chief Justice Stuart Rabner and he is demanding to see the complete paper trail and documentation proving the legality of foreclosures.
The lenders are expected to make a January 2011 court day in Trenton, to prove their case and defend their actions. The advocacy group, Legal Services of New Jersey prompted the move by the New Jersey legal system. With this turn of events, New Jersey has become the first state to require banks to testify on this matter.
President Obama Gets In On The Action
Earlier this year President Barack Obama Vetoed the Interstate Recognition of Notarizations Act, which would have allowed lenders to increase the rate of foreclosure activity even further. The bill was created and backed by Alabama representative Robert Aderholt, (Republican). If passed, the bank friendly bill would have eased restrictions on interstate commerce. However, in light of the continuously high rates of foreclosure and the discovery of the robo-signer plague, the president vetoed the bill.
Only time will tell how the entire scandal will play out and until that time, consumers need to be extremely cautious in documenting their mortgage payment history as well as reviewing all paperwork generated from a bank. If it turns out that a bank has properly followed foreclosure procedures, a short sale or mortgage refinance (featuring lower monthly payments) may help nip those concerns in the bud. Mortgage Marvel is the industry's premiere mortgage rate origination tool dedicated to providing accurate refinance information in real time.
