About Me 0117: foreclosure homes

Only the banksters could get away with this:

TRUCKEE, Calif. — When Mimi Ash arrived at her mountain chalet here for a weekend ski trip, she discovered that someone had broken into the home and changed the locks....

The culprit, Ms. Ash soon learned, was not a burglar but her bank. According to a federal lawsuit filed in October by Ms. Ash, Bank of America had wrongfully foreclosed on her house and thrown out her belongings, without alerting Ms. Ash beforehand.

Ash was in the process of loan modification with Bank of America at the time. And they didn't just break in, they completely emptied the home, even taking "a wooden box, its top inscribed with the words 'Together Forever,' that contained the ashes of her late husband, Robert."

In Florida, contractors working for Chase Bank used a screwdriver to enter Debra Fischer’s house in Punta Gorda and helped themselves to a laptop, an iPod, a cordless drill, six bottles of wine and a frosty beer, left half-empty on the counter, according to assertions in a lawsuit filed in August. Ms. Fisher was facing foreclosure, but Chase had not yet obtained a court order, her lawyer says.

The break-in was discovered when a Canadian couple renting the house returned from the beach.

Turns out these and countless other Americans have become victims again. They're victims of the deficit peacocks.

WASHINGTON -- Despite mounting evidence of big banks committing serious fraud in the foreclosure process, the U.S. Senate eliminated $35 million in legal aid to homeowners trying to keep their homes.

The fund was wiped out in order to meet government spending caps advocated by Sens. Jeff Sessions (R-Ala.) and Claire McCaskill (D-Mo.), but will likely end up costing taxpayers much more in the long run, as wrongful foreclosures burn through the balance sheets of Fannie Mae and Freddie Mac. The slashing of the foreclosure-assistance fund is just one casualty of Washington's increasing bipartisan push to cut spending across the board....

Recent reports suggest severe, nationwide problems with the mortgage system. A survey of 96 attorneys found that banks started foreclosure proceedings on 2,500 borrowers who were negotiating a loan modification. The survey was conducted by the National Association of Consumer Advocates and the National Consumer Law Center.

There's no relief in sight from the administration, either. Treasury has refused to use any of the funds for the Wall Street bailout for homeowner legal aid. Much worse, the Federal Reserve is actually blocking new foreclosure regulations that would homeowners.

WASHINGTON -- Top policymakers at the Federal Reserve are fighting efforts to rein in widely reported bank abuses, sparking an inter-agency feud with the FDIC and the Treasury Department. The Fed, along with the more bank-friendly Office of the Comptroller of the Currency, is resisting moves to craft rules cracking down on banks that charge illegal fees and carry out improper foreclosures. The FDIC supports such rules, according to an FDIC official involved in the dispute.

The new regulations would rein in debt collection, loan modification and foreclosure proceedings at bank divisions called "mortgage servicers." Servicers have committed widespread fraud in the foreclosure process. While the recent robo-signing of fraudulent documents has received the most attention, consumer advocates have complained about improper fees and servicer mistakes that lead to foreclosure for years.

It's the banksters' world, and we're apparently to be considered lucky if we get to live in one of their houses, which is what they and the government consider them. It's hard to arrive at any other conclusion than dday does when it comes to the Fed, "They don’t want to stop the banks from breaking into your house." And your representatives in the Senate are fine with that.

Lots of talk online as to whether other states like California, which like Massachusetts, also operates under a non-judicial foreclosure system, are going to follow the lead of Friday's Massachusetts Supreme Court ruling. The court has a stellar reputation, and that's going to hold weight on a lot of other judicial circuits:

NEW YORK, Jan 7 (Reuters) - In a decision that may slow foreclosures nationwide, Massachusetts' highest court voided the seizure of two homes by Wells Fargo & Co (WFC.N) and US Bancorp (USB.N) after the banks failed to show they held the mortgages at the time they foreclosed.

Bank shares fell, weighing on broader stock indexes, on fears the decision could threaten lenders' ability to work through hundreds of thousands of pending foreclosures.

The Supreme Judicial Court of Massachusetts' unanimous decision on Friday upheld a lower court ruling. It is among the earliest cases to address the validity of foreclosures done without proper documentation.

That issue, including the use of "robo-signers" who approved foreclosure documents without reviewing them, last year prompted an uproar that led lenders such as Bank of America Corp (BAC.N), JPMorgan Chase & Co (JPM.N) and Ally Financial Inc to temporarily stop seizing homes.

"A ruling like this will slow down the foreclosure process" for lenders, said Marty Mosby, an analyst at Guggenheim Securities in Memphis, Tennessee. "They're going to have to be really precise and get everything in order. It doesn't leave a lot of wiggle room."

Wells Fargo and U.S. Bancorp lacked authority to foreclose after having "failed to make the required showing that they were the holders of the mortgages at the time of foreclosure," Justice Ralph Gants wrote for the Massachusetts court.

In a concurring opinion, Justice Robert Cordy lambasted "the utter carelessness" that the banks demonstrated in documenting their right to own the properties.

Courts in other U.S. states are considering similar cases, and all 50 state attorneys general are examining whether lenders are forcing people out of their homes improperly.

Friday's decision applies in Massachusetts, and need not be followed by federal judges or by courts in other states.

This is going to mean a HUGE legal mess for a lot of people in the Bay State -- except homeowners facing foreclosure, who will get to hit the reset button.

Mortgage companies who lent money to buyers purchasing foreclosed homes with this type of title defect, and the title insurers on those deals? Not so good. (By the way, the decision was applied retroactively.)

If you bought a foreclosed home that has this kind of title issue, you no longer own your home. The previous owner still does. If you don't have title insurance, you're doubly screwed. You probably can't sell or get an equity loan for a long, long time. You can sue the banks, or the attorneys, or try to get the owner to sign over the deed. If you do have title insurance, you can file a claim. Go find a good lawyer.

A tiny bit of wiggle room in the ruling means some mortgages with proper documents may survive.

We're going to see a lot of class action suits against the banks the lawyers who were supposed to draft the documents, and the foreclosure attorneys. Most interesting of all, the investors of mortgage backed securities will be looking to sue the mortgage trusts -- and the companies that were servicing the pools.

This means public pension funds have at least a ghost of a chance of getting their money back.

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Thursday, January 13, 2011

foreclosure homes

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