If you are a distressed mortgage customer of BofA, GMAC, JP Morgan Chase, PNC, or Litton Loans, you may be breathing a sigh of relief….at least for a few weeks. As of today, these five firms have halted all or part of their foreclosure efforts after admitting their ‘robo-signers’ may not have read each of the 18,000+ foreclosure documents that they sign per month – like they are legally obligated to. The result has been a halt on foreclosure proceedings until the mess is cleaned up. The President of BofA suggested in a press conference today that it will be a few weeks…
On another note, President Obama refused to sign legislation that would have made it more difficult for homeowners to challenge unjustified foreclosure actions, the White House said on Thursday. White House communications director Dan Pfeiffer said Obama was sending the bill back to the House of Representatives for further discussion of how it would affect the foreclosure crisis, which has become a hot topic after the aforementioned lenders have admitted to shoddy foreclosure proceedings. “We believe it is necessary to have further deliberations about the intended and unintended impact of this bill on consumer protections, including those for mortgages, before this bill can be finalized,” Pfeiffer said in a blog posting.
Why are Lenders advocating this bill?
As it was structured, The Bill would have required courts to accept all out-of-state notarizations, including those stamped by computers in a practice that critics say has been improperly used to expedite foreclosure orders. False notarizations figured in disclosures that GMAC, JPMorgan and other big mortgage processors filed false affidavits in thousands of cases, part of the wave of foreclosures that came in the wake of the financial and economic crisis. As someone who deals with their meticulous requests and processes on a daily basis, I am obviously pleased that they’re being held to the same standard.
“Banks realize that it’s going to be really hard to prove, and it’s going to be really expensive to review all the documents and make sure they are doing it right,” said Andrea Bopp-Stark, a Maine attorney who was involved in the case challenging GMAC’s foreclosure process. The unraveling of the mortgage paper trail could be costly for more than just lenders trying to foreclose on a home. For example, difficulty establishing the legal title to a mortgage could create headaches for companies that wrote title insurance on the property, and for all of the hands that touched the file along the way. “If it turns out these are mistakes in who owns (the mortgage), the claims against the title insurance industry could be overwhelming,” said Kathleen Day, a spokeswoman for the Center for Responsible Lending.
What does this mean for us – as borrowers?
For now, this means that the many of the biggest lenders are stalling foreclosure proceedings while they clean up their mess. I think it’s also encouraging to see some accountability for the lenders, and the attention that this has called to the industry can only help us (borrowers) in the long run.
As a distressed borrower, what should I do in the meantime?
Lenders have historically held foreclosure moratoriums during the last months of the year. Though the cause of this delay is different, I don’t think it will be as noticeable as some are hoping for this reason. I expect them to reconvene their foreclosure efforts as soon as this mess is cleaned up. Therefor, us here at ShhortSale.com will continue our short sale efforts on your behalf.
– Jeff Grant, President, ShhortSale.com