The issue at the center of the foreclosure scandal is the Major Mistakes, Errors and Omissions by the Banks and Mortgage Companies.
In thousands of cases, the banks’ mistakes and lack of due diligence has caused people to face wrongful foreclosures.
Banks have denied that this has happened, saying, “We are confident that processing errors did not result in any inappropriate foreclosures.
We say BS.
We believe that wrongful foreclosures not only happen, they occurred on a grand scale across the United States.
Who is right and who is wrong comes down to what constitutes a wrongful foreclosure.
Wrongful Foreclosure = Step by Step:
- Homeowners were not in default but faced foreclosure. Most everyone agrees it’s wrong for banks to foreclose on someone who isn’t behind on a mortgage or has even paid off a mortgage.
- Homeowners who were told that to be eligible for a loan modification, they needed to fall behind on their mortgage—and subsequently found themselves on the path to foreclosure. It’s not uncommon for banks to give this kind of advice to homeowners who were at the time current on their mortgage but were seeking a modification. This has led some homeowners across the country down a path to foreclosure
- Homeowners were behind on their mortgage but could have caught up if not for additional fees. In light of these problems, some state judges presiding over foreclosure cases have begun asking banks and the law firms they hire to justify the thousand-dollar fees they’ve charged to homeowners. From a piece in the Tampa Tribune: "Routinely, routinely, I'm seeing charges of $1,600, $1,800, $1,000, $800, any of those are ridiculous, and there had better be a good reason for it," [Pasco County Circuit Judge Susan]
- Mistaken foreclosures due to dual track of foreclosure and loan modification processing. Banks aren’t supposed to foreclose on homeowners until they’ve exhausted all available loss mitigation options. But foreclosures and loan modifications being processed simultaneously by different divisions within the bank can cause many struggling homeowners awaiting approval for a loan modification to be foreclosed on first.
- In October, the Wall Street Journal told the story of a couple who had been granted a loan modification by their servicer, JPMorgan Chase, only to receive notice that Chase had foreclosed anyway. The bank said it had made a mistake. Foreclosures in which the bank can’t prove it has standing to foreclose.
Even in cases in which homeowners are clearly in default for reasons unrelated to servicer actions, in certain cases and with certain fact it can be argued that the banks failed to follow the law correctly, specifically the steps that must be taken at the Court House. If they missed a steps or did not complete a step correctly, it may be possible to set aside the foreclosure.
In some cases, when a loan has changed hands numerous times in the securitization process, banks have had a hard time proving standing and producing the documents necessary to enforce a foreclosure.
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