Florida’s Foreclosures Nightmare

Rortybomb ^ | September 29, 2010 | Mike

[tomd2]

The short problem is that banks are foreclosing without showing clear ownership of the property. In addition, “foreclosure mills” are processing 100,000s of foreclosures a month without doing any of the actual due diligence or legal legwork required for the state to justify the taking of property and putting people on the street. Even worse, many are faking documentation and committing other fraud in the process. The government is allowing this to happen both by not having courts block it from going forward, but also through purchasing the services of these mills. As Barney Frank noted: “Why is Fannie Mae using lawyers that are accused of regularly engaging in fraud to kick people out of their homes?”

And the worst part is the lack of conversation about this. Thanks to Yves Smith at naked capitalism for following this story from the get-go; her blog has become the place for anyone interested in this topic (that link is a catch-up post). The rest of the media is starting to catch up to where she was weeks ago. Here’s the Washington Post with the story of an individual caught in one of these nets.

Also Dean Baker just wrote a good summary of the situation for the Guardian:

As a number of news reports have shown in recent weeks, banks have been carrying through foreclosures at a breakneck pace and freely ignoring the legal niceties required under the law, such as demonstrating clear ownership to the property being foreclosed.

The problem is that when mortgages got sliced and diced into various mortgage-backed securities, it became difficult to follow who actually held the title to the home. Often the bank that was servicing the mortgage did not actually have the title and may not even know where the title is. As a result, if a homeowner stopped paying their mortgage, the servicer may not be able to prove they actually have a claim to the property.

If the servicer followed the law on carrying through foreclosures then it would have to go through a costly and time-consuming process of getting its paperwork in order and ensuring that it actually did have possession of the title before going to a judge and getting a judgment that would allow them to take possession of the property. Instead, banks got in the habit of skirting the proper procedures and filling in forms inaccurately and improperly in order to take possession of properties.

And the situation in Florida is worse than most assume. The specially-created courts see it as their purpose to clear out the foreclosures, as Yves Smith covers here (must read). The most obvious takeaway is that homeowners aren’t being given the chance to have their documents properly viewed, have the challenges and proper legal hurdles to putting someone on the street vetted by the courts, and instead are being bribed with an additional month of house time if they don’t ask too many questions.

And the biggest fear is that the fraud uncovered at GMAC is the tip of the iceberg for what is going on nationwide. Keep your eye on this situation.

[driftdiver]

The banks are making money on the foreclosures paid for with our tax dollars.

[tomd2]

As if the bankster thieves have not messed up this country enough, now this:
“We predict that within a week, all banks will halt every foreclosure currently in process. Within a month, all foreclosures executed within the past 2-3 years will be retried, and millions of existing home sales will be put in jeopardy.”
http://www.zerohedge.com/article/its-really-jpm-tells-cnbc-it-systematically-reviewing-foreclosures

[ez]

Fedgov has an interest in getting people out of their homes, where they have built up real value, and making them dependent on the state for their needs. Same reason they don’t want citizens owning gold. Fedgov will then swoop in and take the propeties value.

[Mariner]

Hilarious, nobody can prove who owns the property.

Worse, since the mortgages have been bundled into CDOs, they MAY have to unwind the CDO to prove ownership.

Financial catastrophe that nobody saw coming.

Many of these CDOs, while significantly diminished in value, still HAVE value in the bulk of the performing Mortgages. Others are far, far weaker than their face value.

However, if the OWNERS of the CDOs want to see their money (or portions of it) through foreclosure, they MAY have to sell their product to a bank or other institution who can unwind it. In fact, a single CDO issue could be 10,000 shares representing only 1,000 mortgages. Assume, worst case, 200 of those are bad.

Sheesh, how do you even DO this?!?!?!?

The original laws about deed and property in every single state never even considered such a farce.

I think the CDO owners are SOL.

Pension plans, States and Municipalities, Hedge Funds, Investment Banks etc.

And now, TITLE INSURANCE COMPANIES who certified clear title on 1/2 the homes sold in the last 3 years.

And, this doesn't even take into account the DERIVATIVES holdings and bets that have been placed.

Unforeseen catastrophe.

[B4Ranch]

I read an interesting idea the other day. Get a bunch of states to secede out of this corrupt FED and start another one but use the Constitution this time.

[B4Ranch]

Or a planned catastrophe.

[tomd2]

my experience with judges as a Receiver is that they do not like it when they lied to. they especially dont like it when they are laughed at. this foreclosure fraud is going viral.
http://www.nakedcapitalism.com/2010/09/meet-gmacs-robo-signer-jeffrey-stephan.html