Posted on 09/30/2010 5:36:50 AM PDT by Palter
J.P. Morgan Chase, one of the nation's leading banks, announced Wednesday that it will freeze foreclosures in about half the country because of flawed paperwork, a move that Wall Street analysts said will pressure the rest of the industry to follow suit.
The bank's decision will affect 56,000 borrowers in 23 states where allegations of forged documents and signatures and other similar problems are being used to try to overturn court-ordered evictions. Yet the impact may be much broader, given J.P. Morgan's stature in the industry. If other banks adopt the same approach, the foreclosure process in many parts of the country will grind to a halt.
Officials at Fitch Ratings, a credit-rating firm that measures the health of companies, said the "defects" found in foreclosure documents at J.P. Morgan are industry-wide. Underscoring that concern, Fitch said it is considering whether to lower the grades it gives to the mortgage servicing divisions of the nation's largest lenders.
"Over the next few weeks, we expect to see more and more companies come out with similar announcements," said Diane Pendley, a managing director at Fitch.
The paperwork problems at J.P. Morgan mirror those uncovered last week at another large mortgage lender, Ally Financial. But J.P. Morgan's decision is expected to have a much greater effect on the industry because it is held in high regard by its peers. By contrast, Ally, formerly known as GMAC, is still under the cloud of a $17 billion federal bailout package that it has been unable to pay back.
Both firms are investigating whether foreclosure files were improperly assembled, and whether their employees failed to review the documents even as they signed off on them.
(Excerpt) Read more at washingtonpost.com ...
Paperwork schmaperwork, the bottom line in more ways than one, and no pun intended, is: Can the mortgagee make the payment every month until house sold or purchased by another?
first GMAC, now JPMorgan, WellsFargo(wachovia) and BofA(Countrywide) can not be far behind.
Now raters (ugh!) threatening downgrades on these servicers. If you tried you could not have screwed this up as much as these banks have done.
from Naked Capital: Fitch Considering Downgrading Servicers Over Affidavits http://www.nakedcapitalism.com/2010/09/fitch-considering-downgrading-servicers-over-affidatits.html
Boy, if Fitch thinks servicer problems are limited to affidavits, it is gonna learn a lot more in the coming weeks and months. This report comes via BusinessWeek http://www.businessweek.com/ap/financialnews/D9IHP4500.htm
Question #1 on any mortgage application should read: “Can you afford this loan? Yes? No?. If Yes, continue to question 2. Jeesh!
I guess the banks figured that filling out the foreclosure forms as diligently as they did the mortgage applications would be good enough.
“...the bottom line in more ways than one, and no pun intended, is: Can the mortgagee make the payment every month until house sold or purchased by another?”
Must disagree. In a foreclosure, the bottom line needs to be: can the entity seeking foreclosure from the courts prove that they have a rightful title to the property?
The paperwork fraud and tracking down of such paper is going to require a huge workforce.
I'm at a loss on the time frame to work out the entire system that we have. Dam.
“Question #1 on any mortgage application should read: “Can you afford this loan? “
Just make sure you ask the bank that question first. They’ve made loans to people who they knew did not have the income.
...because they knew they were going to bundle up the mortgages and sell them to somebody else (who sold them to somebody else, who sold them to somebody else...). The dirty little secret in the foreclosure world is that in many cases, the banks can’t prove they hold the mortgage.
My point was related more to the foreclosures being on hold.
Proof of ownership or title to the property is important, and has been used by many people to protect themselves from foreclosure because of poorly done paperwork. Loans pass through many banks, who holds the title could be a parlor game, instead it is serious business.
In many cases this is a matter of standing. To bring a foreclosure, a lender should be the record title owner of the note and mortgage. That proves they have the right to initiate the foreclosure process.
When a loan is sold from one lender to another, the assignment of the mortgage and note should be recorded in the courthouse deed records. Everyone has to record in the property records to be protected. The big banks don’t want to do this anymore; they think they are above property laws. And then some geniuses split ownership of the note from the mortgage.
When you can’t go to the courthouse and find out who owns record title to the note and mortgage on your property, something is wrong.
The banks need to play by the same recording rules as everyone else. If they get burned by not following the recording laws and that makes them start recording their assignments like they should have all along, it will be a good thing.
*** The dirty little secret in the foreclosure world is that in many cases, the banks can’t prove they hold the mortgage.***
Thanks to Fanny Mae and Freddy Mac, and the other liberal laws such as no Red Lining, which forced the banks to issue mortgages whether the borrower had a down payment or money to pay the bank back, all of which forced the banks to give out “free” mortgages or be fined high amounts. That was the beginning, thanks to the libs, however, some banks are guilty of joining in the game to depress the housing market.
Just dam.
It looks the govt statistics for foreclosures are going to look rosier next month, when foreclosures “drop”. More signs of “recovery”?
A a whole lot of happy squatters are gonna be singing praises for obama, who really DID give them houses. Hopefully they are not your neighbors- there goes the neighborhood.
http://www.zerohedge.com/article/mortgage-gate-just-got-wierder-counterfeit-court-summons
Mortgage Gate Just Got Weirder: Counterfeit Court Summons
Submitted by Tyler Durden on 09/29/2010 13:59 -0500
Deutsche BankFloridaFund FlowsGMAC
With each passing day, the revalations in mortgage-gate, which has for now implicated GMAC and JPMorgan in foreclosing on mortgages without titles, and will likely soon proceed through the entire mortgage origination industry like wildfire as more and more of those foreclosed upon begin to challenge the process (we wonder just what the statute on limitations for retroactive challenges is), are getting increasingly more bizarre. Today, courtesy of Alan Grayson’s office we discover that not only are servicers foreclosing on mortgages to which nobody apparently owns the title, but that servicers, representing such reputable firms as Deutsche Bank National Trust Company, are willing to counterfeit court summons in their pursuit of a clean and efficient foreclosure mill.
As Grayson’s office points out: “Apparently what’s happening is that private process servicer companies may not be serving people with summons, and are simply counterfeiting the documents so they can keep the fees without doing the work. That means that you could theoretically be foreclosed on without ever knowing there was even a foreclosure case against you.”
What it also means, is that banks may have been participants in this outright criminal judicial fraud, which we are confident will be uncovered in many more cases, as this is highly unlikely to be an isolated case.
And the ultimate outcome, as the Florida Bar News states, is that soon, the entire foreclosure process will halt, thereby creating a huge bottleneck to cleaning out excess inventory as more and more squatters are allowed to reside in properties that no longer pay their mortgages to anyone, now that it is obvious that nobody (ahem Freddie, but how else can you keep bailing out the banks, pardon, the GSEs, via fraudulent fund flows) owns the actual deed. “If we had everyone defending their foreclosure, we’d never get through this.”
Except in cases of fraud, the paperwork will eventually be found and the debtors foreclosed.
The lawyers have thrown up a temporary stumbling block by throwing sand in the gears of the short cuts. The short cuts will be stopped and the long process resumed and the property recovered by the actual bank holding the deed of trust.
J. P Morgan has said they will find the papers and take the properties. The result is that those fighting foreclosure will run up big legal bills and still be out on the street
There has been a remarkable series of events unfolding in the Utah court system regarding mortgages that were extended to home buyers over the years and later bundled and sold off by the original banks. It turns out that some of the companies that now hold these mortgages may have to meet some onerous requirements before they can foreclose on them, since in those cases the mortgages were originally cast under Utah state law and are now held by investors or other banks that don't meet Utah's banking standards.
“Thanks to Fanny Mae and Freddy Mac, and the other liberal laws such as no Red Lining, which forced the banks to issue mortgages whether the borrower had a down payment or money to pay the bank back, all of which forced the banks to give out “free” mortgages or be fined high amounts.”
Thats part of the picture but not the whole picture. Banks were making huge profits off these loans. They didn’t care if the borrower could pay it back.
Who is dumb enough to buy property without proof of ownership?! That is what many banks and investors did, but of course they were protected by the US Govt and our tax dollars so why should they care.
“Except in cases of fraud, the paperwork will eventually be found and the debtors foreclosed.”
In some cases, in many they won’t because the companies no longer exist or the paperwork has been lost.
“J. P Morgan has said they will find the papers and take the properties. The result is that those fighting foreclosure will run up big legal bills and still be out on the street”
They wont and cant in many cases. The banks legal bills will far surpass those of the borrowers.
This could be a big problem for banks if this holds and spreads. All these foreclosures remain on the banks balance sheets thereby affecting future loans. Just another drag on the economy and another bailout potential.
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