It is very troubling that there is so much fraud taking place on foreclosure paperwork, and the problem of deciding who has clean title has to be addressed.
That said, I have not heard of one single case so far of anyone who was fraudulently foreclosed upon. Neither has there been a single report that I have heard of a person being mistakenly evicted from their home due to a fraudulent foreclosure.
There have been incidents of contractors hired by banks to secure a property, showing up at the wrong address to change the locks or disconnecting utilities, but that is an entirely different matter that is not, repeat, NOT related to the issue at hand.
This crisis in the short term is going to hurt the banks and help anyone that is going through foreclosure and still living in the house (about half of existing in-process foreclosures). In the long term, depending on how long this takes to sort out, the housing market will continue to decline and when all of these properties hit the markets all at once, home prices will sag even further. That means people who want to sell their houses probably won’t be able to, or at least will get far less for it. It also means that people who are underwater now will be even further underwater as home prices drop further.
A lot of the hype the media is throwing around for the Democrats misses the mark on what the impacts of this defacto freeze are really going to be. The problem is not that these foreclosures should not have taken place, it is in the way the paperwork is being handled.
No matter what, the best possible thing to do is get these foreclosures finished as quickly as possible and get the properties back on the market. That is being delayed even further, and therein lies the real problem here.
As a paralegal working in the bankruptcy field, I have secured many deeds and mortgages. I have not run across one mortgage that has been fradulent.
I agree with you.
The problem is that the banks holding the mortgages have a vested interest in letting the properties slowly trickle onto the market.
It's the only way they can avoid revealing how over-valued their mortgage portfolio is, and how insolvent they are.
The consequences of housing finally reaching a market clearing price would be far worse for the banks than allowing the deadbeats to stay in the homes a while longer.
So when Harry Reid calls for a national foreclosure, I suspect the banking industry will reply... "Oh Lawd, Senatuh, don' throw us in that briar patch!!