This has nothing to do with backpacking, except if you have no house you may do more or less backpacking.

60 Minutes did a piece on bank mortgage foreclosures

In the mortgage securitization hysteria, the banks lost many mortgage documents

Most of the banks have done foreclosures with forged documents

If you or anyone you know is being foreclosed on you might want to consider this

Demand to see the mortgage documents. See if there are any date inconsistencies, like the mortgage document is dated after the foreclosure document.

Curiously, a lot of them use the name "Linda Green" as the bank vice president.

If you pointed out inconcistencies like that to the judge, maybe the foreclosure would be delayed.

You might get the bank to pay you off, like $20,000 to not contest it. It will cost them more than that to clear up their mess.

Or if you do a short sell, tell the bank you want $20,000 or you won't agree to it

Edited by retiredjerry on 04/04/2011 11:41:55 MDT.

Saw that. I thought it was Linda Green.

Linda

fixed it

Oh, oh...

Hope it isn't the Linda Green I once dated, if so everyone better watch out!

Um, I don't agree with what you are proposing.

The fact that banks screwed up their paperwork doesn't change the fact that a borrower isn't paying the mortgage. You won't be foreclosed if you stay current with the payments.

If you aren't making the payments, for whatever reason, you shouldn't be living in the house.

Now, if you feel that you were cheated by the lender in some way in the original transaction, that's a different matter.

"Um, I don't agree with what you are proposing."

This is America. It's always someone else's fault.

Short version of what follows .... "Two wrongs do not make a right" ... why should fraudulent documents or lack of ducuments be allowed to result in a foreclosure""

Um, I don't agree with what you are proposing.

The fact that banks screwed up their paperwork doesn't change the fact that a borrower isn't paying the mortgage. You won't be foreclosed if you stay current with the payments.

If you aren't making the payments, for whatever reason, you shouldn't be living in the house.



That is true enough ... but a rather incomplete. Consider other aspects of the issue:

* Foreclosure is a civil legal process. Transfer of ownership of real estate is one of the more precisely defined civil processes we have. Home buyer is not making payments so someone does have the right to take the home. But who is that? Do we really want our courts to grant a claim that has inadequate supporting documentation?

* The "mortgage industry" willing chose to shift from being a borrowing-lending business to becoming a fee for service business. That provided an incentive to increase the volume of their business. Securitization (sp?) was an invention that enabled them to sell the risk to another party, allowing them to unload the risk of sub-prime mortgages on other people. "I'll get my fees and let someone else get the risk". That was ripe for abuse and the situation ripened to the point of being rotten.

* Proper valuation of the properties was also an obstacle to the desired high volume of business. The chosen solution was to avoid doing business with appraisers who failed to inflate home values beyond what was supportable.

* proper paperwork (proof of ownership) is time consuming and expensive ... another obstacle to high volume. The industry chose to avoid that expense, resulting in inadequate proof of ownership.

Do we really want our courts to transfer ownership without the required proof of ownership?

Going back to get the proper documentation is expensive and time consuming. SO, the solution to that problem has become to commit fraud by manufacturing false documentation after the fact. Do we really want the courts to ignore that?

So much for sub-prime mortgages where the home buyer shares a role in the problem. Surely that share of responsibility should mean that they should share the pain. I agree. But we're well past the point where it's subprime mortgages that are being foreclosed. The people being foreclosed now have lost their jobs due to a damaged economy ... damage triggered by the sub-prime mortgage blowup.

Should not ALL parties involved in the transaction share the pain?

Lastly, the current owners of the mortgage had the responsibility to know what they were buying. Why should they be allowed to avoid the cost of completing the documentation for faulty mortgage bundles they had the opportunity and responsibility to inspect before they bought?

One of the alleged reasons we have courts is to provide a "civil" way to resolve disputes ... rather than resorting to violence. Don't you think that sooner or later someone will succumb to the temptation to call in their friends named Smith & Wesson to "right" the wrong of losing property to someone who has not proven their ownership rights?

Take the time to do it right.

Edited by jcolten on 04/04/2011 13:10:04 MDT.

So explain to me the situation where someone would be in foreclosure, and they would have to demand to see the mortgage documents. Back when I had a mortgage, I didn't have to ask anyone to see the mortgage documents, I could pull my own file, and look at my own copies. Not a big secret, I was there when they were signed. Any moderately responsible home owner should be able to prove fraud by this same method, although that doesn't get around that little "not paying the bill" issue.

Now if I understand what Jim is saying, it's that banks shouldn't be able to foreclose without proving they own the mortgage? That makes sense. But shouldn't the homeowner have to prove that they do to? Although getting a free house would be a big disincentive to honesty.

Edited by skinewmexico on 04/04/2011 13:53:48 MDT.

The legal problem occurs when the mortgage was sold and resold and resold again as an investment. If any of those sales were not recorded with the county, it was not legal. The biggest risk in this situation is for the buyer of the foreclosed property, when there is not a clear legal title transfer. Most title insurance companies are now aware of this problem--don't buy if they can't guarantee a clear title!

There have been a number of cases in which homeowners have applied for relief under the current federal law designed to help those who lost their jobs and can't make full mortgage payments, only to have the bank either refuse or stall for months and then foreclose because the payments are too far in arrears.

Most people are only a paycheck or two away from this situation, unfortunately, especially those who were forced to buy when a tiny 1920's 2-bedroom bungalow in southern California cost over half a million. (My daughter and her husband were lucky--they were able to sell just before the bust hit.)

Edited by hikinggranny on 04/04/2011 14:01:30 MDT.

well put Jim

The root of the problem is that the wall between investment banks and regular banks was removed

They made way more money selling mortgage backed securities than sleepy mortgages

They quit worrying about making sure the mortgages were good, that they would be paid back, that the documentation was in order, etc.

Now, if they forge documents to get a foreclosure, that is illegal

Someone that is illegally being foreclosed upon should know about it

If the forclosed person gets $20,000 from the bank, well, the bank made so much money off the mortgage backed securities that there's a certain fairness

And if the bank is penalized, maybe in the future the banks will be more careful

By the way, we have only half fixed the deregulation problems and they threaten to remove deregulations which will take us right back to where we started, ripe for another financial collapse

Take a deep breath.....relax....you are happy now......... Though I will just add this Michael. My great-grand-dad, grand-dad, dad and at least one brother are/were bankers and they might very well agree more with Jerry. Let's just say the last few years would have them spinning in their graves. It's not the kind of banking they practiced.

Edited by obxcola on 04/04/2011 15:09:28 MDT.

No Cole, the problem is that Jerry is perfectly happy with Jesse James robbing the bank. After all the bank is rich and it isn't hurting anybody, right?

He didn't say if you think the bank are wrong check them out. No, he said if you screwed up and face foreclosure go after the bank just in case they didn't cross the t's or dot the i"s. Maybe you can exthort them for 20k. Just what they deserve.

What a load.

Hmm. So before the homeowner stopped making payments they were making a payment each month to somebody. Each year they got a 1098 showing interest paid, so they could get the tax write off. Probably got a bill in the mail each month stating the balance, payment due and due date. So now all of a sudden they don't know who owns the mortgage. If they had doubts why did they ever make payments in the first place.

What a down right sleazy, unethical and illegal thing to do. I'm not saying the bank shouldn't have done a better job keeping records or that banks didn't make a lot of wrong decisions.

And by the way, who do you think pays for all this at the end of the day. All us legal abiding citizens who pay our mortgages.

Brad

Hmm. So before the homeowner stopped making payments they were making a payment each month to somebody.

That somebody would very often be a mortgage processing service ... another layer of processing that emerged to deal with the complexity introduced as a side effect securitization.

The mortgage processing service is not the owner of the mortgage. But the processing service DOES know who they were forwarding the payment to ... but that is because someone told them that they owned the mortgage and they believed them without documentation. That falls very far short of the legal requirements establishing a chain of ownership,

Note that I am NOT advocating that people in the rears on their mortgage get a "free house". I am advocating that folks who took short cuts while creating this mess bear the expense and time delay of correcting the problems caused by the short cuts. Committing fraud is not an acceptable correction to that problem. I am also advocating for the concept that shared responsibility should result in shared cost of remedy.

Note that another response in this thread pointed out that title companies are starting to decline to service sales of properties with this kind of chain of ownership problem. Perhaps because they now expect that'll be their financial future is at risk if they do so?

All of my (very few) real estate transaction were handled by a qualified attorney at some expense to myself just for the purpose of avoiding this kind of situation. We did that because we had been taught that in real estate there is no such concept of "verbal contract" If it isn't in writing, it does not exist. My position is that the current mortgage owners should have avoided the problem they are in by being informed or hiring the right expertise to KNOW that there will be no problems rather than trust the verbal word of the financial snake oil vendors who sold them the securities. Short cuts always come with risk and risk sometimes leads to future expense.

disclaimer: I have no financial interest in either side of this issue

Edited by jcolten on 04/04/2011 15:48:22 MDT.

"No Cole, the problem is that Jerry is perfectly happy with Jesse James robbing the bank."

No, Jesse James was illegal and killed people, very bad.

If someone that's being foreclosed on uses legal means to slow up the process or get a payment to go away, good for them.

Forging documents is not crossing t's and dotting i's.

And ethically, banks created this mess so deserve to be penalized. There bad practices created the real estate bubble and bust and high unemployment. If they have to pay off someone to fix a document screwup it's fair.

By the way, I got a 15 year mortgage which is now paid off. Never borrowed money to buy a car. Always saved 15% of what I earned. That is a much better way to manage your finances.

This is much more complicated than it sounds.

Banks and mortgage companies do not loan most of the money for homes any more -- they sell the loan, which is "serviced" by mortgage servicing companies. In these cases the bank or mortgage company just originates the loan. When I was a kid, for the most part, banks actually lent homeowners money, based on the deposits they had on hand. But that soon changed...

Banks and mortgage companies do not actually do the foreclosure documentation, they hire other companies to do it, the largest of which is LPS. A lot of the current documentation fraud problems lead to us directly to one company: LPS. The robo-signers work for LPS. However, many banks contract this company.

All of this does not absolve the financial "loan originator" of responsibility. Typically banks do a good job of documenting paperwork, mortgage brokers can be worse. If you have ever financed a home, you know there are a few pounds of paperwork in the loan package. The problem usually starts when the loan is sold, and it gets worse from there.

Now....

Who created the mortgage backed securities industry? Guess who....




hint: think Freddie Mac and Fannie Mae).



Both were created to increase and regulate the money supply. And it got worse...

Fannie Mae's mantra is to "provide financial products and services that increase the availability and affordability of housing for low-, moderate- and middle income families... (quote from their Website)" It was created in 1938 to provide banks with taxpayer money to increase homeownership and affordable housing, since the government was unhappy that banks were unwilling to lend money for home loans -- it was too risky at the time. In 1968, Fannie Mae was "privatized." But is classified as a Government Sponsored Enterprise. The reason to "privatize" Fannie Mae, was to get it out of the Federal Budget, because along with the Viet Nam war, the budget was looking pretty dismal. Pretty creative financial move.

Freddie Mac "Works with mortgage lenders to help people get lower housing costs and better access to home financing (quote from their Website)." It was created in 1970 by the government, so Fannie Mae would not be a monopoly.

Freddie Mac and Fannie Mae control 90% of the secondary mortgage market, and hold over 50% of all home loans. We have two government sponsored, investor owned companies that have a monopoly on the secondary mortgage market that the government created. Unless it has changed, these two GSE's are exempt from registering with the SEC, or paying state & local income taxes. Sweet!!

The government has provided over $110 billion to Fannie and Freddie in bailout money.

So what have the regulators been doing to oversee the GSE's they created?

Any fraud committed should be punished. But, what is the root cause of the problem?

"And ethically, banks created this mess so deserve to be penalized. There bad practices created the real estate bubble and bust and high unemployment. If they have to pay off someone to fix a document screwup it's fair."

For goodness sakes Jerry is anyone ever responsible for their actions besides a business? Just curious because you never ask the government or an individual to take any responsibility for their actions. It's ALWAYS the business worlds fault. Sure they have some blame in all this mess, but they NEVER forced a homeowner to sign the mortgage documents.

The funny thing is back in the late 1970's people were having discussions about why everyone didn't own a home. People started saying everyone is "entitled" to own a home. People were complaining that banks were not loaning to those who were a credit risk. So what happen:

"The Community Reinvestment Act (or CRA, Pub.L. 95-128, title VIII of the Housing and Community Development Act of 1977, 91 Stat. 1147, 12 U.S.C. § 2901 et seq.) is a United States federal law designed to encourage commercial banks and savings associations to help meet the needs of borrowers in all segments of their communities, including low- and moderate-income neighborhoods.[1][2][3] Congress passed the Act in 1977 to reduce discriminatory credit practices against low-income neighborhoods, a practice known as redlining.[4][5]
The Act requires the appropriate federal financial supervisory agencies to encourage regulated financial institutions to help meet the credit needs of the local communities in which they are chartered, consistent with safe and sound operation (Section 802.). To enforce the statute, federal regulatory agencies examine banking institutions for CRA compliance, and take this information into consideration when approving applications for new bank branches or for mergers or acquisitions (Section 804.).[6]"

Guess who was President at the time, oh Jimmy Carter (D). And who controlled the congress from 1977-1979, oh democrats. Some yes this was a law that the democrats pushed through. However to be fair every president since then has supported this effort and added to it.

So maybe the Govt has some reasonability in this whole mess. And again supports my position that government intervention rarely works out.

The blame for the financial crisis of the past couple of years can be spread across a whole lot of people. Time to stop pointing figures and move on.

Brad

http://www.youtube.com/watch?v=yipV_pK6HXw&feature=player_embedded

Wish I could find the link but recently there was a story of a homeowner who never missed a mortgage payment but was threatened with foreclosure.

The banks got real sloppy with their paperwork and I hope some of these judges fine the banks hard. It's time the banks started paying strong attention to strong and documented procedures and treat legal homeowners who are paying on their mortgages properly.

ps. I found the link.

http://consumerist.com/2010/12/bank-of-america-tries-to-foreclose-on-couple-that-has-never-missed-a-payment.html

Edited by marti124 on 04/04/2011 17:11:33 MDT.

Obviously I'm not advocating that banks should foreclose on homeowners who are making their payments. I'll be the first to agree that we have a lot of problems in the system and financial institutions have screwed up big time. I'm also an advocate that banks should try to work out mortgages because we all benefit by having people stay in their homes. IMHO I think we should return to the days of old where home buyers put down a substantial deposit, banks hold the mortgage, homeowners must show proof of earnings and good credit scores are required. Kinda financing 101 to me.

However to advocate that a homeowner in foreclosure is entitled to commit fraud or extort from a bank is just flat out wrong.

And to blame banks for the financial crisis, high unemployment, global warming, world hunger, NFL lockout, rain in local forecast tomorrow, etc just isn't right.

Brad