Many of you have no doubt heard about the problems facing lenders and the foreclosure process due to possible fraudulent signatures and contested accuracies in the foreclosure process.
This stems from mortgage lenders using 3rd parties (aka robosigners) to "verify" the accuracy of paperwork and attach their signature to the documents attesting to this fact when in fact they allegedly didn't verify or couldn't verify the accuracies due to the numbers of files they were processing each day.
This presents the potential for causing severe problems in the 23 states that foreclose by judicial process. Minnesota forecloses by advertisement and not judicially.
Additionally, a Mortgage Electronic Registration System (MERS) was created by the lending industry in the 1990's that attaches a number to mortgages, making them easier to track thru the system and the various paperwork shuffles. This system is legal and in use in MN and has kept our mortgage system much cleaner and without the problems many other states are experiencing.
This debacle has caused several banks to halt the foreclosure process, including stopping the sale of foreclosed homes in some instances, just before the closing happened with the hopeful buyer. Bank of America has halted their foreclosures in all 50 states and GMAC and others have also stopped foreclosing in some states. Fannie Mae and Freddie Mac are now weighing in.
The press is fanning the flames by saying some people who have purchased bank-owned homes may have their ownership called into question. As if the federal government would allow the banks to take homes back from people after they close, move-in and invest money in repairing these distressed properties. I don't know what will happen except that banks will suffer reduced share prices and the costs of fixing their processes as well as a few law suits from some who feel they have been harmed by these procedural lapses.
This too will pass.
