Monday, October 25, 2010

Big Mortgage: Trust Us

Bank of America Finds Small Foreclosure Errors:

For weeks, Bank of America has insisted its review had not turned up any serious errors, and emphasized that it had not found a single case where a homeowner was facing foreclosure in error.

But on Sunday, the bank revised its fairly combative public stance. Bank of America had found errors, but only in a tiny number of cases, Dan Frahm, a spokesman for the bank, said late Sunday.

“These are examples of exceptions that were caught early in the process through control steps,” Mr. Frahm said. “They do not reflect exceptions in final documents that are being resubmitted to the courts.”

Snicker. "Trust us," eh? No thanks. Once the criminal investigations underway in all 50 states have been completed, and all the proper "errors" subpoenaed and made public, then we'll see exactly how many homeowners were forced from their homes illegally, and how many real mistakes were made.

Meanwhile, more tales of woe from the front lines of the foreclosure-industrial complex as it clanks back into motion.

“Banks are historically reluctant to do short sales, fearing that somehow the homeowner is getting an advantage on them,” said Diane E. Thompson, of counsel to the National Consumer Law Center. “There’s this irrational belief that if you foreclose and hold on to the property for six months, somehow prices will rebound.”

In half a dozen more cases examined by The New York Times, Bank of America rejected short sale offers, foreclosed and auctioned off houses at lower prices.

[Lydia] Sweetland, 47, tried such a sale this summer out of desperation. After seven months of being unable to pay her mortgage, she decided that a short sale would give her more time to move out of her Phoenix home and damage her credit rating less than a foreclosure.

She owes $206,000 and found a buyer who would pay $200,000. Last Friday, GMAC rejected that offer and said it would foreclose in seven days, even though, according to Ms. Sweetland’s broker, the bank estimates it will make $19,000 less on a foreclosure than on a short sale.

Why would a bank/big mortgage company take the hit? Because in most cases the titles to these properties were sold (some say stolen) by the banks in the form of worthless (expletive deleted) to other "investors." If the property owner tries a short sale, the bank has to pony up the title, which they don't have since they attached it to these other loans and sold the property owner down the river. No one knows where tens of thousands of titles, perhaps more, actually are. John Robb explains:
This isn't a paperwork error. It's gross negligence, on the bank's part, that materially altered the relationship between you and the new owner of the loan. Once the collateral was removed from the loan, it can't be reattached. Your home's title can't be attached to a loan willy nilly and without your consent. To do otherwise is theft, and that's exactly what every lawyer from here to Timbuktu will be arguing.

Of course, that's not going stop the banks from trying to "fix" this. They've already tried fraudulently manufacturing paperwork via fake, backdated signatures to claim the title was properly sent to the reserve. They got found out and foreclosures were stopped across the country. Expect similar behavior in Congress and in the press.

And expect the Big Media storyline of "paperwork errors" to continue as thousands more people are dispossessed illegally throughout the country.

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