A Victory for Home Owners in Massachusetts!

The New Bottom Line reports that
This is important. The banks are creatures of the law. They are only private business in a sense. Their accounts are protected by law and they have been given fast and favorable legal methods for foreclosure because in previous decades they had acted the role of responsible capitalism. Now that the banks have demonstrated they are unworthy of foreclosure favoritism, it is time to tighten the legal procedures and make them earn their money by legitimate means.
You may be tempted to argue that they have every right to foreclose on someone who has stopped payments on a home. That would be true if that is the only way they have been working it. But all over this nation, they have been using a somewhat different procedure. A home-buyer calls up and says he has trouble with paying this month’s mortgage. The bank kindly says, “Don’t pay it. Don’t make any payments for three months. That will qualify you for the HAMP program, and we can renegotiate the loan.”
The trusting home owner doesn’t pay for three months then resumes payments. He is stacked with penalty fees for late payments. Concerned, the home owner calls the bank. But the bank never seems to find the time to call him back. Eventually a letter is received saying that he has been denied admission to the government program and all payments including penalties are due now to avoid foreclosure. Then when the unfortunate client is unable to come up with the thousands of dollars in fees, they foreclose. I suspect the bank hands out a bonus and maybe a bottle of champagne per kill.
When the banks act in this manner, the legal procedures designed to protect their profits no longer make sense in a civilized society.
James Pilant

Cloud on title forever post foreclosure {but wait the Banks own the title companies} (via Timothymccandless’s Weblog)

This is a (fairly outraged and rightfully so) discussion of MERS, the electronic system used by the foreclosure industry to prove ownership of homes. Depending on the state, it proves a little or a lot. It appears as time has gone by that the faults of the system have become more and more obvious.

Of course, many who lost their homes to companies using this system never really got a day in court since this weakness in the ownership status has only recently become well known. This was not fair and that it produces strong feelings of rage and hopelessness is not surprising.

I hope the thoughts here can help some people get justice.

James Pilant

Recently Discovered Flaw in Recording System Clouds Titles on Previously Foreclosed Properties   The modern system of mortgage refinancing and assignments created during the housing boom has left behind a wave of title defects on properties that have ever had a foreclosure in their history, due to a loophole in the property records recording system. This has been detected on a number of properties currently in foreclosure, and found to have … Read More

via Timothymccandless's Weblog

Why Should We Have A Foreclosure Moratorium?

Ezra Klein from the Washington Post

Ezra Klein: (Klein has just asked why should we do a moratorium, this is his follow up question.) But won’t that just freeze the markets and throw everything into more chaos? And as for the homeowners, most of them will end up being foreclosed on anyway. We’ll have delayed the inevitable, adding uncertainty to economic pain.

John Taylor: (John Taylor is president and chief executive of the National Community Reinvestment Coalition.) Those are people who don’t understand what’s happening in the crisis. The point of a moratorium is to give the counselors and the attorneys time to negotiate a fairer, more responsible mortgage product. Mortgages where properties have been abandoned and the banks are repossessing them should go forward. But in other cases, where people have just lost jobs, we can be more patient. Citibank has given those people six months to get back on their feet. That’s what we need, not greasing the skids of this process. People need to understand, every time there’s a foreclosure, if you’re near that house, your property value goes down.

Taylor goes on to discuss the time a moratorium should last. I’ve been calling for three months. I’m a piker. Taylor calls for 6 to 8 months.

But he makes sense, a moratorium would encourage banks to renegotiate the loans, not just foreclose. We could do with a little reason, a little intelligence in this process. As I have pointed out before, giving people BMW sport utility vehicles for signing record numbers of foreclosure documents without looking at them is not just illegal, it’s crazy. It doesn’t make any sense to game the system like that. Rewarding people for good performance is not a bad idea. Rewarding people for lunacy, rewarding people for things that get your sanity questioned is not good management practice.

We could do mortgage foreclosures like people, not like process. We can live as decent human beings. We have choices. We can try to keep people in their homes. We can try to make the best of a bad situation. We don’t have to live this way.

James Pilant