According to experts and officials who have conducted research across America, foreclosure abuse is now becoming rampant.
This story comes out of a report conducted by the California city of San Francisco which revealed that foreclosure abuse was widespread. Of the 400 foreclosures which were audited for the report, 84% of them were apparently illegal.
Many experts are now assuming that the figures revealed in San Francisco are also reflective of the true state of the United States as a whole when it comes to abuse of foreclosures. Diane Thompson, an attorney who works at the National Consumer Law Center, said that:
“The audit in San Francisco is the most detailed and comprehensive that has been done — but it’s likely those numbers are comparable nationally.”
Further evidence of foreclosure abuse was demonstrated by Jeff Thingpen, who is the register of deeds in Guildford County, North Carolina. He studied 6,100 mortgage documents from 2011, which includes loan notes and general foreclosure paperwork, and discovered that between January 2008 and December 2010 there were signature irregularities on 4,500 of these documents.
Signature irregularities is a sign of robosigning, which is an illegal practice used to force through home foreclosures, even if there isn’t a lender present. Robosigning was presented with a lot of publicity recently when a recent foreclosure scandal led to a $25 billion settlement between five of the most prominent US banks and the government itself.
A spokesman for Wells Fargo did say, in response to the scandal that:
“We have acknowledged we didn’t always follow our policies in the foreclosure process. We found some areas where there were deficiencies in our process.”
But any vaguely intelligent individual will easily discover that the banks were just being lazy when it came to foreclosure. As more and more people caught on to this fact, the decision to abuse the foreclosure process was made by an increasing number of people. The banks are certainly to blame when it came to their monitoring of the foreclosure process.
In 2006, when the number of home loans peaked, loans were often given out to people with less than stellar credit records. Due to these events, in 2012 roughly 11 million Americans are now obliged to pay back money which amounts to more than the value of their homes.
Further studies have also been carried out around the country. One study in northwestern Massachusetts, in Essex County, conducted by John O’Brien, the register of deeds in Essex County, discovered that of all the loans issued in 2012 75% were considered to be invalid with another 9% not standing up to serious scrutiny.
Among other problems, this foreclosure crisis has led to a lot of confusion with lenders as lenders who foreclose properties are may not even own the original loans; this was caused due to the repackaging of mortgages after the housing bubble burst in 2007. John O’Brien, in his study, could actually only find the original owners of the mortgages in 287 out of 473 cases.
Overall, all of this means that banks will have a lot of mess to clean up while millions of Americans are forced to foreclose their houses. However, due to the expiring of the Mortgage Debt Forgiveness Act in December 2012, it’s strongly recommended that homeowners seriously consider foreclosing their homes if it looks like they may enter foreclosure in the near future. This is so homeowners can make the most out of the sale of their homes.
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