The foreclosure process nationally is unraveling.
During the housing boom, mortgages were given to anyone who had a pulse, because Wall Street was desperate for the packaged mortgage debt products. These mortgages were packaged and repackaged and sliced and repackaged until no one knew at the end of the day who actually owned the note on the home
. Surprisingly this isn't a problem as long as people keep paying their mortgages, but when the wheels came off the economy a few years back and banks tried to foreclose on people, well, in the words of Martin Lawrence, "Shit got real."
See, in many states you can only foreclose on someone if you own the debt on the property. If you have the papers and the deed and whatnot. And because of all the repackaging nonsense, many banks have no clue who really has the papers. They lack legal standing to foreclose on people.
Now sure, it's not like banks ever let something so pesky as the law stop them. Many kept right on foreclosing on folks, but when people fought back in court and demanded proof the cases fell apart. Also, some banks have been foreclosing on people whose houses weren't even in debt. It's messy, is what I'm saying, and the banks have no one to blame but themselves.
What does this mean? It means that the housing crisis is not over. It's still slowly falling apart all around us. And the banks aren't nearly as solvent as they pretend to be, as they still have yet to write down the value from all the homes (we're talking hundreds of thousands of homes) that still are to be foreclosed.
JPMorgan Suspending Mortgage Foreclosures - NYTimes.com
In a sign that the entire foreclosure process is coming under pressure, a second major mortgage lender said that it was suspending court cases against defaulting homeowners so it could review its legal procedures.
The lender, JPMorgan Chase, said on Wednesday that it was halting 56,000 foreclosures because some of its employees might have improperly prepared the necessary documents. All of the suspensions are in the 23 states where foreclosures must be approved by a court, including New York, New Jersey, Connecticut, Florida and Illinois.
The bank, which lends through its Chase Mortgage unit, has begun to “systematically re-examine” its filings to verify that they meet legal standards, a spokesman, Tom Kelly, said.
Last week, GMAC Mortgage said it was suspending an undisclosed number of foreclosures to give it time to take a closer look at its own procedures. GMAC simultaneously began withdrawing affidavits in pending court cases, throwing their future into doubt.
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