Banks and Companies are Restarting the Foreclosure Sales
Fannie Mae and Freddie Mac are now trying to resume sales of cheap homes in Charleston in an effort to restart the economy. There are so many paperwork reviews and court cases going on right now that foreclosed home sales are at a virtual standstill. They are trying to get the ball rolling on some of these cases because this situation is having a negative impact on the housing market as it continues.
Some of the negative impacts that a foreclosure freeze can have on a neighborhood include that mortgage companies are facing higher costs, so they are passing them right along to consumers. The buyers also are either walking away from buying the property or they are lowering their bids and the amount they are willing to pay for a property.
A lot of the problems started because the documents in the mortgage process were not properly reviewed. They were simply passed over to be approved without really being given much attention. Some of the loan companies simply refiled the consumer’s paperwork in order to get them approved quicker. This was not the result however thanks to this scandal. They ended up having longer delays due to confusion over the duplicate paperwork.
Fannie Mae and Freddie Mac have spent a lot of time trying to convince everyone that this was simply a technical glitch. The courts who are involved are saying that this was not the case. There are about 30,000 houses that were foreclosed on that will end up being delayed in the United States. Overall, 27% of the inventory was affected by the foreclosure shutdowns. Up to 41% of the number of foreclosed houses in the US are tied up in court cases at the present time. An average foreclosure processing time has gone up to over 400 days right now.
The robo-signing problem occurred involved when the titles were transferred electronically and notaries were not properly checking them for signatures of the actual people. The Justice Department has launched an investigation into the different mortgage companies to take a look at their paperwork. Attorney Generals of all 50 states are working on their own investigations as well.
Banks are canceling their foreclosure hearings and reviewing stacks of paperwork so this is creating chaos for the court systems. They are not sure how to proceed until some of the hoopla over all this mess settles down some. Wells Fargo has admitted that there are discrepancies in much of its home loan paperwork affecting some 53,000 homes in about 23 states nationwide.
There is a backlash of furor against the banks and mortgage companies by state and local officials. Many refuse to honor foreclosure notices until the situation is resolved. There has been a fear that bank stocks would be dragged down to lower prices because of the crisis. It would appear there is not an easy solution in sight. Hopefully, the crisis will soon be resolved so that those trying to get credit for a home loan will have an easier time of it.
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