Hurried Foreclosures Could Slow Foreclosure Activity
The New York Times ran this story on Thursday about foreclosure scrutiny increasing across the country because some lenders and lawyers tried to cut corners to speed the foreclosure process along.
Evictions are expected to decline as state and national law enforcement officials investigate the shady foreclosure practices.
GMAC Mortgage and JPMorgan Chase, the two main companies whose practices have been questioned, have suspended all foreclosures in the 23 states where a court approval is needed to evict. Bank of America joined the other two lenders late Friday.
This all comes as no surprise to me, as I’m in the process of writing an in-depth feature on foreclosures and the options of American homeowners.
What I’ve come to find is that lenders treat distressed homeowners as if they’re Milton from the cult-classic movie “Office Space.” Lenders pretty much ignore them. They sometimes act like they’re listening, but really they’re just saying whatever they think will make Milton (or the homeowners) shut up about his stapler and go away.
The best example is lenders’ handling of loan modifications, which are often the last chance homeowners have to avoid foreclosure. I talked to homeowners, loan officers, HUD counselors, lawyers and many others who work with foreclosures, and they all say the same thing about loan modifications.
The process is an endless loop of lost paperwork and prolonging the process until the homeowner grows frustrated and just gives up. Defense lawyers told the Times that many of the foreclosures that have taken place have had necessary documents disappear.
Marchelle Jacques-Yarde, a Boston homeowner I spoke with, said her lender told her that she should stop paying her mortgage, because the loan modification committee is more willing to work with borrowers who are ”struggling.” The Yardes quit paying their mortgage, but they never got a modification despite the fact that they filled out all the paperwork and obliged to all of the lender’s requests. When they called to check on the status of the modification, they never got legitimate answers.Continued on the next page