Sept. 16 (Bloomberg) — U.S. home seizures reached a record for the third time in five months in August as lenders completed the foreclosure process for thousands of delinquent owners, according to RealtyTrac Inc. Bloomberg’s Su Keenan reports. (Source: Bloomberg)
There was a time, not long ago, when having a home of your own signaled stability. It was a stake in a community, a place for individuals to come into their own or for families to grow. It was a solemn obligation to a financial institution, a statement of the bank’s faith in you, an investment for old age.
So much for that. These days, millions of houses across the country sit empty or shelter owners who can’t or won’t make mortgage payments. The vacancies give lie to the notion of home ownership as a road to stability.
As dismal as the housing market is, at least we could cling to the idea that the nation was slowly climbing out of the mortgage mess. However painful foreclosure and heartbreaking evictions, the country was working its way toward still-distant normalcy.
This month hope for a stabilized housing market took a hit, as Ally Financial Inc.’s GMAC Mortgage unit halted evictions in 23 states. Attorneys general in two more states also are demanding moratoria.
The culprit is sloppy, possibly fraudulent, paperwork by at least one manager at the division. And it looks like he was doing what lots of other foreclosure processors were doing, too.
We’ve seen this culprit before. Sloppy research and sometimes fraudulent paperwork by lenders, loan packagers, credit raters and insurers of mortgage-backed securities kicked off the mortgage disaster in the first place.
The only difference is that this time it’s occurring at the rear end of the business, foreclosures.
Did anybody working at mortgage lenders learn anything over the past two years? And shouldn’t banks be careful about taking away someone’s home?
GMAC middle manager Jeffrey Stephan said in a deposition that he signed 10,000 foreclosure packages a month. To accomplish that, he had to give up something. What he omitted was checking to see whether the named owner was really in default and whether the listed mortgage holder in fact still held the mortgage.
In other words, he had no time to check the facts contained in the papers whose accuracy he was guaranteeing. Nor did he bother to always have a notary present when he signed, as required.
Likewise, a JPMorgan Chase & Co. executive said in a deposition last May that she hadn’t personally verified information on the thousands of affidavits and other documents she signed so that her bank could foreclose on houses.
Beth Ann Cottrell, an operation supervisor at the company’s Chase Home Finance unit…
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