Subscribe to the NewsLoan Servicers Suspend Foreclosures
By Admin
In the past week, numerous sources have reported that Ally Financial (formerly GMAC Mortgage), JPMorgan Chase, and now Bank of America have announced that they are suspending foreclosures in the 23 states where they need court approval until they can investigate and correct problems with foreclosure documents. Reportedly the banks have admitted to signing affidavits without a knowledge of the documents or a notary present. Most foreclosures in Washington State are administrative procedures that do not require a court proceeding, so it’s unclear how this problem will impact foreclosure sales in our state.
An executive at a third-party mortgage company told HousingWire that the threat of these faulty affidavits would go beyond foreclosures and even the disqualification of the homebuyer tax credit for some, according to a HousingWire report earlier. The entire recovery in the housing market could be at risk. The unnamed source requested not to be identified because of the sensitivity of the issue.
“The entire economy will be hurt by these extensions. I can understand that they appear to be in the best interest of the consumer, but we continue to delay the impact of the financial restabilizing or the financial rebalancing of our economy. We’re putting borrowers in homes without making mortgage payments, and at the end of the day the taxpayers are the ones picking up the tabs for this stuff,” the executive said.
Here’s an example of the documentation problem. Also at least one title insurer, Old Republic, has stopped issuing title insurance policies for JPMorgan Chase foreclosure sales.
In most cases there is little to dispute that the homeowner had a mortgage and was in default, so it’s unlikely that the resolution of the documentation problems will relieve homeowners of their obligation to pay. On the other hand, correction of the sloppy documentation could result in another lengthy delay in clearing the inventory of distressed properties.
A quick update - information recieved from Washington Realtors Association Legal Hotline:
Washington is not among the states where foreclosures have been stopped. Most of the problems, nationally, are related to judicial foreclosures and in Washington, nearly all foreclosures are non-judicial foreclosures. Significantly, our state’s foreclosure statute prohibits a challenge to the non-judicial foreclosure process if the challenge was not filed prior to the foreclosure sale. Accordingly, there is little risk that a person claiming title to the property, as is happening in other states, could assert such a claim following a non-judicial foreclosure of property in Washington state. Washington title companies are expressing no concern over this issue.
Our discussions with local title company reps appear to confirm this point of view.
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