The Feds Seek Crackdown on Flawed Foreclosure System

Categories: Foreclosure
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If there's one thing we've learned from reaching out to homeowners about to face foreclosures the past several months, it's that the entire foreclosure system is heavily flawed.

Back in February, we profiled Debbie Hailey, who managed to stop the foreclosure sale of her home by failing for bankruptcy at the last minute.

She was scheduled to meet with the court last week, but when she arrived at the Brooklyn Supreme Court, she was told her date had been changed to April 16th.

And also, her home is in danger of being seized again.

Hailey said she has no idea what's going on, with the court forcing her to go through levels and levels of red tape just to apply for an extension.

According to a New York Times report yesterday, banks have been pushing the foreclosure action with sloppy, inaccurate, or even forged documents for years.

Federal regulators are, according to the report, attempting to crack down on these type of practices with fines.

Hailey could very well be victim of such sloppy procedures.

Derrick Johnson, a paralegal from Layman Legal Writing who attends foreclosure sales regularly to "observe the system", is skeptical of the crackdowns, because, he believes, it's all one large scheme.

"All of these banks, the Citibanks and JP Morgans, are aware that the federal government, and the loan monitors, are looking the other way regarding loans," he said. "They have not been doing their jobs to investigate if a loan should be accepted or not."

He said the banks have been getting rich off handing out loans left and right, adding "you could have gotten one even if you didn't have a proper job, because they know how to twist the paperwork."

But the home-buyers should absorb some blame too, he said.

"And us regular folks, we were obviously giddy the banks told us we could afford a home, so we take the loan even though, technically, we couldn't afford."

It's all a system, he adds.

Indeed, according to the Times story, robo-signers have been a problem, with one specific case citing a bank employee signing 750 mortgage documents with minimal review.

For Hailey, she's actively seeking free legal advice on what to do. Her home--which goes back three generations--is at stake.




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2 comments
olivershultz
olivershultz

We're currently in the midst of the greatest mortgage refinancing frenzy of the past 5 or 6 years. Rates are now the lowest they've been since mid to late 2003, I worked with a company called 123 Refinance I refinanced my current mortgage to 3.12% search online for them if you are planning to do refinance.

 

Epac
Epac

The rates are great, but you need to already have a good amount of equity, otherwise it's not worth it (PMI, etc).

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