Before going further, I want to remind readers not to take all that you will inevitably hear about the “foreclosure moratorium” as fact. The mis-information already floating around will inevitably be taken by some as gospel, and it will cost them their homes. I recommend taking everything you hear about the foreclosure moratorium with a grain of salt, and don’t make any life altering decisions based on sketchy reports of banks being unable to foreclose. IOW, if you aren’t making your payments, you will probably loose your home. (*but you may be able to make use of a delay in foreclosures to try again for a short sale or mortgage modification).
After the disclaimer in the previous paragraph, I encourage you to read an incredibly scary article at http://market-ticker.org/akcs-www?singlepost=2207990, The link came from Maria Morton, Kansas City Real Estate (Prudential Kansas City Realty). Prior to reading this, I was under the impression that the most significant foreclosure problems were technical/administrative mistakes. As you read, I think you will agree that there are some pretty significant “Oh S#@ts” here!
In my post about the latest foreclosure crisis, the issues that I presented were primarily robo-signing, loss of original documents, and other administrative failings on the part of the mortgage and trustee industry. The issues brought out by Mr. Deninger, if they are factual, are much more significant. These issues are so significant that they may well result in some mortgagors being able to walk on their lenders….without loosing their homes. According to Mr. Deninger’s article, as lenders sought cheaper and more effective ways to bundle and sell portfolios of mortgages, they started taking short cuts in document recording, short cuts that affected chain of title and securitization of mortgage notes. In other words, they may have inadvertently signed away the security for the notes they are holding…and of course that security is the borrower’s home. In addition to stupidity, I am sure there were also crimes committed.
This situation will inevitably make lots of money for lots of lawyers, will cost tax payers piles more, and will probably allow distressed home owners to stay in their homes a little longer. To home owners in distress…you rarely get something for nothing, so don’t plan on it (but if you can, look at this a short term reprieve and take advantage of it). To the rest of us…brace for more finger pointing nonsense, brought about by greed, which will impact your life, and the value of your home, for a little while longer.