Saturday, November 6, 2010

Are Banks Stopping Foreclosures?

The short answer is that over the past month-6 weeks certain banks (ex. Bank of America, Chase, etc.) have paused some of their residential foreclosures. This does not mean that delinquent mortgages will be forgotten. It simply means that banks are slowing down their foreclosures and halting the beginning of certain new foreclosures while they review their paperwork.

The main reason banks are pausing some foreclosures is because they have discovered that many affidavits and assignments of mortgages have errors. It doesn't mean the foreclosure itself is fraudulent as many people are speculating. What it means is that banks are pumping out too many foreclosures and don't have the time to review all of their paperwork. A law firm sends a bank hundreds of affidavits a day and instead of inspecting each one carefully the Vice President sign dozens a minute. Assignments of mortgages are created in a similar manner.

Regardless of whether the bank has engaged in fraudulent practices or not, these errors can be used against the bank to your benefit. A faulty assignment of mortgage can mean that your bank does not have standing to bring a lawsuit on the mortgage. In addition, courts will no longer allow foreclosures to proceed on mass-produced affidavits and are actually requiring affidavits from attorneys to verify all of the information is correct. Therefore these issues can result in your foreclosure action being dismissed and thrown out of court. This won't solve the underlying problem because the bank will simply fix their paperwork and re-commence the action. If your goal is to annoy the bank then this is a perfect result. If your goal is to modify the better course of action would be to use this as a negotiation tool with the bank. Law firms don't want to tell their clients their actions are being dismissed and banks don't want to pay to recommence their actions.

I understand these are complicated topics and not easy to comprehend by homeowners without extensive litigation and mortgage experience. If you are in foreclosure please contact a foreclosure attorney to walk you through this process.
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