September 25, 2022

Errant Handling of Foreclosure Documentation to Prove Costly

Home Foreclosure Errors Costly to Lenders

Home Foreclosure Errors Costly to Lenders

Following the admission that they mishandled thousands of  foreclosures, three key mortgage lenders, along with other American financial companies will likely face a host of potential fines and law suits.

In recent days, major lenders GMAC, Bank of America and JP Morgan Chase have all announced the suspension of  thousands of home foreclosures throughout the U.S. as a result of the mishandling of foreclosure documents.

The attorneys general of six states have begun looking into claims by consumers that lenders have made significant errors in foreclosure documentation.

As U.S. borrowers faced enormous debts since the beginning of the economic recession, the foreclosure business has developed into a huge industry. The number of home loan defaults have risen from an average of 1% per year prior to 2008 to 10% today.

Reports indicate that In 2010, over three million home foreclosures were estimated to occur in the U.S.

According to attorney Richard Kessler, head of a company that deals with foreclosures, documentation problems “are in all probability” very likely to be found in around 80 percent of them.

The surge in foreclosures led lenders to hire people to process the paperwork as rapidly as they could so that they could list the properties for sale, a process that is being called “robo-signing”.

Most of the suspended foreclosures will still occur after the lenders re-examine the multitude of cases, although it may take years to complete.

Although the mortgage companies are likely to face fines and other disciplinary actions, they will still be completing the foreclosures at some point, since they represent money that is owed.

The reviews will likely disclose significant documentation problems in a number of cases, putting the lenders under serious pressure and the risk of major lawsuits from individuals whose homes they have already foreclosed.

Experts believe there is a likelihood that those who are currently faced with foreclosure will have a good chance to negotiate with their lenders in order to work out some sort of compromise that will enable them to avoid final foreclosure.

Enhanced by Zemanta