Remember when the real estate market was smoking hot? When the daily mail routinely included fliers from lenders advertising how easy it would be to buy that dream home?
As it turns out, it was way too easy in many cases.
Today, a lot of those lenders who skirted the rules so underqualified people could purchase homes are foreclosing on buyers – apparently with the same inattention to details and the rules as when the original loans were made. In September, lenders foreclosed on a record number of U.S. homes in a single month – 102,000.
Now the federal government and 50 states’ attorneys general are investigating the mortgage-servicing industry for such unethical practices as “robo-signing,” in which high volumes of foreclosure affidavits are processed with little or no scrutiny. Often, the person signing the documents is an unqualified employee who may be forging an official’s signature.
Washington Attorney General Rob McKenna says there is evidence that foreclosure trustees in this state have ignored consumer protection laws and that the foreclosure process “frequently includes inaccurate documents, conflicts of interest, faulty chains of title, and failures to provide the disclosures and conduct mediations required by law.”
Correct documentation and mediation are important in every foreclosure, of course, but particularly so in the 27 states – including Washington – that don’t require a judge’s approval to foreclose. That puts additional responsibility on lenders to follow the rules and act properly. Those who can’t guarantee that their documentation is in order should suspend foreclosures until they can.
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