60 Minutes story on forging of foreclosure documents by banks
60 Minutes did a segment on the forging of documents (that were most likely lost) by banks pursuing foreclosures. This is a huge story and could potentially affect tens of thousands, hundreds of thousands, or millions of homeowners that have been foreclosed upon or are threatened with foreclosure.
As more and more Americans face mortgage foreclosure, banks’ crucial ownership documents for the properties are often unclear and are sometimes even bogus, a condition that’s causing lawsuits and hampering an already weak housing market. Scott Pelley reports.
You an watch the video here and read the associated CBS story here.
At issue here is that banks, in their brilliant move to electronic system called MERS to record changes in ownership of mortgages as they were sliced, diced, and sold as securities, either lost or destroyed the original mortgage and change of ownership documents. They did this to avoid having to file paperwork with county clerks every time some part of a mortgage changed hands, saving them millions.
But it turns out that filing with county clerks is a legal requirement and courts have begun to reject MERS filings as proof of mortgage ownership. So what did banks do? According to this story, they started to forge the original documents.
If any of the loan documents provided to you by your bank or mortgage servicing company are signed by Linda Green, they are likely fraudulent.
Foreclosure | admin April 5, 2011
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By coakl, April 7, 2011 @ 3:50 pm
Unfortunately, if the banks cannot prove ownership, neither can the homeowner. As a result, you can’t short sale this $450,000 albatross around your neck.
And the loan(s) are still on your credit report. If you refuse to pay, you now have a delinquency that no one can cure (by foreclosure or by sale). You can’t even begin the process to recover from a foreclosure (7 years) because it can’t even start. You will be “currently delinquent” forever.
Finally, if the houses can’t be sold, foreclosed on, and the owners refuse to pay, these loans will be worthless to the banks, institutions, and investors who own them. Imagine what that does to the balance sheets and stock value of those companies.
Bottom line, if the MERS system is outlawed, you get a zombie housing market. Completely frozen, with losses for everyone.