West Town Chicago–With the Robo signers out of the shadows and bad title issues out in the open there are real serious legal challenges related to deals and much inventory could be taken off the market while class actions suits go through the courts.
When you hear about owners who call for months and month and then their loan has never been modified and calls have never been returned you have to wonder if any bank is functioning properly. People want to stay in their homes and their intent to do right with the resources they have are being thwarted in large part.
To now learn that banks have been going to foreclosure with “robo signed” documents while ignoring “work outs” like short sales and loan modifications makes you wonder where the justice department has been. There are documented missing paper trails on mortgages owned by people that have not missed payments. It looks like this could be very wide scale. This is a big problem for all of us because it could jam up the housing recovery that was poised to just begin to take hold in 2011-2012.
The person who is in the best position is the buyer. Or the seller who is in a short sales situation.
The buyer will benefit from even longer period of lower prices.
The short seller will benefit because banks will be running to short sell and agree to short for six months or so while the foreclosures are ironed out.
So for the smart owner who needs to short sale.. and was on the fence about it… a true window of opportunity has opened.
That paperwork mess in a Pennsylvania office park now has given people who are short selling a thirty percent or higher chance (in my opinion) of getting a short sale approved.. and approved faster!
Now realize how BIG this market is.. and the machinery that is grinding to a halt…. 40 percent of residential sales were headed to be distressed property in 2010…. that is almost half the market…. Ouch…
See why this could hurt the housing recovery.. if a good chunk of that 40 percent of all deals are jammed up for months as title works outs… are verified and Robo Signors are called forth to unsign and verify.. .etc.
Keep in mind that unemployment is at 9 percent… then recall that out of the last seven recessions housing has been the life line that pulled us out of it… we remodeled or refinanced our ways out of past recessions and spent out of them. But that’s not going to happen this time.
GMAC and JPMorgan Chase and Bank of America were stopping foreclosure proceedings in 23 states was merely the beginning. Federal lawmakers now want a federal investigation, and the Ohio attorney general filed a fraud suit against GMAC. This is just the tip of the iceberg … there is political gain to come out of taking it further. Every politician is going to want to help the many people the banks threw out of their home without legal right to. Wait until we start seeing their faces, hearing their stories … etc…
In at least eight states, attorneys generals are taking action…
There are class action suits starting up…. in Illinois, Maine and Kentucky — entire neighborhoods will be going after Chase and BOA etc. They are going to find some former industry employees to tell us how they robo signed their way through dinners etc… low-level bank employees in question were supposed to have reviewed mortgage documents and did not. This is going to be juicy as people dig and dig and dig.
Banks say the violations are minor… and I’m sure they are in some instances but GMAC has already been downgraded by Standard and Poor’s and there will be more to follow.
Title insurer Old Republic National – stopped offering policies of title to insure property that is foreclosed. Without title there is no sale going to happen. And other title companies have followed suit. BOA has since come out and said it will guarantee it’s sales… etc. but there is still a lack of confidence at hand.
The industry has to see how big this is… and how big it will get between now and Christmas.
Meanwhile short sales will be the way to go and the deals that will get approved at a lot higher rate than ever before in my opinions.