Recently, foreclosures seemed to be on the rise as thousands of homeowners were being evicted from their home due to various financial difficulties. However, numerous top banks have stopped foreclosures in various states due to questionable foreclosure practices that have been implemented and may have been in error.
Financial institutions like J.P. Morgan Chase, GMAC Mortgage, and Bank of America are delaying foreclosures as there are examinations as to whether thousands of foreclosure documents were properly submitted and homes were justly foreclosed upon. Questions over these foreclosures have caused Fannie Mae and Freddie Mac to set forth instructions to review the foreclosure process so that each financial institution is in compliance with state law regarding these mortgage actions.
Various sources have reported that incorrect documents were filed against homeowners and need to be reviewed, which has many worried about the implications that these practices may have on the housing market. In what is termed as “robo-signing”, reports indicate that some executives at these financial institutions simply signed foreclosure documents without reviewing them to make sure that they are correct and in compliance with state law.
While this may be helpful for some homeowners who are facing or have faced foreclosure unjustly, there is concern over homeowners who may have purchased a foreclosed home and are claiming the first-time homebuyer credit. Fannie Mae and Freddie Mac, again, have taken action in order to settle this trouble within the housing market. Reportedly, Freddie Mac has given its mortgage servicers until October 18 to complete their review.
It’s hoped that these issues that have been raised by questionable foreclosures will not only force servicers to take more action when it comes to foreclosure prevention efforts, like home loan modifications, but will also tighten their foreclosure practices to make sure that they are in compliance with state law.
Understandably, some foreclosures that have been processed were legal and associated with homeowners who simply could no longer pay their monthly mortgage payment. However, in cases where executives signing off on these foreclosures did not review the foreclosure documents, it’s hoped that this “robo-signing” will be stopped and homeowners who may benefit from mortgage assistance plans will be given the option to do so.