Financial institutions recently announced they were suspending foreclosures in certain states to address issues that foreclosure documents were signed without being properly reviewed. Bank of America, J.P. Morgan Chase, and GMAC mortgage, now Ally Financial, are reported to be the institutions who are taking action to review foreclosed homes where faulty foreclosure proceedings may have taken place.
There has been concern that these foreclosures may cause trouble in other areas and even disqualify some homeowners who are attempting to claim the first-time homebuyer tax credit. Yet, some reports say it is unlikely that homeowners who purchased foreclosed properties will face little adversity or trouble stemming from these questionable foreclosures. There are those who believe that stalls in these foreclosures could also have adverse effects on the housing market overall, as these delays in foreclosure proceedings are ongoing.
The trouble with many financial institutions who have improperly processed foreclosure paperwork seems to be incredibly in-depth and could take substantial time in some cases for these issues to be resolved. While there is a consensus who feel the majority of foreclosures may be warranted, there are examples where homeowners were unjustly foreclosed upon and there are those who feel judges in these cases may dismiss foreclosures altogether.
Since the situation is quite new, there are various ideas and theories on where these foreclosure suspensions and accusations of “robo-signing” may lead. There had been admissions by top employees at certain financial institutions which stated they did not review foreclosure paperwork but simply signed the documents due to the vast amounts that they saw each day. Yet, questions over whether these individuals signed documents or may have had others forge their name, as well as, questions over the legality of some notarizations on foreclosure documents are also present.
Seemingly, this mess could take some time before it’s sorted out as numerous cases of servicer error concerning foreclosures have been presented in the past and more fuel has been added to the fire when representatives from some of these institutions openly admitted they did not review all foreclosure documentation they signed. Yet, it’s hoped that this review process and these questionable practices, now having been brought to light, will force a higher degree of review when it concerns the loss of an individual’s home.
Servicers like Bank of America, J.P. Morgan Chase, and GMAC Mortgage have offered foreclosure prevention assistance to homeowners in many cases and, for the most part, have seen their numbers grow related to the number of home loan modifications they have made through the Making Home Affordable Program and from private modification plans as well. Yet, homeowners are sure to add these recent revelations to their list of criticisms they have levied against many servicers these past months and request that changes be made in foreclosure prevention efforts.