“Defective documentation has created millions of blighted titles that will plague the nation for the next decade"... Richard Kessler, an attorney in Sarasota, Florida, who conducted a study that found errors in about three-fourths of court filings related to home repossessions. The out of control foreclosure machinery has officially been brought into the shop for repairs.
The real estate financing industry appears to have brought the same technical expertise that allowed automated underwriting of mortgages to an automated foreclosure process: Structurally flawed, rife with errors, guaranteed to fail — and in need if an immediate overhaul.
As we have seen, homeowners without mortgages have lost their home to foreclosure.
That this legal impossibility actually occurred reveals the foreclosure process, especially in Florida (but other states as well)as little more than a legal conveyor belt, bereft of oversight, manned by parasitic law firms and overwhelmed bankers.
It is Lucy on the chocolate factory line, only with homes being repossessed instead of bon bons slipping by unwrapped.
This more than merely “flawed paperwork” — the entire process is problematic. It has reached such depths that numerous banks have voluntarily stopped foreclosures while they review their internal processes, and the methods used by local law firms they hire. Called Foreclosure mills, many of these firms employ illegal methods to their legal practices. They use robo-signers instead of reviewing documents reviewed by lawyers; they hire process servers with histories of fraud and criminality. In the pursuit of foreclosure profits, they have tried to turn the practice of law into a clerical act of foreclosure, repossession, and resale — consequences be damned.
We have continually argued all of the HAMP and foreclosure abatement programs are ultimately counter-productive, and benefit the banks, not the home owners. I have called for allowing the process to proceed naturally, letting prices fall to where they will. Further, We have never opposed the foreclosure process as a price discovery mechanism.
But what is going on in Florida and elsewhere is a national embarrassment. What is required here is a full blown investigation from the US Attorney’s office.
Published: Monday, 4 Oct 2010 | 4:03 PM ET
By: Barry Ritholtz
CEO, Director of Equity Research of Fusion IQ
View original article: http://www.cnbc.com/id/39506421
Blogger Matthew Allan is a specialist in Savannah Real Estate, focusing on Savannah's downtown historic districts, including the Landmark Historic District, Victorian Historic District, Thomas Square Historic District, Starland Historic District, Baldwin Park, and Ardsley Park Historic District.
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