Crisis Intensifies For America's Robust Home Mortgage

The crisis in the thus far robust home mortgage business in the United States intensified further recently with the Bank of America announcing its plans to bring all foreclosure sales to an end in each and every one of the 50 states of the nation with instant effect. This move by the US central bank has dragged the already stressed home owners in California into the scam related to disputed strategies adopted by the major lenders.

The resolution by the Bank of America, the largest mortgage lender in the country, is being seen as a move that has a greater impact that the moves by other major banks in the US which too have halted all foreclosure sales in as many as 23 states where the process of 'judicial foreclosure' exists, as they expressed worries regarding the manner in which legal papers have been processed. While California has not felt the heat owing to moves initiated by the other major banks thus far since it has a non-judicial foreclosure method in place, the recent initiative by the Bank of America is likely to affect several thousand borrowers in the state who are striving hard to retain the ownership of their homes.

Commenting on the recent decision of the Bank of America, a spokesman Rick Simon said that they were now being excessively careful on this crucial issue. He further said that the assessment of the manner in which the lenders processed the legal documents ought to take a number of weeks' time. Emphasizing that they would definitely be processing all loans that seem to be felonious, Simon said that they had not intentions whatsoever to go on to pronounce any judgment or make any sales during the assessment process of the loans.

Meanwhile, numerous leaders in the country have recently accepted the fact that several thousand legal official declarations were signed by people even without even confirming the basic facts and this has eventually given rise to doubts regarding the legitimacy of the foreclosures. A member of California Reinvestment Coalition, an advocancy organization, Kevin Stein said that the initiative by the Bank of America pushes the predicament beyond the distinction between judicial and non-judicial aspect. Stein said that he believes that by putting a halt on the foreclosure sales in all the 50 states of the United States with immediate effect, means that the authorities of the Bank of America are not certain whether they have been doing foreclosure sales with people illegally irrespective of which ever state they might be belonging to.

Insecurity looming large

Although they may eventually be benefitted from the decision of the Bank of America, as of now the troubled and worried home owners in California would now be required to get ready to confront further insecurity. In fact, as many as 456, 250 borrowers or mortgagees had initiated the process for foreclosure sales in only one year - 2009! In the meantime, advocates in the housing domain who have helped home owners in the Bay Area to hold on to their real estate property and have witnessed the extent to which the process may be harrowing, are of the view that the recent scam is just an indication of the fact how the entire home mortgage procedure has been weighed down for prolonged periods owing to mixed signals as well as corner-cuttings.

Citing an instance of gross irregularities in sanctioning home loans by the major lenders, Paul Leonard from the Center for Responsible Lending in Oakland, said that they had come across a woman who had been through the mortgage procedure for several months and when she had submitted the same loan forms modified several times, the lender had informed her that they would not be able to accept it completely till she submitted her divorce papers to them. This startled the woman who exclaimed that she was not divorced and was living a happy marital life! This is really a shocking exposure on how things have been going on thus far.

Here is a brief discussion on how the judicial foreclosures are initiated. States where judicial foreclosures are prevalent, generally the court cases begin with a lawsuit against the borrower or mortgagee and a judge keeps hold of the authority or jurisdiction. However, in the case of California, all foreclosure sales are dealt with outside the courts and since private dealings occur between the lenders and the borrowers it is certainly vague as to what would be the precise impact of the present crisis there. In fact, many experts are of the view that system followed in California, wherein deals are struck between money lenders and borrowers outside the court, is not only simpler compared to what is prevalent in the judicial states, but is also less time consuming, cheaper as well as not so agonizing for the home owners facing foreclosures.

Paul Leonard of the Center for Responsible Lending in Oakland is of the view that such a development is certainly retaining on a life of its own. He says that they have all the reasons to suppose that similar types of problems are also occurring in California too. Nevertheless, in California one would not find the same kind of policing on duty as one may find prevalent in the states that have judicial foreclosures. According to Leonard, it may be said that on the whole things in California are run on autopilot.

It is interesting to note that every week there are a number of fresh demands for probes, for instance, this week there were a number of them from Rep. Zoe Lofgren (D-San Jose) as well as the US House Speaker Nancy Pelosi (D-San Francisco) urging the Justice Department in the United States to decide whether the mortgage firms or the money lending companies have breached any rules since they move about dislocating home owners, who had taken felonious loans from these companies, from their properties.

Meanwhile, the lenders have been asserting that they have been taking every initiative to help the harassed home owners facing foreclosures. However, there seems to be plenty of discrepancies in the working of many money lending companies. For instance, an executive at Wells Fargo had acknowledged that recently they had signed as many as 150 foreclosure papers in a single day without bothering to ascertain individually whether any of them were authentic. Contrary to this revelation by the Wells Fargo executive, Chris Hammond, a spokesman of the company, asserted that the regular auditing of their processes by the banks showed that their affidavits regarding the foreclosures were not only perfect, but also the fact that they were regularly assessing and strengthening their polices and procedures while verifying foreclosure documents.

Resentment builds up

Contrary to what the lending companies have been maintaining, critics, who have worked intimately with the harassed home owners confronted with foreclosure sales and have also, witnessed the extent to which such processes can frustrate an individual, have asserted that they were unconvinced with the statements issued by some of the lending firms. For instance, a foreclosure counselor in Sunnyvale Maggie McCarthy pointed out that even as the lenders have now been make some additional effort to correspond with their borrowers in a more clear manner, knowing the deceptive ways adopted by some of the money lenders, the allegations regarding the fake affidavits as well as other corner-cutting swindling do not come as a surprise.

Describing working with any of the money lenders as 'working in the dark', McCarthy pointed out that usually such money lenders give their consent to an assessment plan having lower payments, but subsequently when it ends, the wily money lenders ask the borrowers to submit all information regarding their income and eventually say that they are sorry that they are unable to do a modification of the loan. Therefore, McCarthy asks as to why these money lenders had put the innocent borrowers in the trial plan initially. Was it a trick or something else?

However, there are some rare exceptions too. Take the instance of Maureen Burkley, a self-employed consultant in Willow Glen. Forty-five-year-old Burkeley had confronted a foreclosure in 2009 when her income was reduced, but eventually she succeeded in pursuing Wells Fargo in getting her loan modified. However, she had to experience 17 months of 'hell' to be successful in her herculean mission.

Citing the 'hellish' experience she had to endure for as many as 17 months, Maureen Burkley stated that the money lenders would first ask the prospective borrowers to do all the paper work and submit it to them and when one does it, they claim that have not received them! This makes the mortgagees continue the same process for at least four or five times to finally make them acknowledge that they have received the documents. She said that there were instances when she faxed the documents and called her money lenders - in this case Wells Fargo, on the subsequent day to confirm the receipt, but they simply denied having received any papers from her! Elucidating here miseries, Burkley said that while one person at the money lender's office confirms that they have received the documents, there is always another who claims that they had not received any. According to her, it was a situation where it seemed that no one in the money lender's office was aware of what the other was exactly doing and this only helped to build up more frustration.

Burkley claimed that the entire move to harass and misguide the prospective mortgagees was nothing but a strategic ploy adopted by most of the money lenders. In fact, Maureen Burkley said that she was desperate to hold on to her home in the town as her dear German shepherd called Lucy had succumbed to cancer after living with her in that house for 14 long years. She lamented that these money lenders are always trying to drive the borrowers go mad, so much so that eventually the latter gives up and stops fighting with them any more.

Meanwhile Wells Fargo spokesman Chris Hammond said that his organization was happy to be able to make a home load modification to Maureen Burkley. At the same time, he attempted to provide an explanation for the inordinate delay in providing the loan modification to Burkley saying that in a number of instances it is likely that it takes quite some time to completely comprehend the situation of a borrower and come to a decision regarding whether it is possible to provide them with a loan modification. He also claimed that his firm was always working to their limits and utilizing all possible alternatives with a view to prevent a foreclosure sale.

Even as the foreclosure sales have already been halted by the Bank of America in some of the selected states of the USA, questions have been raised regarding the fate of the homes, which the banks have already revoked. However, thus far California is the only state in the country that seems to be in a stand-in mode. Meanwhile, Jerry Brown, the US Attorney General as well as the candidate for the governor's post in California, has directed JP Morgan and Ally Financial, earlier known as GMAC, to confirm whether the properties already taken back by the banks were done in accordance with the law of the land or simply put a halt on all foreclosures in California till they are able to establish anything in this regard.

In other states of the United States, the prosecutors have described the action of the banks as fraudulent as, according to the law of the land, they are needed to individually authenticate any information provided to them via a sworn affidavit.

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