Who’s at fault for the foreclosure mess that’s gripping our country right now?
Some blame people who borrowed more than they could afford. Others blame the banks that used so called “robo-signers”, who penned their names to thousands or even millions of documents, with false information, as if they were foreclosure machines.
Attorneys general in all 50 states have now opened a joint investigation into mortgage fraud.
Shawn Donovan, Secretary of Housing and Urban Development (HUD) says Americans are “outraged” by it all. He’s promising to take serious action, saying “proper procedures” might not have been followed, which made the whole problem worse.
Meantime, some of the nation’s biggest banks have come to a screeching halt with their foreclosures, until they can get the paperwork straightened out.
The Bank of America money just announced a timetable for 102,000 foreclosure actions in which judgment is pending.
Bank of America spokesman Dan Frahm in a statement said: "We anticipate that by Monday, Oct. 25, the first foreclosure affidavits will be resubmitted to the courts. Upon judgment, foreclosure dates will be set and Bank of America will resume foreclosure sales in such proceedings in the 23 judicial states. We will continue to delay foreclosure sales in the remaining 27 states until our review is complete on a state by state basis."
The halt in foreclosures only refers to the court proceedings, which means if the home you live in has been foreclosed on, you might be able to stay in there for awhile, but “defaulted borrowers” are still being told to move on.
“Often I walk into properties after the sheriff has just kicked a family out, and I still see a full coffeepot and breakfast on the table. That’s how quickly they had to leave,” says real estate agent Clare Spartz of Keller Williams.
“People are feeling hopeless right now. They’re uneducated about the whole process. In many cases they could arrange for a short sale of their property, which might save their credit, but often they basically close their eyes and let it all fall apart.”
It is estimated there are about 5 million foreclosed homes on the market right now. Real estate agents say they have two major clients right now: those who are desperate to sell to avoid foreclosure, and investors who think they can profit off the bad luck of others.
But buying a foreclosed property is now becoming much more difficult.
“The biggest title insurance companies will no longer insure titles on foreclosed homes,” says Coldwell Banker’s Diana Denton. “So those homes can’t be purchased… which means we’ll have even more inventory on the market, which will drop home values further, and that [means] we are going to be in a worse situation than we are in now.”
Nobody seems to know when we’ll hit bottom or just how deep the rabbit hole will go.
Right now the federal budget deficit for the fiscal year ending September 2010 is $1.3 trillion and that could increase, thanks to this foreclosure mess.
“If the federal government has to step in, again, with bailout money for the banks, we might see that deficit rise to $1.6 trillion, and that’s a big concern, not just for the banks but also for taxpayers who will have to foot that bill,” says Charles Brown of CB3 financial.
Ruth Ravve joined the Fox News Channel (FNC) in 1996 and currently serves as a Chicago-based producer.