Why Foreclosure Fraud Is So Dangerous To Our System Of Property Rights

10-12-2010 • Businessinsider.com/

The law does not tolerate any errors in this process. What does the foreclosure process legally require? It varies by state and mortgage note, but the following is a good outline: 1) Notice of Delinquency is sent to a borrower who has fallen behind his payment schedule; 2) Notice of Default is sent to a delinquent borrower who has missed the requisite number of mortgage payments; 3) Notice of Foreclosure is sent to the defaulted borrower, and the process begins; 4) Affadavit by the bank’s representative are signed attesting to: Ownership of the note, who the borrower is, the property in question, the date of last mortgage payment, amount of delinquency, tax escrow owed, other payments (such as homeowners insurance); 5) Notarized documents: A Notary Public affirms that the affidavit was actually signed by the signatory, and this allows it to be entered into the court as documentary evidence; 6A) Notice of Pendency (Lis Pendens) is filed with the County Clerk putting the world on notice as to the foreclosure action; 6B) Summons and Complaint are prepared by bank attorneys, who further verify the specific information attested to by the bank executives. The attorneys then file the Complaint, commencing the Foreclosure Action;. 7) Service of Process is filed, either hand delivered to the home owner, or nailed to the door of the home; 8) Referee is Appointed to review and process the case; calculate the amount owed, and report back to the Court; The Referees report is also notarized; 9) Judgment of Foreclosure is moved for by Note holder; 10) Court orders the property auctioned. The court specifies a notice of the auction, publicizing the property auction; 11) Bidders must Close on the auctioned house in 30-90 days; In the event of no sale, the bank takes possession (REO); The fraud that has come to light are primarily occurring in steps 4, 5, 6 and 7. The verification of the specific data that is mandated legally is not taking place by bank executives. Reviewing a file can take anywhere from, 20 minutes to well over an hour. Yet some bank employees are testifying that they have signed off on as many as 150 per day (Wells Fargo) or 400 per day (Chase).