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forclosure fraud? what's going on in florida?

Posted by traceee (tracy02360@aol.com) on
Mon, Oct 11, 10 at 22:04

Ok, the short version goes like this: Brother and sister-in-law, placed cash offer on single family home forclosure property in Naples, Florida over a week ago on a Wednesday. Bank had another offer and told both parties to come back in with best and final 2 days later on Friday. Last Monday, BIL & SIL placed 2nd offer. Tuesday - silence. Wednesday - listing disappears from MLS.

This property had been on the market for 6 weeks. Bank claims they are haulting forclosures. I am confused by this - I assumed "hold on forclosures" meant people could stay in there homes longer so banks could try to work with homeowners for a solution -- not that there would be a "hold" on sales of homes that were already forclosed on and vacant.

Is there a chance people can get there homes back? How can you get a clean title or deed if there is a chance people could "reclaim" their forclosed homes? How will inventories ever be reduced if you take forclosures and short sales out of the mix?

WOW, what a mess! Are we allowed to write the name of banks or institutions on this forum?

This particular bank should have worked harder to modify loans with homeowners like they were supposed to instead of keeping people on hold for hours and hours.

I read some of the "forclosure shadowing" posting and links, but I am still dumbfounded by the situation with my brother and sister-in-law.


Follow-Up Postings:

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RE: forclosure fraud? what's going on in florida?

Hi Traceee,

Short & simple; The banks are stymied. They're unsure what's more expensive; holding onto a foreclosed REO property at their own risks & holding costs, or selling it (at a foreclosure discount) only to later have to pay off the new buyer to go away, pay the seller who they foreclosed upon which got unwound, or pay of the title insurance company coming after them for their documentation screw up.

Since they don't know which is worse, they're simply sitting still, frozen... until the lawyers get a firmer grip on the government's most-likely treatment of the impending litigation by mortgage holders challenging in court to "Produce The Note."

Most likely scenario for B&SIL, if they have the patience; they'll get a BETTER deal when this unwinds, as there will be a backup of congested inventory battling in competition to get sold to a wary pool of hesitant & cautious buyers.

Luck to them!
Dave Donhoff
Leverage Planner


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RE: forclosure fraud? what's going on in florida?

Evidently, it does not pay to fool around with foreclosed properties, no matter how great the "savings" are....at least for a one-time cash buyer like me. For the pros , they can abide with the headaches and hassles.
The point is ....can banks be trusted?
From the recent events .....NO.
Our government may have to take over......:<(...


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RE: forclosure fraud? what's going on in florida?

tracee...we are also 'on hold' regarding the foreclosed house that we were under contract on (I posted on this forum about our delay).

Right now, our closing has been delayed another 30 days....we know that may change and the property may be taken off the market.

If you "Google" David J Stern Plantation FL, you will find one of the reasons foreclosures have become a mess...according to a whistle blower in his office, he had employees sitting at tables practicing how to forge signatures for the foreclosure paperwork.

I'll add a link to a recent article that was in the Tampa Tribune.

ML

Here is a link that might be useful: Foreclosure Firm article


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RE: forclosure fraud? what's going on in florida?

"Foreclosure Fraud" is really a misrepresentation of what is happening.

In the good ole' days, a bank lent someone money to buy a home. If that borrower defaulted, the bank foreclosed on the home.

Now, a bank lends someone money. That mortage is sold almost immediately to another company that doesn't know the borrower at all. It might be bundled with other loans and resold multiple times. The company servicing the loan probably isn't actually holding the loan. Now, what happens when the borrower doesn't pay? You've got a bunch of middle men and pencil pushers with no real relationship with the borrower. Also, the holder of the note may not even have much/any retail business and experience dealing with individual borrowers. Then, add on a huge increase in the rates of default, and suddenly you have a heck of a mess.

To the best of my knowledge, there does not appear to be any/many people being foreclosed on that didn't actually deserve it. Lenders aren't tricking people out of their homes. Basically, they are overwhelmed with paperwork and are taking shortcuts. Obviously, you can't take shortcuts with legal documents, and that will cost them (and us) in the short term.


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RE: forclosure fraud? what's going on in florida?

The point is ....can banks be trusted?
From the recent events .....NO.
Our government may have to take over......:<(...

HAH!!! As though our politicians are as trustworthy (let alone MORE trustworthy) than bankers.

I don't trust either... but bankers can be sent to jail for fraud... our politicians are rewarded for it!
================================

billl,

To the best of my knowledge, there does not appear to be any/many people being foreclosed on that didn't actually deserve it. Lenders aren't tricking people out of their homes. Basically, they are overwhelmed with paperwork and are taking shortcuts. Obviously, you can't take shortcuts with legal documents, and that will cost them (and us) in the short term.

I don't recall ever been more in agreement with you than here. The entire administrative title servicing chain got sloppy, and although virtually every foreclosee is deserving of their forfeiture, lawyers make sure they are well paid to protect the integrity of our documentation and process rights.

As painful & distasteful as it is... I am happy to see the lawyers leaping in & reaking havoc on the slothfulness of the system. It should have been addressed meticulously in the first place.

Cheers,
Dave Donhoff
Leverage Planner


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RE: forclosure fraud? what's going on in florida?

"To the best of my knowledge, there does not appear to be any/many people being foreclosed on that didn't actually deserve it."

BofA has apparently foreclosed on at least a few wrong houses (as in they got an address wrong).

The title insurers are so nervous that things are going to grind to a halt until all the little details are done correctly.
The banks will not lend without title insurance (even though they are the ones that at least in some cases have managed to screw up and cloud the titles).

There were hints of coming problems about 1-2 years ago.

Deutsche Bank had set up a subsidiary to purchase mortgage notes and issue bonds backed by the notes.

They saved money and allowed the subsidiary to close, while DB continued passing the money to the holders of the bonds.

When some mortgages defaulted, DB tried to foreclose.

In at least two states the courts stopped them since the bond holder does not own the underlying notes, but a bond issued by the no-longer existing subsidiary.

DB had to prove they actually had transferred the note ownership to themselves when they dissolved/absorbed the subsidiary.

The ownership of the notes used to be a cut and dried paperwork exercise, with each owner being the assign of the previous owner, and all the transfers recorded.

To save on recording fees (the courthouse collects a per page charge) an 'electronic record' was kept separate from the recorded records (private company in Reston, VA).

The court record has been mixed when the private 'holder' has tried to foreclose.
Some courts have allowed them as an agent of the actual note owner, while some others have declined without additional proof.

Now comes the search for the actual 'wet ink' not executed by the borrower.

Just a little detail that determines who actually owns the note, and has the right to pursue foreclosure.


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RE: forclosure fraud? what's going on in florida?

Thank you Maddielee for that link - I hope all goes well for you. I am assuming you are in Florida, or buying in Florida? The article was informative, I sent it along to my B & SIL. Seems like a gloom and doom situation, how can the economy ever recover?

My B & SIL have owned a condo in a golf community in Naples, FL for the past 10 years. They have just retired this year (in their mid 50's by the way), and are planning on keeping the condo and golf membership, while purchasing a single fam home as primary residence, as they have just sold their home here in Massachusetts.

The "DRAMA" continues for them, as they placed another bid on a different home - it belongs to a couple going through a divorce. It was an extremely low offer, 40-50 grand below asking price (which is actually only a little below market value). The day the offer was submitted, the soon to be divorced husband becomes quite ill and ends up in intensive care. The wife is asking for an extension, so when her husband comes out of his coma, she can tell him the news...she is apparently thrilled with the offer and wants OUT of this home!

So you see Maddielee...you can always find someone, somewhere with a story!!! How about that for bad luck!!!


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RE: forclosure fraud? what's going on in florida?

billl and Dave I agree with both of you.

I don't get the fraud label, the OP "assumed hold on foreclosures meant people could stay in there homes longer so banks could try to work with homeowners for a solution -- not that there would be a "hold" on sales of homes that were already foreclosed on and vacant", now the OP is finding this is not the case and is considering it fraud?


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RE: forclosure fraud? what's going on in florida?

Well, the fear is that some judge will decide that the lenders actions went beyond laziness and were actually a deliberate fraud intended to deny someone their rightful property. That is what has lender freezing up the sale of homes previously foreclosed on. They would rather sit on a property for a couple months than take the chance of prolonged legal fights that they thought would be moved from their books. I guess the fear is understandable. They had people signing off on thousands of these a week for hundreds of thousands each. That is potentially a hundred million bucks a day at stake.


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RE: forclosure fraud? what's going on in florida?

How about the people who are making their payments, though? When 25 years from now they pay off their overpriced house and still can't get a clear title because the paperwork is so screwed up...and they're 25 years later and nobody has a clue what's going on? Or if they actually find a buyer in, say, 15 years and can't get a clear title to transfer? Anybody besides me thought of this scenario?


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RE: forclosure fraud? what's going on in florida?

Part of the problem, I read, was that there were "affidavit mills" where people would sit and sign thousands of affidavits without looking into the account. Therefore, an invalid signature and a type of fraud.

I can personally attest that this happens. I worked in a company in the debt collections business. We were one of the more ethical of the companies out there. But we had a few people signing almost all of the affidavits and you can bet your bottom dollar they weren't looking at each account and making sure the name was spelled correctly, the address was correct, details were correct, etc. Very important things for legal documents.

The problem is it costs money. Humans have to do it, machines cannot substitute. And humans cost $, and these big banks refuse to pay for the proper staffing to do these type of things.

What subsidiary/name does Deustche Bank do business under in the US? They got into a lot of trouble here in Cleveland for doing a lot of...unsavory stuff. It seems like they are def. one of the worst offenders.


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RE: forclosure fraud? what's going on in florida?

This is not a 25 year problem. There will either be a rapid settlement (the lenders don't want to draw this out) or a flurry of lawsuits (or several class action suits.) The lenders will end up paying some token amount to each borrower. The borrowers will walk away with a little chunk of change to help them get back on their feet. The new owners of the home aren't going to take a bath on this.


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RE: forclosure fraud? what's going on in florida?

"That is what has lender freezing up the sale of homes previously foreclosed on. "

And the title insurance industry screaming they cannot (will not) insure the titles.

They, rightfully, do not want to be left holding the bag.


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RE: forclosure fraud? what's going on in florida?

The entire problem stems from robo-signing, this refers to what we’re now realizing has been a very common practice in the banks’ foreclosure document processing divisions, where one person was essentially given the job of signing as many 10,000 foreclosure documents per month, by hand. These individuals were supposed to be reviewing the files, making sure grounds for foreclosure actually existed, signing the docs in front of notaries. But because of the volume of documents, what they actually did was just sign thousands of documents at a time, without even reading them, and ship them off somewhere else to be notarized.

If you do the math on an 8 hour workday, you'll see that that only gives the staffer 1.5 minute to review each file and documents to make sure the foreclosure is warranted. That's not humanly possible, which is how these staffers got the nickname “robo-signers”.

I have personally poured over mortgages online and have found so many errors that they were never legal in the first place, these being both homes in foreclosure and REO's.

It's a sad state of affairs, with 860,000 homes up for grabs, and the FDIC is hiring big time to assist in this entire mess. To make matters worse, the Obama make home affordable and loan modification plans are not working as advertised and what the banks are telling people seems counter-intuitive by not paying their mortgage on time. REO's are a great deal and I was currently working on my fifth house here on Cape Cod that was a Fannie Mae first look, however no offers in 15 days placed it up for grabs. Buying a home for 1/2 of what it's worth is a no-brainer.


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RE: forclosure fraud? what's going on in florida?

"The entire problem stems from robo-signing..."

It started before that when the banks failed to properly maintain records showing who owns the notes.


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RE: forclosure fraud? what's going on in florida?

I think those are 2 sides of the same coin. The problem is stemming from the fact that the original lenders are selling loans off to 3rd, 4th and 5th parties. These new "lenders" never had the staffing of traditional banks and were really just treating the loans as investments instead of legal documents. It would be like you or I selling a stock on e-trade. We aren't thinking about stock certificates or relinquishing our voting rights, we're just making a financial transaction.

Suddenly, the note holders were thrust into the position of having to deal with these mortgages as more than just investments. They didn't have the staff on hand to do that and tried to take all sorts of shortcuts instead of hiring people to do it properly.


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RE: forclosure fraud? what's going on in florida?

I thought this was a good financial story of how we started to get to where we are today.

Here is a link that might be useful: The Blundering Herd


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