The Dark Side of Mortgage Foreclosures

Post date: Oct 18, 2010 1:19:25 PM

Since our economic crisis began in 2008, we have all heard

the depressing mortgage foreclosure statistics. According to

the Mortgage Brokers Association, every 3 months, 250,000 new

families enter into foreclosure. 138,000 foreclosures alone

were commenced in April of this year according to the

government. And for every home in foreclosure, as many as a

dozen homeowners find themselves seriously in arrears. If

this sounds bad, it is. But an even grimmer story is

emerging. Mistaken foreclosures.

As banks race to keep pace with the record number offoreclosures, more and more mistakes are being made. Takethe example of Jason Grodensky of Ft. Lauderdale. When Mr.Grodensky purchased his home, he paid cash. But in July helearned that his house had been foreclosed by Bank ofAmerica and sold, even though he did not have a mortgage. Inrecent weeks similar stories have begun to surface fromacross the nation.How did this mistake happen? Bank of America isn't saying,although they acknowledged the mistake and say they aretrying to unwind the transaction. According to a publishedreport in Florida's Sun Sentinel, one Florida attorney said,"The evidence doesn't matter, the proof doesn't matter, dueprocess doesn't matter. The only thing that maters is thatthey get rid of these cases."This story and many others has some banks temporarily

suspending foreclosures until paperwork can be scrutinized.

The Florida Attorney General is investigating Grodensky's

case.

In another Florida foreclosure case, this time in Palm Beach

involving lender GMAC, one banking official admitted signing

as many as 10,000 foreclosure documents in a month and

without proper review.

The State of Florida is not alone in its inquiry.

Connecticut, California and Ohio have also stepped in after

concerns about improper foreclosures in their states. The

U.S. Treasury Department and the Office of the Comptroller

of Currency are also investigating shoddy foreclosure

practices.

Last week Bank of America agreed to delay foreclosures until

it could investigate whether bank officials failed to

properly follow foreclosure procedures. Bank of America's

action comes on the heels of an admission from an official

there that she signed 8,000 foreclosure documents per month

without proper review.

How bad is the problem? No one knows, although the National

Consumer Law Center believes the problem is widespread.

Unfortunately, those who are losing their homes to

foreclosure are already cash strapped. Hiring competent

counsel is difficult for people who can't even afford the

roof over their heads.

About the Author:

Brian Mahany is a partner at the Milwaukee law firm of Mahany

& Ertl, LLC. He concentrates in fraud and asset recovery

cases. Brian blogs on a number of finance related topics and

welcomes feedback. Contact Brian through his website at

http://www.mahanyertl.com or directly at (414) 704-6731