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Finding A Way Out of the Foreclosure Fraud Crisis

Finding A Way Out of the Foreclosure Fraud Crisis

While there’s been plenty of bad news and criticism surrounding the foreclosure fraud crisis, we’ve heard very little in terms of solutions or even short-term remedies.  Everyone seems to acknowledge, at least to some degree, that this is a significant problem, but few can tell us how to get out of the mess.

So kudos to the Center for American Progress for at least initiating a conversation on what a possible solution to untangling these problems could look like.  Just after both Bank of America and Ally Financial announced that they were resuming active foreclosures in at least 23 judicial foreclosure states, CAP suggested the creation of a foreclosure mediation program as one means of giving responsible homeowners and their lenders or mortgage servicers an opportunity to review the documents used in support of foreclosure to ensure the foreclosure is both legal and appropriate.

There’s plenty to consider in this deceptively simple solution.  To begin with, by forcing a face-to-face meeting with the parties and a neutral fact-finder, homeowners, lenders, and future home purchasers (along with others involved in these transactions including agents and title companies) can have some certainty that these future foreclosures are lawful. 

Second, mediation in general often works to resolve disputes in a fashion not possible in traditional litigation.  Many of the thousands of people affected by the foreclosure crisis could keep their houses if lenders and servicers would work with them on a modification.  This includes the thousands of homeowners who fell behind on mortgages because of a job loss or medical emergency, to those homeowners who are upside down in their homes as a result of circumstances well beyond their control.

The reality is the federal Making Home Affordable programs and related state initiatives had a similar goal in mind but with no real leverage to make lenders negotiate.  The exposure of this fraud, and thus the exposure of potential liability connected with this fraud, can change that.

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21 comments

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5:19AM PDT on Oct 31, 2010

Excellent idea! Let's insist on it!!

10:10PM PDT on Oct 30, 2010

thanks for the info.

6:56AM PDT on Oct 30, 2010

Most articles are missing the point about the worst part of this fraud. NO HOMEOWNER knows whether he or she is paying a party with legal standing to collect payment, modify loans, or record lien satisfaction. And the REAL party of interest DOES have legal standing to foreclose...AGAIN. This goes for more than 60 million homes that were processed through MERS (look on the first page of your mortgage for a MIN number). The fraud affects all of these homes, not just those in foreclosure. The basic property rights that sustains this nation have been raped. EVERY homeowner should be outraged! It affects every home's value and corrupts EVERY county's land records. Take the time to research this. It's like one big pyramid scheme. As long as the bottom level keeps paying, the top gets rich; but when they stop paying, the scam falls apart. We need a PAYMENT moratorium more than a foreclosure moratorium. Ask your bank to PROVE it's legal standing. Foreclosure attorneys have free letters that will help you do that. Don't let these crooks destroy your future. Hopefully, We the People have had ENOUGH.

9:58PM PDT on Oct 29, 2010

Thank you for posting.

8:47PM PDT on Oct 29, 2010

and now it happens. banks are failing and desperately trying to get a cushion of homeowners to fall on to pad the huge salaries of their top execs. if the banks, A FOR PROFIT ENTITY, need money, then get it from the top execs, the ones who have stolen all the money to begin with. i do have one question about negotiating some type of settlement. How can homeowners be assured that the negotiator has not already been bought and paid for by the banks? I would be concerned given the banks crooked, greedy track record.

8:16PM PDT on Oct 29, 2010

Shun the banks and go to the credit unions.

6:57PM PDT on Oct 29, 2010

Anna, the Better Business Bureau actually doesn't do anything.in my experience and they have no power to compel businesses to act in anyway.

3:12PM PDT on Oct 29, 2010

U.S. billionaire Wilbur Ross is one of two competing bidders for the Republic of Ireland's EBS Building Society. Building societies are primarily mortgage providers and have a less profit driven agenda than banks. I see Ross' company American Home Mortgage Servicing is facing lawsuits in two U.S. states for repossessions. Considering how so many Irish citizens are facing difficulty in meeting large mortgages from our insane property 'bubble', this is really worrying. As is the IMF's statement of concern that more repossessions should be taking place in Ireland.

2:08PM PDT on Oct 29, 2010

Thanks for the article.

1:45PM PDT on Oct 29, 2010

The criminal elements running this country and their puppets in Wash. DC will eventually drive us nuts enough to put the Tea Party in charge!

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Kathleen J. Kathleen is currently the Activism Coordinator at Care2. more
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