Foreclosure Renewal - Housing Mess

Kalyan many, on Tuesday, November 16, 2010, 1: 15 pm EST

Major banks seek housing problems and billions of dollars of losses again? That is what a new report from the Congressional oversight group appears to warn.

According to the report, the resulting chaos of exclusion paperwork defects could lead to huge losses for banks and a new dilemma for the housing market.

Rampant paperwork lapses in the evaluation of the authenticity of the information provided in documents of the mortgage has wrapped principal lenders including

Bank of America Corp.?(NYSE: BAC-News),

JPMorgan Chase & co.?(NYSE: JPMorgan - News) and

PNC Financial Services Group Inc.?(NYSE: PNC - News) in a series of demands of homeowners in the second half of September. Of a result, these lenders temporarily suspended foreclosures.

According to the new report, financial firms a total of 6.4 billion in mortgages service involved in the mess of exclusion. However, after administration of Obama cited that the suspension of exclusion is not necessary in all 50 States, affected lenders began to resume selling excluded properties.

Perhaps the continuation of the suspension of exclusion is required as disorder was not removed from the root. We believe that repeating defects of paperwork and the flood of lawsuits arising could be difficult to find home buyers in the coming years. This could stretch outthe U.S. housing crisis for several years.

Results

According to the report, in idyllic circumstances, lenders would be able to continue the activity of exclusion as invalid information in the documents shall be replaced by documents right after a certain point in time. Also, disorder of exclusion could be an exaggerated problem. In any case, paperwork defects related to exclusion will be ironed long-term experience of the workers of properly revise documents.

At the other extreme, lenders may face legal challenges related to the validity of the mortgage. Lenders also could not is has failed to demonstrate your property mortgage loan they say themselves, incurring unexpectedly heavy losses as a result. Also, the moratorium prevents selling excluded, leading to a high probability of reduced activity of housing properties.

In the root

At the time of exclude households, many lenders use 'robo-firmantes' ? employees who sign hundreds of documents on a day without verifying decisive information as previously pending borrowers quantities. This is the main reason behind the mess.

Another major problem emerged when several banks stated that they have the right to exclude from the same property.

Flawed paperwork also raised questions about the validity of the document property. In many cases, an individual who had moved to a House of a payment cannot be the legal owner. Mortgage of a result, the original owners of improperly expelled from their homes as part of its process of exclusion lenders.

The Way Out

As a measure of redemption, is expected to legislators and regulators banking to push lenders to modify loans rather than prevent, that probably could decrease defects of paperwork.

The Congressional oversight group is also pressing for loan modifications as any other error of paperwork could damage affordable Home and modification program (HAMP), preventing exclusion main effort of the Treasury.

Houses in game again?

Some analysts consider disorder can hinder potential buyers in the short term, but the result does not change long-term and there will be no impact on housing recovery as such. However, we believe that the problem will persist for a longer period and no doubt there will be a significant recovery stress as housing lenders sometimes does not have information about the owners of the loan.

Also, lenders may not prove your property mortgage loan due to a documentation error. We will have to wait awhile to see how well absorbs shock.

View the original article here