Just like their amazingly effective mortgages, which made and burst the bubble. the big boys (known affectionately as TOO BIG TO FAIL), are at it again, only now it is with sketchy foreclosures. Bank of America announced today that they were unfreezing the foreclosures that they had frozen, which had effectively allowed the effective stop of foreclosures. They had a freeze of their foreclosures, in order to review what was thought to be poorly documented paperwork. They did not, however, explain how they had determined that this mess had actually been vetted, and suddenly found to be in order. Other banks will likely soon follow in this masquerade.
These are the same institutions that gave us the housing bubble. They gave us mortgages that were not worth the paper they were written on, and derivatives, which broke the mortgages up into tiny, indigestible, toxic pieces. Now these institutions cannot prove that they actually own the mortgages. Instead they rely on individuals to certify that the paperwork in order. Their assertions are often based on less than a minute’s time reviewing the documents, (robosigning) and that is not a way to prove you own something that may have been sold and resold dozens of times before you got it, if you ever actually got it.
Wait till the lawyers get a hold of this; they now have a method of how to stop foreclosure. A few lawsuits have already been filed, that led to the freeze originally. Now they are counting on the courts accepting that they have “standing,” (are the owners) and to prove that, they are relying on an industry front that they set up, possibly with the sole intention of rubber stamping their (at best) sloppy and risky practices. If you are one of the large chunk of Americans who are attempting to learn how to stop foreclosure this may be something to look into.
And while we are on the topic of foreclosure, it’s worth connecting that to the huge increase in bankruptcies that are sweeping the US in the wake of its greatest recession. In the article How to File for Bankruptcy Without an Attorney I not only give suggestions on what to do if you need to file a pro se bankruptcy, but I also discuss how Chapter 7 and Chapter 13 bankruptcies are connected to avoiding foreclosure.
The best method for portecting your home, if you can quailfy, is a Chapter 13 bankruptcy. It would be hard to file for bankruptcy without an attorney if you go that route, and with your house at stake, an attoney is certainly advisable. However you may well be able to roll the payments to the attorney into your 3-5 year reorganization, and that could allow you to stop foreclosure and keep your home. However, if you can successfully file for bankruptcy without an attorney (using Chapter 7), the best you can expect is a delay in stopping a foreclosure of 3-5 months. Possibly if your home has a lot of equity, you may get some money back from a sale where you use a homestead exemption in that type of bankruptcy. You may not be able to stop foreclosure that way, but you could at least save some of your equity.