RandomGuy
10-05-2010, 09:26 AM
You may have heard that some of the larger banks have self-imposed moratoriums on residential foreclosures.
That isn't out of the goodness of their hearts. Turns out (surprise!) that their paperwork is so sloppy and faulted that they are having a LOT of problems actually proving that they even hold the lien to allow them to foreclose. "Produce the note" is being increasingly heard from people who have been given notice, and the banks have found themselves unable to do so in many cases.
Here is an interesting article:
Company Stops Insuring Titles in Chase Foreclosures (http://www.nytimes.com/2010/10/03/business/economy/03foreclose.html)
A major title insurance company has stopped insuring homes foreclosed by JPMorgan Chase, another sign that the controversy over the legal practices of the big lenders is starting to influence the housing market.
Title insurance is insurance that protects buyers of property from faults in the deed. As such it generally increases the ability of a seller, in this case the bank that has foreclosed, to ask for a greater price.
In the absence of this title insurance, suddenly the potential losses on the part of the bank in a foreclosure just got a LOT greater. Both from a lower asking price, and the increasing numbers of people having the gall to ask the banks to actaully (gasp) prove they have a case in court.
This will probably slow the pace of foreclosures and force banks to work a lot more with their mortgage holders. Oddly enough this may actually make the housing market finally "hit bottom".
That isn't out of the goodness of their hearts. Turns out (surprise!) that their paperwork is so sloppy and faulted that they are having a LOT of problems actually proving that they even hold the lien to allow them to foreclose. "Produce the note" is being increasingly heard from people who have been given notice, and the banks have found themselves unable to do so in many cases.
Here is an interesting article:
Company Stops Insuring Titles in Chase Foreclosures (http://www.nytimes.com/2010/10/03/business/economy/03foreclose.html)
A major title insurance company has stopped insuring homes foreclosed by JPMorgan Chase, another sign that the controversy over the legal practices of the big lenders is starting to influence the housing market.
Title insurance is insurance that protects buyers of property from faults in the deed. As such it generally increases the ability of a seller, in this case the bank that has foreclosed, to ask for a greater price.
In the absence of this title insurance, suddenly the potential losses on the part of the bank in a foreclosure just got a LOT greater. Both from a lower asking price, and the increasing numbers of people having the gall to ask the banks to actaully (gasp) prove they have a case in court.
This will probably slow the pace of foreclosures and force banks to work a lot more with their mortgage holders. Oddly enough this may actually make the housing market finally "hit bottom".