Foreclosure update

Foreclosure's one of the more enduring – and expanding – issues around today. This week alone…

Testimony before the Congressional Oversight Panel last Tuesday spoke of foreclosures hitting homeowners who were not even in default, and of banks tacking on excessive fees that can drive borrowers into foreclosure situations.

The Associated Press, that morning, said, "The disarray stemming from flawed foreclosure documents could threaten major banks with billions of dollars in losses, deepen the disruption in the housing market and hurt the government's effort to keep people in their homes."

"In the best-case scenario,” the Panel’s report summary said, "concerns about mortgage documentation irregularities mayprove overblown. In this view, which has been embraced by the financial industry, a handful of employees failed to follow procedures in signing foreclosure-related affidavits, but the facts underlying the affidavits are demonstrably accurate. Foreclosures could proceed as soon as the invalid affidavits are replaced with properly executed paperwork.

"The worst-case scenario is considerably grimmer. In this view, which has been articulated by academics and homeowner advocates, the 'robo-signing' of affidavits served to cover up the fact that loan servicers cannot demonstrate the facts required to conduct a lawful foreclosure. In essence, banks may be unable to prove that they own the mortgage loans they
claim to own." ( Committee’s executive summary / Full Report )

"Foreclosures on prime fixed-rate mortgages in the U.S. jumped to a record in the third quarter as unemployment strained household budgets of the most credit- worthy borrowers," a Cincinnati.com article this morning read. "Nationally, 4.4 percent of mortgages were in foreclosure and another 9.4 percent were at least one payment behind, according to the Mortgage Bankers Association." Here at home that meant one out of seven Ohioans and nearly one out of eight Kentuckians with mortgages are either in foreclosures or behind on monthly payments as of the end of September.

GAO, earlier this week, in response to an investigation called for by Senator Sherrod Brown, the Cleveland Plain Dealer reported, found that more than 50 percent of all abandoned foreclosures that it identified were in Ohio, Michigan and Indiana. "Ohio is one of the states hardest hit by the practice of mortgage companies walking away from foreclosures they've already started, leaving homeowners and communities to deal with the blight and costly fallout -- seven of the 20 metropolitan areas with highest numbers of abandoned foreclosures were in Ohio- -- with the Cleveland area ranked at No. 3 after the Detroit and Chicago areas." Cincinnati-Middletown, Toledo, and Pittsburgh round out the bottom three in that order. [ GAO Summary, Highlights, or Full Report, here. Also see Plain Dealer report from July 2009 instigating investigation ]