60 Minutes has an incredible story detailing how a mortgage document processing company is putting hundreds of thousands of homes in a limbo.

The story describes how one document mill in Alpharetta, Georgia attempted to duplicate lost affidavits of assignment after the originals were lost. Lost documents was a systemic problem. It is a natural problem of non- (more…)

It turns out that investors are amenable to loan modifications when they are on the borrowing side.

A Boston real estate firm got out of a $2.7 billion loan this week after it couldn’t make payments on a portfolio of office buildings in Seattle and Washington, DC. Beacon Capital, an international real estate investment group based in Boston, has been unable to service the debt on a large commercial real estate deal.

Beacon bought a portfolio of office buildings in Seattle and Washington, DC. The 2007 deal was (more…)

Now we have news that the nation’s largest mortgage originator, Countrywide, systematically skipped over the basic framework of how property is legally identified and represented in their transactions.

This administrative lapse could cost Bank of America billions of dollars, according to Daily Finance.

A team leader from B of A’s Mortgage Litigation department testified at a New Jersey hearing that it was “customary for Countrywide to maintain possession of the original note and related documents.” That is a surprise, (more…)

It isn’t just that people think that the document problem might become a problem. At this point, it is hard to find anyone with a professional role in the housing sector that doesn’t imagine that this will upend the sale of homes. It is a question of when, and not “if,” according to many experts. This morning, Karl Case (of Case-Shiller) reversed his earlier expectations for a near-term recovery and declared that he sees more gloom and doom for more than a year. Mark Zandi says it could several years. Realtors are bemoaning how they have deals that are suddenly in flux. We’re not at the point where we can say “if it wasn’t for distressed sales, then we’d have no sales at all,” but it is true that distressed sales make up almost half of all transactions and that their share of home sales now accounts for almost six times more volume than historical norms.

Saying that it Isn’t So

It is like Gertude told Hamlet:  “The lady doth protest too much, methinks.”

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An under-the-radar bill passed out of Congress this week that could give servicers a chance to escape from liability for the mortgage affadavit crisis.

The bill sidesteps the authority of state judiciaries to impose standards for the notarization of documents. That would upend the recent actions of state attorneys general to make servicers produce adequate documentation before they can go forward with foreclosure proceedings. It is a legitimate requirement, because recent reports show that administrators at GMAC and JP Morgan Chase, among others, were signing documents without without verifying their authenticity.

In 23 states, foreclosure proceedings have been disrupted because of news that many servicers were not using proper procedure for documenting their affadavits.   Those states are ones that insist upon judicial review in the foreclosure process.

Those requirements would be undermined by this bill. It sets up the possibility of a case where a (more…)