Is the big bank “Robo Signing” scandal hurting the housing market?
With home sales this past summer at the lowest level in more than a decade, the lasat thing the real estate market needs is another kick in the teeth. But as a scandal unfolds over mortgage lenders’ shoddy preparation of foreclosure documents, the fallout is beginning to hammer the housing market, especially in states like Florida where distressed properties are abundant. Three major mortgage lenders — Bank of America, GMAC Mortgage and JPMorgan Chase — have said they are suspending foreclosures in the 23 states where they first need a judge’s approval. They are also waving off Fannie Mae from selling any of the foreclosed homes whose loans they sold to Fannie.
More broadly, the revelations about the sloppy paperwork are emboldening homeowners and law enforcement officials in many states to question whether lenders rightfully hold the notes underlying foreclosed properties — further chilling the housing market. Distressed properties, many of which are in foreclosure, make up about a third of all home sales. “Foreclosures are going to slow to a crawl,” said Guy D. Cecala, publisher of the trade magazine Inside Mortgage Finance. Of the 23 states where foreclosures need court approval, Florida has by far the most trouble — about a half-million cases clog its courts — and the moratoriums are having a noticeable effect. Because most lenders sold their mortgages to Fannie Mae, it is largely that company that has been sending e-mails to real estate agents about putting off deals and removing houses from the market.
- You: Flawed Foreclosure Documents Thwart Home Sales (nytimes.com)
- Just What We Need: The Foreclosure-Gate Crisis Is Starting To Hurt The Housing Market (businessinsider.com)
- BofA Halts Foreclosure Sales in 50 States (time.com)
- You: Largest US Bank Halts Foreclosures in All States – New York Times (news.google.com)
- Bank of America halts foreclosures nationwide (thegrio.com)
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