Foreclosure Docs & Robo-Signers in the Headlines: Underlying Legal Issues

In the aftermath of the housing bubble burst, the housing market received a massive jolt from the discovery of serious problems with the foreclosure practices. The problems started at the height of the housing bubble and had been quietly simmering in the background. But after the housing market collapse, several allegations and improprieties were being unearthed almost on a daily basis in 2010, and the issue is far from over.

The deposition of a GMAC loan officer named Jeffrey Stephan opened a can of worms, which revealed deep and widespread flaws in the foreclosure practices of America’s largest banks. In a sworn deposition in Pennsylvania, the accused loan officer stated that he had signed off on up to 10,000 foreclosure documents a month for five years. Furthermore, he said that he hadn’t reviewed the mortgage or foreclosure documents thoroughly. This story made headlines overnight, and he quickly became known as the “robo-signer” for the way he handled mortgage and foreclosure documents in a cursory or robotic manner.

In subsequent developments, a Florida lawyer named Peter Ticktin, who is defending 3,000 foreclosed homeowners, gathered 150 depositions from bank employees of some of the largest banks, who stated they had signed foreclosure affidavits without ever laying eyes on them. This confirmed that the practice of rob-signing was chronic and rampant.

It didn’t take long for the attorneys general of all 50 states to announce an investigation of the shoddy practices banks were accused of using to kick struggling homeowners out of their properties.

Several class action suits have since been filed in the Florida and many other states. Since there is no precedent for many of the causes of action being alleged in these lawsuits, lawyers are unsure about how a wrongful foreclosure action is going to fare in the courts.

A Congressional oversight panel has stated that the implications of these wrongdoings remain unclear, and the infamous “robo-signing” practice may have concealed deeper problems in the overall practices of the mortgage industry. The panel also stated that this could potentially threaten America’s financial stability and undermine foreclosure prevention efforts for the foreseeable future.

How Many Foreclosures Have You Sold This Year?

History will probably judge 2010 as the year of record foreclosures in the U.S. While the actual numbers are still coming in, experts expect numbers to cross the one million mark.  Some analysts think the actual numbers could reach as high as a whopping 2.5 million when the final numbers come in for 2010. In comparison, over 900,000 homes were repossessed in 2009. About 528,000 were foreclosed during the first six months of 2010, and during this period, about 1.7 million homeowners received a foreclosure warning – this translates to one in 78 homes. Historically, the average annual foreclosures have been in the range of 100,000.

Although the pace of foreclosures had slowed down during the last quarter of 2010 due to various factors including robo-signing accusations, which was followed by the massive investigation launched by the attorneys general of all 50 states, the fallout from these scandals may continue to cripple the housing market in 2011 and beyond.

According to Lender Processing Services, which tracks U.S. mortgages, for a home loan to go from being 30 days late to the property being foreclosed and sold takes an average of 15 months. As of July 2010, over 7.5 million homes were in some stage of delinquency. Foreclosures accounted for about 25% of the home sales in the second and third quarters of 2010.

Where there’s adversity, there’s also opportunity. 2010 presented unprecedented opportunities for buyers and investors of foreclosed properties, which meant opportunities for Realtors too. However, most Realtors were overwhelmed by the foreclosure deluge and many struggled to adapt to the rapid change. Agents that jumped in too quickly made mistakes and those that waited too long missed opportunities.

As the year progressed, a lot of agents learned the tricks of the trade. They figured they must be one step ahead of their customers in terms of knowing the exact foreclosure status of properties in their geographic service areas, and to price the listings right the first time, so that they could move buyers off the fence using foreclosure comps. Many agents and brokers positioned themselves as “foreclosure experts” and even some universities jumped on the bandwagon by offering fast-track foreclosure certification programs.

Many savvy and aggressive Realtors converted the foreclosure lemon into profitable lemonade for themselves and their customers.

So how many foreclosures did you sell in 2010?

Coldwell Banker Ackley Realty Ranks First in Southern Region Sales Production

Kissimmee-based Coldwell Banker Ackley Realty is the top-ranked Coldwell Banker affiliate in both Florida and the Southern Region encompassing 14 states for 2009.

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