Anatomy of a Fiasco
Anatomy of a Fiasco
Foreclosure Surge
With the collapse in the housing market, the number of foreclosure filings per month in the U.S. has more than quadrupled since 2005, according to RealtyTrac. This has led to a huge increase in the amount of paperwork that must be processed by lenders.
Anatomy of a Fiasco
Cutting Corners
In order to process these documents, banks began relying on so-called "foreclosure mills"—legal services firm that provide affidavits of ownership and other details. In some cases, employees of these companies have admitted to routinely signing thousands of documents a week related to foreclosures without properly reviewing them.
Anatomy of a Fiasco
GMAC & Others Halt Foreclosures
After an employee testified in a recent case that he executed 400 affidavits a day for GMAC without even reading them, GMAC announced in mid-September that it was suspending its foreclosure proceedings in the 23 U.S. states that handle foreclosures through the court system, pending a review of its paperwork handling process. JP Morgan Chase and Bank of America soon follow suit.
Anatomy of a Fiasco
Calls for a Freeze
House Speaker Nancy Pelosi and other politicians are now calling for a federal investigation into lender's foreclosure practices, saying that "the excuses we have heard from financial institutions are simply not credible." Meanwhile, Texas's Attorney General has asked banks to freeze all foreclosures. U.S. Attorney General Eric Holder held a press conference Wednesday saying the Justice Department is looking into the situation.