Foreclosure Fiasco: It's Worse than You Thought

After three years of terrible news about the housing market, you'd think it couldn't get much worse. But over the past week, a whole new can of awful has opened up. It turns out that the banks who lent money with reckless abandon during the real estate bubble were just as incompetent on the way down as they had been on the way up. Big lenders and mortgage servicers have been forced to acknowledge that, as they rushed to foreclose on hundreds of thousands of properties, they didn't always check to make sure that they actually held the mortgages.

In one case, a Florida man who had paid cash for house was foreclosed upon for defaulting on a loan he never took out. In other cases, mortgage documents have been forged. So-called "robo-signers" have been churning out affidavits without checking to see if they are true. In response, foreclosures are all but frozen in 23 states, House Speaker Nancy Pelosi has called for a federal investigation, and attorneys general around the country are seeking to halt foreclosures. One major title insurer has announced it won't insure homes foreclosed upon by J.P. Morgan Chase. That may sound like a technicality, but if the trend spreads, it could send the housing market into a tailspin.

On top of this severe economic breakdown comes a disturbing finding by two Princeton researchers that racism contributed to the housing bubble — minorities were disproportionately targeted by predatory lenders and sold subprime mortgages, regardless of their ability to pay. In our seven story package, you'll find a straightforward explanation of how we got here, and insights from MoneyWatch and BNET experts on what this means for the market, and for you.

• Slideshow: Anatomy of a Fiasco
• Will Foreclosure Freezes Fix the Housing Market?
• What Could Make the Housing Market Even Worse
• Why We Need Better Financial Regulation
• Help for Homeowners Means Hurt for Banks
• How Racial Segregation Worsened the Crisis


• In Housing Crisis, a Hidden Cause?


• B of A Extends Foreclosure Freeze to All 50 States