Monday, November 1, 2010

Note to the Banking Industry on refiling troubled foreclosure actions

Sun Sentinel Reporter, Paul Owers, recently wrote that South Florida leads the nation with more than 58,000 foreclosure filings in the third quarter. Mr. Owers writes that “the number of filings in Palm Beach, Broward and Miami-Dade counties rose 25 percent from the second quarter and 9 percent from the third quarter of last year.” On the same day, Sun Sentinel Reporter, Diane Lade, focused on the fact that banks must prove they own and hold the mortgage on a property if they expect a judge to grant them a foreclosure judgment. Up until now, many banks have been getting lucky in terms of their foreclosures despite missing, badly prepared and, in the worst cases, inaccurate or fraudulent documentation.

Attorneys General in all 50 states are now investigating the full extent of the “robosigning” scandal and the number of foreclosures that were consummated on the basis of faulty documents or procedures. We are also told that many banks are planning on refiling their foreclosure documents in the hopes of getting it right this time. In the interim, many of the properties that have been the subject of mortgage foreclosures are now being highly scrutinized by the real estate, legal and title insurance industries. Resales of these properties are becoming more difficult as problems are revealed.

Rather than spending thousands of dollars in reopening and refiling these actions, has our banking industry given any serious thought to taking the same amount such action would cost and simply putting that money in the pockets of the homeowners they displaced in exchange for a Quitclaim Deed to the property and a Stipulation to the Entry of a Foreclosure Judgment? Sure there is the chance that the bank won’t be able to find the owner or he or she will say “No”. In those instances, the bank can proceed with refiling a foreclosure action that would have otherwise been successful but for the shortcuts taken. Hiowever, for the folks who can be found, who had no defense to the foreclosure and who have given up all hope of ever getting those properties back, this money in their pockets could certainly help with relocation costs and would serve a more humane purpose than simply refiling.

This work by Donna DiMaggio Berger, Esq. is licensed under a Creative Commons Attribution-NoDerivs 3.0 Generic License.

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