The mortgage servers, banks that collect the payments and perform all the other administrative work, have been cutting corners in the foreclosure process. This has allowed some home owners to stay in their house longer. This has already been reported as a problem with GMAC bank. However, now this article is discussing the impact on the real estate market has whole.
This next part explains the real issue.If uncovering such deficiencies halts thousands of pending foreclosures or renders void those that have already taken place, including repossessions of homes that have been resold, it could snarl courts for years and further postpone a recovery that can’t happen until real estate prices find a bottom, said Stuart Saft, a partner at New York-based Dewey & LeBoeuf LLP. Until home values start to rise, buyers will stay away, he said.
More LitigationThe troubles started with an increase in originations in the 2000s, especially of riskier loans, as Wall Street devised ways to bundle mortgages into securities it sold to investors around the world. From 2002 to 2007, $18.2 trillion worth of mortgages were originated compared with $7.7 trillion in the previous six years, according to data compiled by Inside Mortgage Finance, an industry newsletter in Bethesda, Maryland.
Another reason is article states is lack of staff. These services knew this problem in 2008 and there huge pool of unemployed people.“I anticipate some people I know, possibly myself, are going to be involved in reopening these cases to get money for people who can’t get their houses back,” said Richard J. Burton, a Miami attorney who started the Foreclosure Project LLC, which provides legal representation to homeowners facing foreclosure.
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