Tuesday, March 8, 2011
Perhaps -- perhaps -- the tide is finally turning in the foreclosure crisis: courts are actively preventing unlawful foreclosures (Florida excepted). I think that's a very, very good thing, because (1) I have a soft spot for the rule of law and (2) most foreclosures serve absolutely no one's interest except the mortgage servicer's, who collects fees for foreclosing. The borrower is worse off, and both the lender and the investors in the securities backed by the loans are worse off in a stagnant re-sale market.
But undoing the unlawful foreclosures that have already been completed will take many, many years. Ibanez was likely the tip of a very large iceberg. We had a mortgage crisis; we now have a foreclosure crisis; get ready for the restitution crisis.
From the Oregonian:
Since October, federal judges in five separate Oregon cases have halted foreclosures involving MERS, saying its participation caused lenders to violate the state's recording law. Three of those decisions came last month, the key one in U.S. Bankruptcy Court in Eugene.
Attorneys say it's not clear whether lenders in Oregon will simply start over or head to court to foreclose, steps that could prolong the crisis for months and drive up costs, attorneys say. Some suggest lenders might not have access to the documents they need to comply with state law.
"A lot of us are questioning whether there is a solution," said David Ambrose, a Portland attorney who represents lenders in mortgage transactions. "It's pretty amazing. There are a lot of unanswered questions."
MERS is listed as an agent for lenders on more than 60 million U.S. home loans, about half of all such loans.
Mark A. Edwards
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