Wrongful Foreclosures Snaring Homeowners Throughout the Country

<"http://www.yourlawyer.com/topics/overview/Wrongful-Bank-Foreclosures-Lawyer-Lawsuit-Attorney">Wrongful foreclosures are still taking place across the country, according to a report from the Associated Press. In some cases, banks have tried to foreclose on homes even when the mortgage was up-to-date. In some instances, the banks went after homeowners who had paid off their mortgage, or homes that never had a mortgage to begin with.

“This is the worst I’ve ever seen it,” Ira Rheingold, an attorney and executive director of the National Association of Consumer Advocates told the Associated Press.

“In virtually every case, I believe the homeowner was not in default when you looked at the surrounding facts. It is a widespread problem throughout the country,” Diane Thompson, a lawyer with the National Consumer Law Center, has defended hundreds of foreclosure cases, said.

According to the Associated Press, homeowners in Florida, Nevada, Texas and Pennsylvania have filed lawsuits alleging that they were victims of mistaken foreclosure. And in many of these cases, the errors went well beyond a paperwork mistakes.

For instance, there is the case of Angela Iannelli, of Pittsburgh, Pennsylvania, who says her mortgage was up-to-date when a contractor for Bank of America padlocked the door of her home while she was at work. Utilities were shut off, and even her pet parrot was taken by the bank.

A Spring Hill, Florida couple who didn’t even have a mortgage says Bank of America removed their belongings and changed the lock on their home, even after being made aware that the foreclosure was a mistake.

While you might assume that errors like these are relatively easy to fix once they’re discovered, that’s not the case according to the Associated Press. Apparently, once a bank places you on its foreclosure assembly line, it becomes nearly impossible to get off. Wrongfully foreclosed homeowners have had to pay thousands in legal fees because of the banks’ mistakes, and sometimes the foreclosure makes it all the way to trial stage before a homeowner is vindicated.

So how did this all happen? According to the Associated Press, during the housing boom, banks stopped holding on to mortgage loans and pooled them into securities that were sold to investors. The banks then charged fees for servicing those loans. The banks earn the biggest fees when a borrower can’t make payments and the bank forecloses, the Associated Press said. So they have an incentive to foreclose on people as quickly as possible. Together, the banks and their law firms created a quick-and-dirty foreclosure machine that was designed to rush through foreclosures as fast as possible, the Associated Press said.

In October, several home loan lenders, including JP Morgan Chase, Bank of America and GMAC Mortgage, suspended various aspects of the foreclosure process after discovering irregularities in the preparation of court documents. In many instances, the banks outsourced foreclosure processing to “foreclosure factories,” which processed tens of thousands of court documents every month. It now turns out that the foreclosure affidavits processed by those companies were signed by personnel who came to be known as “robo-signers.” In many cases, the robo-signers were not reading or verifying documents where they were signed, and in many documents were not properly notarized.

The banks’ disclosures have prompted multiple investigations, including one by attorneys general in all 50 states. Those investigations could uncover criminal misconduct or large-scale errors that force foreclosures to be put on hold for an extended period of time. That will encourage thousands of people whose homes have been seized or are facing foreclosure to mount legal action against the banks.

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