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AlterNet: Corporate Mortgage Scams Threaten to Crash an Already Shaky Housing Market

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marmar Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Sep-29-10 06:05 AM
Original message
AlterNet: Corporate Mortgage Scams Threaten to Crash an Already Shaky Housing Market

.....(snip).....

Real estate owned (REO) sales are sales of lender-owned properties that banks failed to unload at foreclosure auctions, and are busily trying to dump by any means necessary. That includes selling them to whatever deal-hunting home-buyers still exist in this anemic economy.

But prospective home buyers could be inheriting damaged goods. Because their dense securitization, each mortgage is divided between so many parties that banks are foreclosing and selling homes that may not even belong to them.

"Wells is sufficiently concerned about the risks of selling properties out of foreclosure that it is springing an addendum on buyers, shortly before closing, which effectively shifts all risk for any title deficiency on to the buyer," Yves Smith explained on Naked Capitalism. if a bank like Wells does not have the right to foreclose, it cannot have clean title to the property. So the bank could conceivably be selling something it does not own."

Worse, titles to REO properties are being compromised and confused by these crafty banks and their lawyers. In one particularly ridiculous case, Bank of America foreclosed on a Countrywide-brokered Florida home and transferred its title to Fannie Mae, even though it had already been paid off in cash for it and no mortgage existed. .........(more)

The complete piece is at: http://www.alternet.org/economy/148340/corporate_mortga... /



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customerserviceguy Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Sep-29-10 06:11 AM
Response to Original message
1. This is what title insurance is for
I know the industry gets maligned a lot, but I spent nearly twenty-five years in it, and if they mess up, they pay up.
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dkf Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Sep-29-10 06:29 AM
Response to Reply #1
3. Except if the entire barrel is rotten then a title company can't possibly back it all
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customerserviceguy Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Sep-30-10 06:25 AM
Response to Reply #3
4. True, and if there were a full-fledged disaster
any insurance company wouldn't have the resources to pay up. That's why so many companies, like Nationwide, tried every possible way to weasel out of paying Hurricane Katrina damages.

The vast majority of foreclosures will end up with the former homeowner just walking away, if they had the will or the resources to seriously fight some technical flaw with their proceding, chances are they would have done it during the time when the deal was going down. Most mistakes get swept under the rug simply by it not being worth the time and trouble to make something out of them.
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Clovis Sangrail Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Sep-29-10 06:13 AM
Response to Original message
2. title company?
isn't this exactly what they're for?
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