So how much of a delay in foreclosures is the robo-signing fracas causing?
Freddie Mac, the now essentially taxpayer owned company that with Fannie Mae, finances or guarantees about half of all U.S. mortgages, told the Financial Times on October 25 that its now taking as long as eight months for a house to work it’s way through the foreclosure process. That process took about two months before the start of the mortgage crisis.
The delay comes because borrowers and judges are challenging bank attempts to foreclose at every stop of the way now that the robo-signing scandal has shown that many banks don’t have the paper work they need to foreclose or at least haven’t properly certified that they do. (Robo signers, bank officials checking over the paperwork for a foreclosure, it turns out certified the completeness and accuracy of thousands of foreclosure packages without actually reading the documents.) The judges ruling on foreclosures are throwing an increasing percentage of foreclosures back to banks for refilling too.
The result is that while before the mortgage crisis many people moved out of their homes upon receiving a foreclosure notice, now many are staying in those houses until the sheriff evicts them.
Freddie Mac and Fannie Mae currently sit on move than 190,000 foreclosed properties.
The delay in the foreclosure process is costing banks money (Do I hear sobbing among my readers? Thought not.) and stretching out the time it will take the housing market to clear the current inventory of homes and further depressing the prices of existing homes.
You know the old saying “Owe the bank a few thousand and you’re in trouble uif you can’t pay. Owe the bank a few billion and the bank is in trouble if you can’t pay.” So multiply than until we’re talking hundreds of billions or a few trillions and the saying might be “Owe the government a trillion and the government’s in trouble.” Nobody wants to tackle Fannie anbd Freddie because 1) everybody was in the trough and 2) the honest fixes are so huge and painful
I got out all US banks few weeks ago. Just don’t want to be any part of it!
Obviously, bank officials certifying foreclosure documents they haven’t read is bad. But it’s funny how the politicians are so incensed by that, but seem to think that their voting for legislation that they haven’t read is okay.
And I’ve noticed that congress isn’t shy about attacking the banks that received bail-out money, and those who oversaw them as they dug themselves into these holes. But I don’t hear so much about the failures of those who oversaw Freddie and Fannie as they got into this mess. Wonder if that could be that congress was behind Freddie and Fannie, and the politicians don’t want too many questions being asked about that. Freddie and Fannie are going to be the ones that really cost the taxpayers big. We might do okay or even make a few bucks on the bank bail-outs – at least many of them. But Freddie and Fannie – under the oversight of congress – are in a hole that is still getting deeper.
what does this mean for the real estate investor, the speculator and the renter? I think these are three very different goals and minds worth looking at. Any thoughts Jim?
Query what replaces counsumer spending once non-paying mortgagees have to start paying rent?
The drawn out mortgage mess has been a turbo-charger on consumer spending.
Jim,
Can you please suggest some plays designed with the QE2 in mind. Thank you.