Foreclosure-gate might be the smoot-hawley we have been waiting for, Gonzalo Lira explains in the link below, short, and detailed versions…
There are a few holes in this argument.
First, he claims that since a bank may have sold a security “representing” a portion of your bank loan, they now must track down all these investors and obtain their signatures as they suddenly become primary lean holders in your mortgage. But the “deal”, or contract is still between you and the bank. When your 401k invests your money in a certain company, can you specifically find those companies and demand a direct say in all the contracts they may sign ? Of course not.
He uses a couple of anectdotal examples of what most likely is just plain error, to claim that banks are now forclosing on “good” mortgages at will, as if their is some advantage for them to do this.
Bank of America in fact, has resumed it’s foreclosure process, most likely realizing that this is nothing more than a political scare, drummed up in this, an election year with a party desperate to remain in power.
The contract you signed is between you and your bank. You owe them the money, plain and simple. The government has a responsibility to uphold that contract. If the guy who owns a security “representing” a portion of your loan wished to stake a claim to your front yard, he would be required to get you to draw up a new contract.
This is not to say that some leftist, property hating judge somewhere may proclaim that all mortgage contracts be null and void. But the forclosure process in itself is an intregal part of property rights. It is part of the process that recognizes that your property becomes yours, once you have paid for it. The contract (mortgage) between you and your bank also insures that some rogue investor down the line cannot initiate a forclosure on you.
I would not recommend that people now go tell their bank to go pound sand, that your contract is now null and void. You have absolutely no standing in court (at this time) if you breech the terms of your contract. No matter where the interests in your mortgage go after you sign on the dotted, your mortgage contract is your protection, your deal for it’s term. In exchange, it’s terms are your responsibility.
There is a movement now to empower a third party to rewrite mortgage contracts as well. If in fact, the government were to allow some acorn type group to have the power to mess with interest, principle, or other terms of your contract, it would have a devestating effect on the industry. No contract would be valid.
I think the point was the tort pile on and subsequent delay in forclosure processing. This whole forclosure-gate fiasco could be a red herring setup to distract from what I think is a bigger issue, the intentional delay of homes (having gone through forclosure) being listed, so then homes are held “off-market” to keep prices stable..and not in free fall decline. Bubble, bubble, toil and trouble.
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