Foreclosures have been in the news for a number of years. It goes in cycles. I bought my first condo in 1992, it was a HUD foreclosure. The combination of loans with adjusting interest rates, too easy credit a few years back, overly optimistic buyers, falling values and a deep recession have brought us foreclosures in waves that keep on coming.
The latest in a long line of foreclosure news is the robo signer scandal, and the revelations that foreclosure sales were not processed properly therefore the sales are not valid. I’m not an attorney and I’m not an expert of foreclosure laws or proceedings but it seems to make sense that the basics should still apply. If a homeowner misses payments they are in breach of the agreement they signed at the closing. When in breach of the agreement the bank has the right to take the house back subject to the laws of the state in which the house sits. Those laws should be followed and the correct procedures should be done in the correct order but … Let’s get back to basics, the homeowner agrees to pay, and when they don’t they lose their rights to live in the house. It’s really that simple.
I favor loan modifications which seem to work better for everyone. But it seems that many of the loan modifications haven’t worked. The easy credit prevalent in the mid-decade approved people who can’t or won’t keep to a credit promise, modified or otherwise.
Once the bank has the house back they need to take enough due diligence so that the deed is conveyed correctly. And what if they don’t? Just as they have with the robo signers. I think that to negate sales and muck up the process with minutia is a disservice. Make the corrections that are needed to clear title and move on. Get it right, don’t take another victim by throwing the baby out with the dirty bath water.