There’s one word that perfectly describes what’s going on in the foreclosure arena, and it’s not exactly printable here. But when I saw the story that the Connecticut attorney general is seeking to halt all foreclosures in that state, on top of JP Morgan’s halt this week, on top of Ally’s earlier halt, one word came to mind. It starts with “cluster” and ends with something that rhymes with “luck.”
Today we got word that the attorney general in Connecticut, Richard Blumenthal, wants a 60-day freeze on foreclosures. “This freeze should stop a foreclosure steamroller based on defective documents and enable effective remedies,” Blumenthal said. “The actions of GMAC/Ally and JP Morgan are inexcusable, a possible fraud on the court undermining the integrity of the legal process and consumers’ ability to fight foreclosures.”
That’s on top of news yesterday (hat tip, naked capitalism) that the acting director of the Office of the Comptroller of the Currency, John Walsh, has contacted seven of the nation’s biggest lenders about their practices. From the Washington Post story: “The paperwork problems range from potentially forged documents to bank employees who never read borrowers’ files before signing off on an eviction.”
The flood of foreclosures has been so great, and the convoluted paper trail that came as a result of the securitization of mortgages has been so Byzantium, that the whole process of foreclosing on a home has become entirely unmanageable. Now, this is something of a mixed blessing for home-owners who’ve defaulted. On the one hand, they’ve probably getting more time to put their proverbial houses in order, if not their literally ones. On the other hand, some of them are being totally screwed, to put it politely.
This story has all the hallmarks of a festering gash. We have come to a very bad pass, Mouseketeers, when the courts, or the mortgage servicers themselves, can’t figure out who owns a home. Even worse is when the servicers just don’t care to find out.