If you look at the media, you could easily believe that the
foreclosure crisis is all but over. It is true that the number of new
Foreclosures has dropped. That drop is meaningless for two reasons, to
wit: many banks are regrouping because of new legislation that they
thought would be to their benefit (like in Florida) but turns out to
cause more problems than solutions for Banks. And the Banks, who have
been controlling market conditions and public sentiment through planted
news articles, want to give the impression that market conditions are
improving. This gives them both a higher price when they sell property
to investors and the extra benefit of creating the illusion that the
crisis is over.
Don’t believe it. There are at least as many Foreclosures in the
pipeline as we have already seen. Another 15 million people are in the
process of being displaced — many as a result of “modclosure.” That’s a
new term out in the blogosphere. My compliments to whoever thought it
up. It is the practice of using the illusory promise of modification
leading inexorably towards foreclosure. It starts with instructions from
the bank to stop paying, thus creating the appearance of a default
while the Servicer continues making payments to the creditor. Then as
the bank asks for documents and says it lost the,more destroyed them
because they were not in proper order, the homeowner gets in deeper and
deeper as each month goes by. Then on the eve of modification the bank
forecloses — process known as dual-tracking which is prohibited as of
January 1, but there is no indication that the banks will comply.
As stated by once recent decision by a Federal Judge — this is systemic, not a mistake. The
Policy of the banks is that sanctions are less expensive than compIiance
with law. Given the small number of litigants challenging the
Foreclosures the risk of losses where the Foreclosures are challenged is
acceptable.
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