Insight and investigations from our expert reporters
Action in March by federal bank regulators wasn’t enough to scare banks away from the way they handled foreclosures. Reuters found that big banks that service mortgage loans continue to use robo-signers, file false documents and mislead courts in their efforts to take houses from homeowners delinquent on their mortgages.
The findings point to the need for a widespread audit of mortgage documentation by federal bank regulators, a step they have so far strongly resisted. The pervasive use of questionable documents in foreclosures suggests that the cause is deeper than just corner-cutting by mortgage loan servicers. It suggests that to a large extent, original lenders never turned over the required ownership documents when pools of new mortgages were securitized and sold to investors. Investors may have spent billions to buy mortgages they never received.
By Scot Paltrow
Link to PDF: http://link.reuters.com/kyb72s
Senior personal finance correspondent Linda Stern has been delving into the housing market for a special report on home appraisals — “What’s a home worth? Pick a number, any number”
It turns out a lot of people are in home appraisal hell.
The reasons for this new form of real estate limbo include new and proposed federal rules governing appraisals along with changes in the way appraisals are conducted. Plus, the uncertain housing market is creating price instability. The end result? Borrowers are missing out on low interest rates. And lenders are leery of the appraisals they get.
Shares Lender Processing Services Inc fell as much as 9.8 percent at one point on Monday after Scot Paltrow’s special report said the company, which helps banks manage mortgage foreclosure documentation, faces more serious legal troubles than it previously disclosed. The stock closed 5.77 percent down for the day.
Read the full report, “Legal woes mount for a foreclosure kingpin,” in multimedia PDF format here.
By Matthew Goldstein
The $425 billion in home equity loans and other second mortgages sitting on the balance sheet of the four biggest U.S. commercial banks is the big gorilla in the room that no one wants to talk about. (See our latest special report here.)
The banks, for their part, generally have downplayed concerns about so-called second liens on mortgages. Bankers point out that less than 5 percent of home equity loans and other second mortgages are delinquent and lenders have been taking charge-offs for second liens deemed uncollectable.
Washington is abuzz with the arguments about foreclosures and whether banks have been steamrollering them through, but many Americans at the other end of the spectrum are having their own problems with mortgage lenders.
One of the couples featured in our special report on how hard it is to get a mortgage were originally turned down because the top right-hand corner of a paystub appeared torn in a photocopy. This despite the fact that the applicants’ debt was just 14 percent of their income and they were borrowing just 25 percent of the home’s value.