South Floridians are acutely aware of the foreclosure meltdown. We’ve all had family, neighbors, or friends who have been affected. We’re not alone though. Many parts of our country are still reeling from the foreclosure crisis, and we’re not even close to seeing the light at the end of the tunnel. Foreclosure cases continue to drag on, and many question whether the foreclosing banks have the legal right to bring the cases to begin with.
For years, Florida real estate lawyers have been aware of the legal “standing” issues in foreclosure cases caused by bad paperwork in the securitization process and faulty or missing assignments of mortgages. However, in recent months and weeks, it appears that the judges are now opening their eyes to these problems. As recently as last week, Daily Finance reported about an Alabama case where the judge ruled that the securitized trust did not have the right to foreclose (under the Pooling & Servicing Agreement or under the Uniform Commercial Code) where the securitization process was flawed. As we see more rulings like this, we will see even more litigation over these issues.
Has the time come for a bailout fund to stem tide of lawsuits caused by bad mortgage paperwork in foreclosure cases? FDIC Chairman Sheila Bair thinks so. On tomorrow night’s episode of 60 Minutes, she tells Scott Pelley that banks should be forced to contribute billions to a clean-up fund that will help stressed homeowners stay in their homes and stave off lawsuits that threaten the economic rebound.
We are facing a very real problem with faulty paperwork and outright fraud by the banks in many cases. Is a bank bailout fund really the answer? If so, who is going to pay for it? Sure, on paper it will be “the banks” paying for it. But why should smaller community banks with “portfolio” loans have to pay for the errors committed by the large banks. Equally as important, does anyone really doubt that the ultimate cost is going to be borne by the federal government and ultimately the taxpayers?
I am still undecided on this issue, but tomorrow’s 60 Minutes episode promises to be enlightening. I’m sure we’re going to see a lot more about this issue in the coming weeks.
At last, someone comes up with the “right” answer!
This is one of the most sensible arguments made on the subject.
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