Foreclosure ills may derail market recovery
The onslaught of controversies plaguing the foreclosures market could derail the recovery of housing market, at least according to the Obama administration.
Investigations over dubious paperworks by mortgage firms and servicers are causing much uncertainty over the legal status of foreclosed homes and the same could further lower foreclosed home prices which, in turn, could, cause the housing market another setback.
The Treasury Department said that problems pertaining to the so-called robo-signed affidavits, as well as the possibility of prolonged legal battles by homeowners and inquiries by state and federal officials, could hinder foreclosure proceedings and turn off potential buyers.
Communities such as Nevada, Florida, Arizona and California, where large numbers of foreclosures are concentrated, will be the places most likely to be affected by the adverse effects of these problems. A joint investigation by all 50 states and the Federal Reserve is now being conducted to uncover additional shady transactions.
GMAC Mortgage, JPMorgan Chase and the PNC Financial Services Group have already joined Bank of America in suspending some foreclosure proceedings since late September. The mortgage industry continues to downplay the scope of the problem and insists that everything remains under control.
Experts say that litigation could both come from homeowners resisting foreclosures and investors who claim that shadowy loan origination services have caused a decline in their profits.
The Center for Responsible Lending also said that buyers are now increasingly becoming more wary in pursuing REO properties due to these foreclosure issues. It also stressed that buyers need to be assured that foreclosure transactions remain legal in order for the market to recover.
The Home Affordable Modification Program (HAMP), which started in 2009, have only granted around 470,000 permanent loan modifications to date, a far cry from its goal of 3 million homes. Critics say that the program could only be causing false hopes among millions of homeowners who are eager for a solution to their mortgage troubles.
Article Tags: Foreclosure Proceedings
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