The latest scandal to hit the real estate industry (foreclosure robo-signing) has really gotten me fed up. Is it wrong? Yes. Is it being investigated? Yes. We know they’re wrong, and they SHOULD be taken to task over it, but this problem is not a matter of whether banks should or shouldn’t be foreclosing on these homes, it’s a problem of paperwork being improperly reviewed.
The average home buyer spends less than 5 minutes reviewing their loan docs when they buy a home, and as it turns out the banks care about reviewing documents as much as the buyer does. I have a hard time finding anyone to be sympathetic towards in this mess. The homeowner has stopped paying the mortgage, and the banks want to recover their non-performing investment. At it’s core, the issue is simple: If you want to stay, you gotta pay.
It takes an average of 1.5 YEARS to be foreclosed on in Maryland. Even after the foreclosure, the former owner can stick it out in the house for an additional 3-4 months before the bank can finally get their confirmation complete and an eviction order through the courts. That’s nearly 2 YEARS of residency without a single mortgage or rent payment.
I think it’s important to remember that nobody would be in the situation if they paid their mortgage on time. I know that people feel cheated by the banks thanks to complicated loans and falling home values, and I don’t blame anyone who decides to walk away rather than continue paying, but it’s a damn shame that the same people who couldn’t be bothered to READ their loan docs now complain about banks not reviewing their documents either.
Everyone is getting cheated here, folks, and it’s a vicious cycle. Banks built exotic loans, buyers failed to pay attention, people lost control of their finances, banks started foreclosing, property values dropped, more people got trapped, banks foreclosed more, people started walking away, prices dropped further, banks foreclosed more, and now people blame banks for improperly foreclosing on people that AREN’T paying their mortgage. Don’t think for a moment that the banks are the only culprit, they’re just the easiest to blame.
(image courtesy of arriba via Flickr CC)