Outside the box

As a child, did you ever know anyone who purposely got in trouble in order to be sent to the principal’s office?  Usually it was either a crush on the administrator or more likely, a test to be avoided.

The Associated Press gets high marks for a story today about the continuation of robo-signing, which we thought was dealt with because we’re decent folk, aren’t we?  We get told, “Don’t do that,” so we don’t!  Or maybe not.

The AP uncovered not only foreclosure documents still being signed, but also other types of real estate papers, citing mortgage discharge documents in one particular instance.  What the AP didn’t do is figure out if the banks are perpetrating a naughty in order to get sent to the principal’s office.

If there is a hue and cry, as there appears to be, and if states’ attorneys general institute lawsuits to block all this fraudulent paperwork, where are the homeowners in all this?

Mr. Ponobscot, a hypothetical owner, has a mortgage discharge filed against his property with one of the robo signer names on it.  Maybe Mr. Ponobscot did in fact refinance and that fact was recorded, albeit with one of the “forbidden” names as the signer.  Now Mr. P wants to sell his house.  He owes some monies on it, but as he has just retired, he wants to downsize and spend more of his retirement in Europe, rather than making big house payments.

He lists the house and gets an offer.  All is well and they’re almost packed for the final walkthrough when the title company phones with some very bad news.  There is a document signed by Linda Green, which is known to probably have been a forgery, therefore there is a cloud on title so the lender can’t lend.

In the years and years of trying to figure out the legality of all this, Mr. P will probably throw up his hands and just give the silly house back to the bank so he can go on with the life he planned.  Mr. P to L’Arc de Triumphe, house to Bank of Big Americans Chasing a Fargo.

What if banks were not foreclosing on homes, because they had been told not to, but were instead dropping innocuous documents on their secured properties?  Documents which wouldn’t hurt the owner, wouldn’t force them from their homes and wouldn’t probably even be noticed, until the homeowner tried to sell.  What if?  That would be an amazing way to take some properties over without a lot of effort – when the owner stops paying because they can’t sell with clouded title, the only winner is the bank.  Not saying it’s happening, but it’s a frightening thought nonetheless.

Sellers – a good first step to selling your home would be to have an agent request a preliminary title search for you.  That would anticipate any hiccups which might have crept into your paperwork.

Buyers – make sure you and your agent scour the documents.  Take them to an attorney (always money well spent on big transactions) before you begin spending money on inspections and loan applications.

 

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