Photo: Flickr via d. billy
We got an interesting note from Florida resident Jim Bennett about our foreclosure-gate post this morning. We argued that one impact of the foreclosure moratorium will be a temporary lift in house prices because fewer foreclosures will hit the market (followed by a crash, as they all hit at once).
Jim and others suggest that the problem is far deeper and more profound. Specifically, they suggest that the ownership records on millions of houses are now gone for good. Which means that no one knows (or can prove) who really owns them.
True? If so, how big a problem is this? How will it be sorted out? Weigh in below…
One thing you did not mention [about foreclosure-gate] is the long term effect.
Let’s be perfectly honest, many of the title documents are irretrievably lost. They may have been destroyed or they may in packing cases of garbage cleaned out of offices as loan brokers folded, but they have gone to television land. And in the haste of the securitization process, many deeds changed hands repeatedly with ever being duly recorded in the town hall. That means that it will be all but impossible to obtain clear title for many houses or condo units. But if clear title can’t be obtained, how can these places be sold – ever ? No lender will grant a mortgage against a quit claim deed.
The banks themselves aren’t sure who owns what, which led to the absurd spectacle of several banks foreclosing on the same property. Down here in Florida the problem has become almost comical. B of A tried to foreclose on a man in Port St. Lucie who had NO mortgage of any sort. They damn near got away with it too. A few weeks ago, the police evicted a family that wasn’t in foreclosure after B of A gave them the wrong address. Some title insurers are refusing to write title insurance on foreclosures at all, while others have raised their rates sky high. In short, it is a circus. How they will untangle this mess is beyond me.
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