Foreclosures in all 50 states are now being called on for complete reviews. Banks could have been fraudulently throwing people out of their homes, without the legal authority to do so thanks to a break in the chain of title since the mortgages were bundled into securitized products, nobody really knows, who is actually able to foreclose.
With foreclosures making up 1/3 of the home purchases in California, this could cause some serious issues regarding title insurance in the future since banks were signing off on foreclosure paperwork without the legal authority to do so. I am sure this will all get figured out appropriately but it just another way for the banks to extend things further out and pushing a recovery even further into the future. I still find it absolutely amazing that banks, which we bailed out, are able to tell Wall Street the value of a loan is its original value as opposed to what it would be on the secondary market. A bank can tell Wall Street a loan that originated in 2004 at a value of $1.5 million is still worth 1.5 million even though we all know it is probably worth more like $900K in today’s environment. Wouldn’t it be great to be able to tell people that your stock portfolio is worth the same amount it was before the stock market crash?
If you have a few minutes, watch this funny video regarding the foreclosure crisis from Jon Stewart.