The foreclosure mess has now entered a new phase, courtesy of the US Bankruptcy courts. The Trustees are forcing institutions to prove “they even have the right to foreclose at all.”
This is a positive development.
In my various writings on the Fraudclosure debacle, I have not suggested we want to see foreclosures of defaulted mortgagees stopped. To the contrary, Foreclosures (done right) are a necessary part of the RE unwind. My position has been very simple; Banks must follow the law, respect property rights and due process. Oh, and not commit perjury or fraud, and if they did, they must suffer criminal prosecution like any other suspected felon.
Here’s Gretchen Morgenson on the latest twist in this pathetic sage:
“The United States Trustee Program, the unit of the Justice Department charged with overseeing the integrity of the nation’s bankruptcy courts, is taking a different view. The unit is stepping up its scrutiny of the veracity of banks’ claims against borrowers, and its approach is evident in two cases in federal bankruptcy court in Atlanta.
In both cases, Donald F. Walton, the United States trustee for the region, has intervened, filing motions contending that the banks trying to foreclose have not shown they have the right to do so.
The matters involve borrowers operating under Chapter 13 bankruptcy plans overseen by the court in the Northern District of Georgia. In both cases, the banks have filed motions with the bankruptcy court to remove the automatic foreclosure stay that results when a court confirms a debtor’s Chapter 13 repayment plan. If the stay is removed, the banks can foreclose.”
This is progress.
Now if we only can get some criminal indictments for the robo-signer/fraud/perjury lawyers, bankers, and loan servicers, we will be making progress.
Don’t Just Tell Us. Show Us That You Can Foreclose.
NYT, November 27, 2010