Having worked hard on a number of short sales headed to foreclosure (many with B of A), I found an article by Brent Hunsberger in The Oregonian very interesting. Excerpts from the article appear below.
Hundreds of Oregon Foreclosure Sales Stopped
Sales of hundreds of foreclosed homes in Oregon have been halted or withdrawn in recent weeks after federal judges repeatedly questioned their legality, according to a number of real estate attorneys in the state.
Lenders have withdrawn more than 300 foreclosure sales since February in Deschutes County alone, one of the Oregon area’s hardest hit by the housing collapse. About 130 of those notices were filed in the past week, attorneys say.
Recon Trust
Dozens of foreclosure listings by ReconTrust Co., the foreclosure arm of Bank of America Corp., have disappeared from its website, attorneys say. A B of A spokeswoman said the bank was canceling certain sales to “ensure that those homeowners had fully explored options to avoid foreclosure.”
The developments underscore that the challenges disrupting foreclosures in other states have finally hit home in Oregon. Foreclosure sales in the state totaled 10,500 last year, or 28 percent of all home sales, according to RealtyTrac Inc. Federal agencies and state attorneys general are investigating the foreclosure and loan-modification practices of the nation’s largest banks.
The legal concerns revolve around Mortgage Electronic Registration Systems Inc., a Reston, Va., corporation set up in the mid-1990s by the mortgage banking industry to rapidly record the ownership of mortgages so they could be packaged and sold as securities.
MERS
MERS essentially allowed lenders to sell loans without recording each transaction with county recorder offices, experts say. That rapid and sometimes reckless securitization of such loans contributed to the 2008 financial crisis and housing slump. The problems clouding the foreclosure process — including last year’s robo-signing scandal that forced several big banks to suspend foreclosures in about two dozen states — continue to drag down the housing market today.
Attorneys say it’s not clear whether lenders in Oregon will simply start over or head to court to foreclose, steps that could prolong the crisis for months and drive up costs, attorneys say. Some suggest lenders might not have access to the documents they need to comply with state law.
“It’s pretty amazing. There are a lot of unanswered questions.”
MERS is listed as an agent for lenders on more than 60 million U.S. home loans, about half of all such loans.
In Oregon, lenders can foreclose without going to court. But state law also requires that the loan’s ownership history, or assignments, be recorded with local county governments before proceeding with a nonjudicial foreclosure.
Deschutes County
A review by The Oregonian of Deschutes County clerk’s office records shows that B ofA’s ReconTrust withdrew more than 60 foreclosure sale notices Friday and 35 on Thursday.
B of A spokeswoman Jumana Bauwens said the cancellations resulted from a review late last year of its foreclosure process. The bank wants to ensure that homeowners nearing a foreclosure sale have exhausted other opportunities, including loan modifications and short sales, she said.
“We are not going through and saying rescind everything,” Bauwens said late Saturday.
