Despite the nascent recovery in the U.S. housing market, thousands of homes still sit vacant in highly distressed markets. But according to CNBC, despite their appearance, not all of these homes are foreclosures. Many are still owned by borrowers — whether they know it or not. Early last year, the nation’s five largest mortgage servicers signed a settlement over “robo-signing” foreclosure abuses. The deal resulted in thousands of properties being released from their liens, with many more to come…. [more]

Nye Lavalle

The foreclosure scandals that dominate headlines today could have been averted had Fannie Mae paid more attention to one foreclosed homeowner, according to the New York Times.

Nye Lavalle, a well-to-do business professional, was preparing to pay off the $100,000 balance in 1988 on a loan he took out for a home in Dallas, Texas. But Lavalle found discrepancies in the paperwork that inflated his bill by $18,000. He refused to pay his loan servicer, and endured a long, and ultimately unsuccessful, legal process to fight the charges. In 1995 he lost the home. [more]

Not only were the law firms hired by Fannie Mae and Freddie Mac to process foreclosures found to be negligent, but the government agencies’ reviews of those firms also went ignored, according to a Federal Housing Finance Agency watchdog report obtained by the Wall Street Journal.

Last September, banks suspended foreclosures after many foreclosure lawyers were found to be “robo-signing” documents without dedicating enough time to work through all the necessary information and documentation to verify their legitimacy. Many of those lawyers were hired by Fannie Mae to handle foreclosures on mortgages backed by Fannie Mae and Freddie Mac. … [more]

New York State Attorney General Eric Schneiderman is hindering federal efforts to negotiate a foreclosure settlement with Wall Street banks on behalf of homeowners, the Wall Street Journal said, by insisting banks should pay for investor losses, too.

In combating the robo-signing practice, the Obama administration “is very far down the road for a settlement that will create servicing standards, and will also result in a significant financial contribution towards helping homeowners,” an administration official said, that is believed to be worth nearly $25 billion…. [more]

Nationwide mortgage servicer GMAC, which was the beneficiary of a taxpayer bailout in 2008, submitted false documentation to foreclose on homeowners for whom it lacked original lending paperwork, according to information obtained by ProPublica. In one case, GMAC wanted to foreclose on a New York City homeowner, but couldn’t sign documents in the name of the original lender as is customary because the company, Ameriquest, had gone out of business. So GMAC allegedly filed a document dated July 2010, three years after Ameriquest folded, that said it had been assigned the loan in 2005. It was signed by a GMAC executive claiming to be a “Limited Signing Officer” for Ameriquest, the paperwork says…. [more]

Scheduled foreclosures on New York City residential properties plummeted last month as mortgage servicers continued to reel from the so-called robo-signing scandal that surfaced last year and prompted a nationwide investigation into their foreclosure practices.

According to new data from PropertyShark.com, just 43 foreclosures were scheduled for the first time last month citywide, down 59 percent from the 106 scheduled in January 2011. That’s also 83 percent below the 247 foreclosures scheduled in the city during October 2010, the last month before foreclosures began their nosedive as a result of temporary lender-imposed freezes. The freezes came in response to revelations that lenders’ foreclosure paperwork was wrought with errors and that oftentimes, affidavits had been signed with little or no prior review…. [more]

State attorneys general are butting heads over a proposed settlement with loan servicers over their faulty foreclosure practices, according to HousingWire. The proposal is the result of an investigation launched in October into some of the nation’s largest mortgage lenders after a scandal revealed widespread errors in foreclosure documentation. But it appears there’s still quite a bit of negotiating to do. According to a spokesperson for Iowa Attorney General Tom Miller, “we haven’t even begun face-to-face discussions with the banks yet.”… [more]

On the heels of the paperwork scandal that prompted some of the country’s biggest lenders to halt foreclosure proceedings, distressed home sales jumped significantly in December as foreclosures resumed. According to a new report from Campbell/Inside Mortgage Finance, 47.2 percent of all U.S. home sales involved distressed properties in December, up from 44.5 percent in November and back near September’s 47.5 percent peak, just before the robo-signing scandal came to light. TRD… [more]

Supreme Court judges in New Jersey have ordered six major lenders to prove that their foreclosure practices are legitimate or else be blocked from proceeding with uncontested cases against homeowners in the state, according to the Wall Street Journal. The banks included in the order — Ally Financial, Bank of America, Citibank, JPMorgan Chase, OneWest Bank FSB and Wells Fargo — accounted for almost half of all foreclosure filings in the state this year. … [more]

HSBC is restarting foreclosures in New York State after a nearly two-month reprieve, according to the Post. The bank, along with peers like Bank of America, JPMorgan Chase and Wells Fargo, had halted foreclosure proceedings Oct. 20, after the so-called “robo-signing” scandal surfaced, revealing widespread errors in foreclosure documentation. HSBC is the first major bank — it owns around one-tenth of New York mortgages — to restart proceedings since then (BofA has announced that it will resume foreclosures for vacant non-owner-occupied properties next month)…. [more]