Friday, November 12, 2010

Why foreclosures are down.

The reason for this is not less people defaulting on their mortgage; in fact, that number has gone up.  What has happened in the last 3 months is what a lot of people are calling "Foreclosuregate":

1.  You buy a house and sign a mortgage note.
2.  The note is sold to a variety of institutions.
3.  Circumventing the county recorder's office, the note is recorded as transferred in a banking holding company (that has no employees BTW) called MERS.
4.  You then default on your mortgage because you lost your job.
5.  A bank or mortgage servicer calls you to foreclose on your house.

Now it gets fun.

6.  Two more banks call you to foreclose on your house, as the note transfer was erroneous or recorded improperly.
7.  You pull a "show me the note!" requesting that the entity that has standing to foreclose on you actually owns your mortgage.
8.  All three banks that called you cannot produce your original wet signature, as it's been destroyed after the mortgage assignation was put into MERS.  However, existing law demands that this document be produced to foreclose.
9.  Banks start creating mortgage notes retroactively (google "robosigning") to be able to foreclose mortgages they think they own.
10.  Homeowners find out about #9, #8, and #7 and dig in their heels with court proceedings.
11.  Foreclosures drop.

As you can see, the reasons foreclosures dropped is because banks engaged in a game of three-card-monte with your mortgage to the point where no one including them knows who owns it, so the rate of foreclosures had to go down.

Prices are still too high.  Don't buy.  Don't buy.  Don't buy.

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