What You Should Know about the Foreclosure Moratorium

Several banks have recently announced a moratorium on foreclosures because they admitted to “robo-signing” paperwork to foreclose on homes without even reading the paperwork. Bank of America was the biggest offender which announced moratoriums on about 20 states at first and then decided to impose the moratorium to foreclosures that it had on its books nationwide. Chase and Ally Financial have also imposed moratoriums while Citigroup and Wells Fargo have admitted no wrongdoing and are going along with their foreclosures. Here are some things you should know about the moratorium if you are affected by it.

The Beginning
The foreclosure moratorium didn’t just spring up because Bank of America and other banks wanted to do a good thing for its mortgage borrowers. The problem actually began in June when Thomas Cox, an attorney and homeowner in Maine, questioned the affidavit practices of a GMAC employee. The lawyer eventually determined that the employee signed the foreclosure affidavit without any knowledge about what was contained in the paperwork. As a result, the foreclosure proceedings on Cox’s home were dismissed. The matter was over until September when another GMAC employee leaked information about the company halting foreclosures in 23 states until corrective action can be taken with the paperwork for many of them.

September’s Figures
The foreclosure numbers across the country were staggering in September. There were more than 102,000 properties seized by lenders in that month alone. This made consumers and officials even more aware of the foreclosure problem and caused many people to begin asking more questions about the practices of the banks and lenders.

Some States Have Fought Back
As a result of the admission by many bank officials who say they did not read the paperwork of literally thousands of homes which were in the foreclosure process, some states have demanded investigations into these cases and until those investigations can be completed, homeowners should be able to stay in their homes even if they are being foreclosed upon. This could create a huge mess involving people who have already been forced to leave their home due to foreclosure. Many of these actions may be deemed illegal which could result in hundreds or even thousands of lawsuits against the title insurers.

The Moratorium is Causing Confusion
What seems like something that could be a great help to some people who just need a few weeks to straighten out their finances and get back on track with their mortgage payments is causing confusion nationwide. Some homeowners have been informed of the moratorium and they think they may get a few extra months in their home only to find out a couple days later that their case has been approved to continue with the foreclosure proceedings.

While the foreclosure moratorium looks good on the surface, there are many factors that can cause confusion, frustration and other negative feelings for homeowners and even lenders. Hopefully the other side of this moratorium looks better than this side of it.