Enough Blame to Go Around Redux

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Education & Training with The Melanie Group

Enough Blame to Go Around Redux

 

Way back at least to 2006, I wrote a blog called: "Enough Blame to Go Around". In it, I stated that it was not just Wall Street, not just dishonest mortgage originators, not just target hitting appraisers, not just commission driven agents, and not just stupid and/or driven consumers caused the mortgage bubble to burst-it was all of us. It was, and it is. The current news about foreclosures is the "freeze" following allegations (and proof) that many lenders were "robo-signing" foreclosure files, and not precisely dotting all the I's and crossing all the t's. An excellent op-ed piece appeared in yesterday's Wall St. Journal by Holman W. Jenkins, Jr. "House
Afire". To read his article, follow this link:  http://online.wsj.com/article/SB10001424052702303341904575576200794162356.html

Mr. Jenkins makes the point that casting the lenders as big, bad and evil is non-productive. At the end of the day, whether the paperwork was done correctly or not, virtually all of the foreclosures deserved to happen. Now, I'm not hard hearted, and I certainly can appreciate that no one likes to see people put out of their homes. But, the average length of time between missing the first payment and actually getting a foreclosure notice is as high as 560 days, plus or minus, in Florida. Many of those now receiving foreclosure notices, flawed or not, have not made a payment in over two years. At the end of the day, a mortgage is a contract between a borrower and a lender. The lender loans the money; the borrower is supposed to pay it back. If the borrower doesn't pay it back, the lender gets to repossess the asset (house) and sell it to cover all (or part) of the loan.

In our business, which is real estate, we rely on contracts. We rely on those who sign contracts following through, whether that means a seller paying us a commission, a seller granting clear title, a buyer going to closing because all conditions of the contract have been met, or whatever. If we as REALTORS® join in this bank bashing, we are cutting our own throats. At the extreme end, banks could simply decide that if various interest groups prevail and essentially nullify their contracts, making it impossible for the lender to foreclose, they will stop lending. Is that what we really want? I don't think so! We want a return to responsible lending, and among other things that means that Fannie and Freddie are still due for a major overhaul. But we as REALTORS® need a logical, fair system of enforceable contracts-or our business collapses.

 

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Rainer
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Bruce Hammond
Port St Lucie ReMax Properties in Port St Lucie for sale - Port St Lucie, FL
REALTOR - Port St Lucie Florida Real Estate Sales

You probably know this but the laws preventing the nobility from seizing the land of peasants dates back to 1677 when the English Parliament enacted legislation making it mandatory that some contracts be in writing. This law has evolved in to our current Statute of Frauds which, in part, mandate that real estate sales contracts be written.
If these lenders who are foreclosing are doing so without the written documentation that they own the mortgage and have the right to foreclose, or worse, are forging documents in order to speed up the process, then the issue of whether the people who own the property are behind on their mortgage and deserve to be foreclosed upon becomes kind of secondary. The unquestionable ownership of real property is fundamental to our democracy...and to our republic.
Those who commit fraud to facilitate the process and maximize profits by minimizing expense deserve to go to jail and not get off by calling it a paperwork glitch.

Oct 28, 2010 08:21 AM #1
Rainmaker
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Melanie McLane
The Melanie Group - Williamsport, PA

Bruce, I agree; they have to follow the laws. But to "throw the baby out with the bathwater" and stop all foreclosures (and some state attorney generals are simply posturing and using this as an opportunity to grandstand their political careers) is not helpful or useful. I guess my take is personal responsibility; if I haven't made my mortgage payment in two years, I'm smart enough to know I defaulted on my contract, and I hold myself responsible for all that then ensues.

Oct 28, 2010 08:43 AM #2
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Rainmaker
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Melanie McLane

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