''Get To the Bottom of This Foreclosure Mess''

10/14/10

Accusations include lenders who allowed false statements to be made, knowing the information was inaccurate and preparing documents in an illegal fashion. But many are wondering how that could be. Many lawyers are beginning to ask those questions as well. Here's why:


Before the mortgage meltdown, there were loan programs known as ''stated''. These, at one time, were reserved for those potential homeowners with exceptional credit histories and a significant time in their current jobs. These applicants were allowed to ''state'' on their mortgage applications everything from their bank balances to how much money they earned. They were taken at their word because of their sterling work and credit histories. Eventually, however, loan officers in banks and mortgage companies allowed these stated programs to trickle down to those lower credit scores and those applicants who had spotty or less than stellar credit ratings. Suddenly, a young couple with medical bills, a newborn and only a year on the job and were allowed to state their bank balances, their income and even how long they had been at their current residences. Even obvious red flags of a stated five years in a residence for a couple who were only in their 20s and recently married were ignored.

Suddenly, stated programs were all the rage. It quickened the approval process and allowed lenders, loan officers and others to get their pay days faster, not to mention the quick turnaround for new homeowners to get into their new investments. This, of course, was bound to fail. The economy started to collapse and people who'd claimed to be earning $50,000 a year and who had $18,000 in their savings accounts lost their jobs that really only paid $28,000 a year and those savings that should have been a soft place to land were discovered to be non-existent. And so began the domino effect.

Currently, four of the nation's largest lenders have halted their foreclosures due to emerging concerns of illegal practices, including signing off on thousands of foreclosures without even reading them. Investigations are kicking off in nearly every state and certainly within the lender's headquarters. This is one legal mess that promises many revelations and possibly criminal charges at some point. The problem is that it appears there are few innocents in this game of hide and seek.