What happens to all those mortgage loans that were fraudulently originated or had bogus borrower information “supplied” by the loan originator? What happens to all the loans that originators said met Fannie Mae or other investor requirements, but really didn’t, AND NO ONE AT THE INVESTOR’S OFFICES THOUGHT TO CHECK???!!!
I’ll tell you what is happening. Investors are trying to “undo” their purchases of the bad loans and make prior owners of the mortgages buy them back. These are the unloved and unwanted mortgages.
So, there YOU are, trying to do a short sale or loan modification or maybe you’ve been served with foreclosure papers. Then NOTHING happens, and sometimes years pass. Your mortgage is probably one of the unloved and unwanted. It doesn’t mean YOU did anything wrong, it just means everyone else is scrambling and trying to think up some reason why they shouldn’t have a defaulted loan on their books.
I talked to a lady in Florida yesterday who received foreclosure papers over three years ago, but nothing else has happened since then. The lender has not taken the final step to get court approval to foreclose. She wants to refinance, she has the ability to refinance, but she can’t get anyone to talk to her. They don’t call, they don’t write, they don’t foreclose…
Nobody wants to make a decision about her mortgage or her foreclosure, because they might “get cooties.” The current investor doesn’t want to exercise any ownership rights because it might jeopardize their claims to reverse the purchase. The former investor or originator doesn’t want to exercise any ownership rights because it would jeopardize their claims of “Hey man! Not my table!!!! Talk to your own waiter.” In the meantime, this poor woman has been stressed out for three long years.
My advice to her? She is in Florida, which is a judicial foreclosure state. That means that in order to start the foreclosure process, some lender had to file a lawsuit. So, she’s in front of a judge, even though nothing has happened in over three years. I told her to talk to her own attorney, and counter-claim against the foreclosing lender/investor for intentional infliction of emotional distress. She could also claim breach of the contractual duty of good faith and fair dealing. If someone defends that claim, she’ll have someone to talk to. If no one defends that claim, she can take a default judgment against the lender and then execute on her own mortgage in satisfaction of her judgment. In other words, she could end up owning her own mortgage! I’m willing to bet she would give herself very generous re-finance terms.
Food for thought. Being unloved and unwanted might have tactical advantages. Use them. Don’t be a victim.