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Banks responsible for mortgage mess: Miami homeowners facing foreclosure have options in 2011

An article published in Daily Finance puts the blame for the foreclosure crisis squarely on the shoulders of banks, not homeowners.

As our Miami foreclosure defense attorneys have reported on our Miami Foreclosure Lawyer Blog, homeowners looking to prevent foreclosure in South Florida stand a solid chance in 2011 now that the illegal and unethical behavior of banks is being brought to light by criminal investigations and the work of foreclosure defense attorneys in all 50 states.

Forged affidavits, false documentation, fake witnesses and invalid notarization are just a few of the tactics banks used in an attempt to prove ownership of homes they may have never had the right to foreclose on in the first place.

This article pins 90 percent of the blame on banks and just 10 percent on the backs of troubled homeowners. In every case the bank made the loan. And usually it and several other banks or Wall Street institutions profited from securitizing the loans and selling them as investments. Other banks profited from servicing the loan.

-Banks knowingly made millions on loans doomed for foreclosure from the start.

-Banks deliberately, or through shear incompetence, failed to modify mortgages for many homeowners who could have saved their home with a little help.

-And banks were so careless with paperwork that they have improperly foreclosed on thousands of homes, tied up the court system, and turned the foreclosure process into a disaster that has choked the real estate market and caused significant harm to the overall economy.

It began with lax underwriting standards, making mortgages almost as easy to get as using a debit card at the ATM. Underwriting is one of the most basic tenants of banking. The advent of the so-called “liar loan,” which required little or no documentation, drastically increased the income of those writing mortgages (who typically received commission-based compensation), which virtually assured the foreclosure crisis. In 2006 and 2007, more than half of all new subprime loans were liar loans. Keep in mind subprime loans are loans made to people with subpar credit — the loans, in other words, that should have received the most scrutiny.

In many cases, the banks knew the loans were no good — they made them anyway because they were not going to hold them. Instead, they made even more money by selling them as investments.

Ratings agencies were complicit in that they gave AAA ratings to inferior packages of securitized loans. Banks shopped for the best rating. Rating the loans had become really profitable for the rating agencies, which looked the other way in order to get the business.

These problems were exacerbated by the fact the servicers of loans got paid to foreclose not modify. So banks did so in record numbers, despite having to forge documents and engage in other illegal and unethical behavior in order to do so. We will explore that end of the equation in an upcoming post to our Miami Foreclosure Lawyer Blog.

And remember, if you are a Miami homeowner facing foreclosure in 2011, seek the advice of a qualified real estate attorney and negotiate from a position of strength.

If you need help with foreclosure issues in Miami or the surrounding areas, including short sales, deficiency judgments, strategic defaults or other help for Miami homeowners, contact Jacobs Legal for a confidential appointment to discuss your rights. Call (305) 358-7991.

Who’s to Blame for the Mortgage Mess_ Banks Not Homeowners – DailyFinance.pdf

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