I am watching the foreclosure situation on a daily basis, and see an ugly trend.  Robo-signing is nothing compared to what is being uncovered now.

We have long-heard whispers and rumblings about missing documentation.  The "missing" loan documentation scandal is now gaining attention in the courts. 

To over-simplify - loans were made, packaged, and sold on Wall Street as safe investments for mutual funds, pension funds, and general consumption.  When adjustable mortgages began adjusting upward along with declining property values - people began to default on loans.  This, in turn, caused the loan packages on the stock market and mutual funds to under-perform.  As more of this happened in significant numbers, we had a crash on our hands.

Back to my point though, these loans were sold as packages that were sold again and again.  As it turns out, these packages were not accurately tracked by the Mortgage Electronic Registry System and we have no record of ownership in many cases. 

The lack of information is simply being supplemented with forged information to prove ownership of the mortgage (by the bank).  After "proving ownership", the banks are foreclosing on the properties in question.

As you may imagine, the legal system is getting involved at this point.  We have seen mixed results thus far in regards to the court rulings due to the individual nuances in the cases.  We can definitely expect to see much more of this in the coming weeks and months though.

In some cases where evidence lacks as to who holds the mortgage, we could see owners receive clear titles to homes instead of foreclosure.

About the Author:
Michael Blount Jr is a Realtor and the Broker of Blount Properties, living in The Woodlands, TX.  Michael is knowledgeable in both residential and commercial real estate and studies the market and trends to better serve his clients.  Michael serves the greater Houston metro area.  For more information - visit www.BlountUSA.com or search for Blount Properties on FaceBook.