Major banks and related mortgage service businesses are living through a nightmare that seems endless. No doubt leaders of these institutions want to wake up and put it all behind them, but the news just gets worse. I last wrote about the foreclosure fiasco six months ago, and it’s worth taking a look at what has transpired since.
In my column from December, I wrote about the billions of dollars institutions lost on bad home mortgages and how much more was at risk when they realized they didn’t have proper paperwork to prove ownership of properties on which they were trying to foreclose. I covered bank and servicer officials’ assertions that loan files were reviewed for required documentation that turned out not to be true. The underlying problems included the “robo-signers,” hiring of inexperienced so-called “Burger King kids,” and outsourcing to domestic and offshore paperwork mills, where new hires seemed trained only to quickly forge signatures. And you may remember MERS, the Mortgage Electronic Registration System, set up by the banking industry to speed mortgage securitization while saving money on registration fees, but has now put ownership of the mortgages in question.
