A new drama in the foreclosure markets has shocked the real estate industry, is another sensational scandal for the mortgage sector, and is being carefully scrutinized by many consumer watchdog groups.
The gist of the fresh turmoil is simple. The fundamental legality of the foreclosure process followed by major mortgage lenders is being questioned. There is a strong possibility that tens of thousands or even millions of foreclosures that were transacted within the last 2-3 years have no sound legal basis and are, in fact, fraudulent.
The enormity of it all started to come to light last month when major lenders — including J.P. Morgan Bank, Bank of America, and GMACÃ¢â‚¬â„¢s mortgage division — issued a moratorium on foreclosures to give them time to reexamine their paperwork and procedures. Fannie Mae stopped doing business with a law firm that had been handling massive numbers of their foreclosures because they question the legality of its methods, and offices of Attorneys General in all 50 states began investigating foreclosure practices.