There’s something fishy in the foreclosure industry, and yes it is an industry. Millions of Americans are facing foreclosure but many of the rules designed to protect homeowners are being circumvented for the convenience of mortgage servicers and the lawyers who represent them in foreclosure court. Housing advocates have unearthed a growing trend where mortgage servicers fail to get an “assignment of mortgage” before filing foreclosure which is against the law. An “assignment of mortgage” is a document that certifies who owns a property and who is entitled to file foreclosure against it. Because so many mortgage loans were sold, securitized and traded, finding the “assignment of mortgage” can often involve months of detective work that could delay a foreclosure. But many mortgage servicers and their lawyers are forgoing the process and filing foreclosure first and then finding the “assignment of mortgage” document. By law, the assignment must be completed, signed and notarized before a foreclosure can begin. But some courts are finding that this is not being done and sometimes firms are even fraudulently backdating assignments in order to get around the law and accelerate the pace at which they can complete a foreclosure.
If a mortgage servicer’s lawyer is found fraudulently foreclosing on someone’s home the foreclosure case can be dismissed with prejudice (which means they cannot ever bring the case before court again) and the attorney can be disbarred. However, many foreclosures that have not followed the letter of the law are coasting through the court system because so many courts and judges are overwhelmed with the sheer volume of foreclosures facing them. In some districts, foreclosure cases are only given 20 seconds for review which is jokingly referred to the “rocket docket.” But for homeowners struggling with foreclosure, it’s no laughing matter.