Proof positive that many were underwater the minute they signed a mortgage/loan on their homes.

Proof positive that many were underwater the minute they signed a mortgage/loan on their homes.
Complete with FBI reports, charts, and examples of appraisal fraud:
http://www.dailykos.com/story/2010/10/16/910891/-2002-2009:-Appraisal-Fraud-Victims-Widespread-Check-Maps-and-Charts

The biggest fraud which helps to explain why so many are underwater in their homes, was appraisal fraud/collusion. In the words of the National Mortgage Compaint Center in 2005:



Did you catch the date of this statement: 2005: The Banner Year of the Housing Bubble!



more:
http://money.cnn.com/2005/05/23/real_estate/financing/appraisalfraud/index.htm
http://www.nytimes.com/2010/10/15/business/15maine.html?hp=&pagewanted=all
http://www.dailykos.com/story/2010/10/16/910891/-2002-2009:-Appraisal-Fraud-Victims-Widespread-Check-Maps-and-Charts
http://www.mcclatchydc.com/2010/10/13/101997/civilian-cops-take-on-beleaguered.html?storylink=MI_emailed

Can they outlaw selling to a secondary market?

The original mortgage documents certainly contain language about the originator's right to sell the mortgage and note on the secondary market. It's on one of those pages that is quickly leafed through as the borrower says, "Where do I have to sign this thing?"

Otherwise the transaction is illegal. No ifs, ands or buts.

Too bad Chase. You lose.

If you and I agree to make a deal for you to sell me your lawnmower for $100, and I don't fork over the cash, then the deal is voidable by you. If I make a deal to sell you some heroin, then that's an illegal deal, no matter who comes up with what.

Many people here are making the mistake that the rules in foreclosures are like some legal technicality in a criminal case that lets the accused walk free if the cops didn't go by the book in the prosecution of the case. It just doesn't work that way.

All the foreclosing lenders need to do is just a do-over, selling and assigning the mortgages and the notes legally, properly dotting every I and crossing every T, and they still get to do what they've been doing, it just slows them up somewhat, and drags out the recession.

Mark my words, in 99.9% of the situations, there will be no writedowns of mortgage balances, or extensions of the 'teaser' rates that marginally qualified these loans back when the borrowers had good paying jobs. It's just a matter of when the foreclosure machine can start back up again, and how many more months of free rent defaulting borrowers will get before the inevitable happens.

I've been wondering why the banks are tweaking the noses of the court. Maybe they should get everything in order before the judges all lose their patience.

cannot happen in this situation, since the borrower-lender relationship would still exist, and still be subject to the terms of the mortgage agreement.

A judge knows that he or she can inflict financial pain on a lender by simply requiring them to do a time-consuming do-over. Since a default can happen at any time over the course of a loan agreement, I can't see any situation where a judge says, in effect, "Even though the original loan and mortgage are still valid, the lender can never ever again avail themselves of remedies contained in the document, just because of some misbehavior in excercising those remedies in the past."

If that ever became popular, you'd see mortgage lending dry up completely in this country, and a portion of the economy would grind to a halt. I'm planning on saving up enough to buy my next car, but how many people will be able to pay all cash for their first home?

If the lender is unable to foreclose and unable to collect isn't that a lifetime of free rent?

I can see the judicial system punishing specific individuals for malfeasance, but I know of no cases where they've extinquished a mortgage and/or note.

wells fargo turned us down...went with a local s&l and appraised the house for exactly what is worth. they don`t sell the paper and they "buy back" instead of foreclosing

I'm not familiar with this.

It goes back to a culture that does not value ethics or truthtelling.

Truth is the enemy of commissions.

Gotta keep those valuations pumped up.

that was evident on the home inspection report. The seller wouldn't budge on his original price and I begged my clients (the Purchasers) to walk (no, run) away from the deal but they wouldn't.

It's four years later and the house is about half the value of what they bought it for. The mortgage stays the same.

have given the rest a bad name.

Back when the late 70's bubble was inflating, we in the title insurance business talked about one-, two-, and three-martini appraisals, reflecting the oft-maligned "three-martini lunch" that President Carter wanted to kill take breaks for.

If the appraisers hadn't signed off on the inflated appraisals, the air would have stopped being pumped into the bubble. Good to see that a few of them now feel contrite about it.

they often lose their jobs, and have a tough time finding work in the industry again.

The appraiser was about 55 and said he was getting out of the business.
I asked him why and I'll never forget his response.
He said he had been doing appraisals for 30 years and never had he seen anything like the period of 03-07.
He said the entire industry had become one huge fraud and that it would all crash down very soon.
10 months later, it crashed.
He was a nice guy. I hope he found another line of work.

I did my last title insurance work in 2005, in July of that year, I got hired, and was out on my ass (with over two decades experience) five weeks later. I'm glad I was able to convince a subsequent company that what I was doing on the phone for those years was essentially customer service.

Just like they found "robo-signers" for the inevitable foreclosures.

glad it's finally getting some attention.

Isn't it interesting that whenever you get an appraisal, 99% of the time it turns out to be the exact price you're looking for?? Hmmmmm....

I had some friends who bought a house in 2004 for $100,000. In 2005 they needed money so they asked their loan company if they could refinance. Loan company re-appraised at $120,000. I told my friends there was something fishy there....they didn't believe me and I think their house is now worth about $90,000.