Mystery mortgages may lead to new foreclosure crisis

Imagine this scenario: you have recently been approved for a refinancing on your mortgage. This significantly lowers your interest rate, and allows you to save hundreds of dollars each month. But after making your new payments on time for several months, you receive a notice from the bank, informing you that you are delinquent on your payments and that your home is in danger of going into foreclosure.

Unfortunately, this scenario is taking place throughout Georgia and the country, as homeowners continue to suffer the repercussions of banks’ irresponsible and illegal actions. Homeowners are receiving foreclosure notices for home loans they have paid off through a refinance, for homes they no longer own, or for loans that have been paid in full through bankruptcy or otherwise. Even when this doesn’t result in the loss of a home, it can take a significant toll on a homeowner’s credit score.

The reason for the influx of homeowners being accused of failing to pay “ghost mortgages” stems back to the housing boom and robo-signing scandal, according to bankruptcy and foreclosure attorneys. Scrambling to keep up with the influx of home sales, banks falsified paperwork and kept sloppy records when loans were later sold to investors around the world. And when the housing market crashed and the wave of foreclosures began, banks again began engaging in irresponsible recordkeeping in order to foreclose on as many homes as possible.

Now, it is homeowners who are paying the price, with little chance of relief. “Once the system has marked you as delinquent, there’s just this massive machinery that takes over,” said one housing attorney. “There are people whose lives are destroyed by the system, and there’s no way to fix it.”

Source: Reuters, “Old mortgages rise from the dead, haunt homeowners,” Michelle Conlin, Jan. 26, 2012