More and more, our communities are being bombarded with foreclosures then left with the consequences of those foreclosures:
Bombed out houses and properties that banks do not want and cannot dispose of!
In communities all across this country, neighborhoods suffer because of bombed out, neglected and abandoned homes.
Zombie homes.
One fact that so many people have trouble wrapping their heads around is the fact that these Zombie homes are paid for (dearly) by taxpayers. The criminal banking institutions that committed fraud in originating, servicing and then foreclosing on homes complete the crime spree by filing False Claims for federal insurance benefits on the Federal Housing Administration:
The Federal Housing Administration (FHA), which is part of HUD, insures
both single-family and multifamily mortgage loans made by approved lenders.
If a buyer defaults on an FHA-insured loan, the lender acquires the title to
the property by foreclosure, a deed in lieu of foreclosure, or other acquisition
method.
The lender then files a claim for insurance benefits and conveys the
property to the Secretary of HUD.
Now, because taxpayers ultimately pay for these bombed out homes and fraudulent foreclosures, you would think that more effort would be placed on helping to reduce those losses…both at the front end and throughout the process…right?
Rather than just jam through foreclosures, wouldn’t it make more sense to keep the family in the home?
(Particularly when that home will likely end up abandoned and destroyed…loved only by the bulldozer that will be plowing through it?)
Except…nope. That’s not what is happening. In Florida in particular, we have made a policy decision that it makes more sense to throw families out into the street and grant foreclosures to banks….who will then submit false insurance claims to the taxpayer that was just thrown into the street. Why do I say false insurance claims? Let me (begin) to count the ways:
FHA-approved lenders must report the status of all delinquent loans to HUD
each month until final resolution.
In the event of foreclosure, which results in
FHA-insured properties entering HUD’s REO inventory, the final resolution
is the insurance claim paid after the foreclosure auction is completed and the
marketable title is transferred to HUD.
FHA’s Quarterly Report to Congress
on the Financial Status of the Mutual Mortgage Insurance Fund provides
information on serious delinquency trends and numbers of REO dispositions
and associated loss rates.4 The average loss rate on REO properties for the
quarter ending September 30, 2012, was 62.1 percent.5 Of the 741,384 active 90-
day delinquent loans as of September 30, 2012, 219,699 were in foreclosure.
[gview file=”https://mattweidnerlaw.com/wp-content/uploads/2014/06/May-2013-Housing-IGs-Report.revised.v2.pdf”]
More…much more…detail comes from another report, this one from the Office of Inspector General. Two of my favorite quotes from the report:
From the beginning of our review in October 2010, Bank of America limited our access to employees and information.
and
Bank of America may have conveyed flawed or improper titles to HUD.
[gview file=”https://mattweidnerlaw.com/wp-content/uploads/2014/06/bofaaudit.pdf”]
