Nowadays, it takes six or more weeks for a consumer to get a mortgage, from application to closing. The lender takes more than a month to go through each borrower's paperwork, making sure that all the documents are genuine and true.
It took Bank of America two and a half weeks to confirm that the paperwork had been done correctly on 102,000 foreclosures in 23 states.
If Bank of America can verify 102,000 foreclosures in 17 days, it makes you wonder why it can't make faster decisions on loan modifications and mortgage applications.
GMAC Mortgage, which also announced a 23-state foreclosure moratorium in early October, says it is proceeding with foreclosures in those states, too, as soon as faulty affidavits are "remediated."
Loan officers like to tell me how persnickety lenders have become, regarding borrowers' paperwork. If you have a six-page checking account statement, and the last page is blank, you have to submit that blank sixth page. Otherwise, you risk having your application rejected. If you apply for a credit card while awaiting approval on the mortgage and orget to tell your loan officer about the credit card application, you can get all the way to the closing table before finding out that your mortgage will go unfunded.
If you don't follow the banks' rules to the letter, no loan. No modification. No exceptions.
But when banks don't follow the courts' rules on judicial foreclosures, they don't expect to suffer any hardship for it: Simply refile a "remediated" affidavit that implicitly admits that the servicer lied or cut corners, and expect the judge to shrug and let it go.
Here's why the foreclosure scandal is a big deal: It demonstrates, yet again, that strict rules apply to the little people, while the Big Boys get away with all sorts of violations.
Yesterday I read a deposition of an employee of one of the "foreclosure mill" law firms in Florida, in which convincing evidence was brought forth that the law firm backdated legal documents. The employee of the law firm didn't seem to think it was unusual or important. Do you think you could get away with backdated documentation when applying for a home loan or a mortgage modification?
What would happen if you followed the foreclosure mill's example and submitted backdated documents to a court? If you did it, you would risk jail time. If a big bank does it, no biggie. Just remediate the document and resubmit it.