Saturday, October 02, 2010

Some banks suspend foreclosures, stop "robosigning"

Several financial institutions have suspended housing foreclosures, admitting that bank officers were not reading documents and going through the process of “robosigning”. Among these are Bank of America, Chase, and GMAC. Companies are going to have to develop better review procedures, probably requiring them to hire more underwriting specialists. The Washington Post called this a "paperwork storm", maybe a "perfect storm" too.

As a result, underwater homes may stay occupied longer – good for the families, but keeping real estate prices lower than usual and underwater in many sections of the country, particularly the Southwest. Recovery of housing could take even longer.

A typical New York Times News Service story by David Stretfeld appeared in an Idaho paper, identified by Bing, here.

In the meantime, real estate developers should look at other opportunities for increasing demand, such as senior housing and CCRC’s. I would have thought Donald Trump would get interested in the senior housing and care business, maybe even make it the subject of an Apprentice project.

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