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Messy Mortgages in San Francisco, New York and Beyond
Last week, a San Francisco city audit of almost 400 home
foreclosures reported that 84% had faulty documentation and/or irregular
processing. Problems with information in the Mortgage Electronic Registry
System (MERS), a Reston, VA based intermediary in processing mortgage, was also
cited. (MERS was set up in 1995 by Fannie Mae and Freddie Mac, along with
several of the larger market participants - its motto: "process loans, not
paperwork".) Various sources believe the San Francisco results are
representative of continuing problems across the U.S. mortgage market.
Separately, New York Attorney General Eric Schneiderman is suing Bank of
America Corp., Wells Fargo & Co. and JPMorgan Chase & Co. for improper
foreclosures and the use of poor MERS data.
MY TAKE
As the U.S. housing market seeks
stability, we are reminded of the lack of integrity in the processing of both
mortgage filings and foreclosures.
Note: while the audit focused on
foreclosures, the inaccurate MERS data can cause problems in the purchasing and
refinancing of existing homes as well.
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