Foreclosure Reviews Could Lead to Costly Delays
House Speaker Nancy Pelosi has called for a federal investigation of foreclosure sales and evictions.
Observers say that if the government gets further involved and millions of foreclosures need to be re-processed, it is unclear how long the job will take and how costs will be allocated.
Lenders are rushing to review their own situations. At GMAC Mortgage, a unit of Ally Financial Inc., a spokeswoman said, “The vast majority of these affidavits will be resolved in the coming weeks and before the end of the year,” And a spokesman for J.P. Morgan Chase & Co. said the company's review process is expected to take "a few weeks."
But fixing the problems won’t be that simple if the reviews uncover missing documentation or other serious problems that are likely to trigger more legal challenges.
The bottom line is: "It's very hard to see how the servicers can avoid reimbursing the trusts for losses caused by taking short cuts," said David J. Grais, an attorney in New York who represents investors.
Source: The Wall Street Journal, Robbie Whelan and Ruth Simon (10/06/2010)