President Obama Refuses to Sign the “Quick Fix” Bill

By: Peter Kedzior, REO Specialist | Coldwell Banker Residential Brokerage | Arlington Heights, Illinois | www.PeterKedzior.com

What started as a curious case of one bank employee who admitted he used to approve thousands of foreclosure cases every month without even reading most of them, now turned into a nationwide scandal involving possibly hundreds of thousands of homes in the process of foreclosure. As most of us have heard by how, three major banks: J.P. Morgan Chase, Wells Fargo, Bank of America and GMAC all announced a temporary halt on foreclosures while the extent of “flawed paperwork” is being investigated.

This practice must have been so widespread that Congress in an unusually expedited manner voted a bill that would make foreclosure documents that meet legal standards in one state, exempt from verification procedures in any other state that requires court approved foreclosure proceedings. This bill now faces a veto, since President Obama doesn’t want to make it easier for banks to bypass state laws regarding proper verification of foreclosure cases.

The extent of this scandal is not fully known yet and every day brings new developments. Many banks in addition to halting pending foreclosures, are also removing foreclosed properties from the market fearing their documents are so flawed that no title insurance company would cover them, once sold. It is almost certain that the number of foreclosures coming to the market will slow down in the next weeks and months. The enigmatic “shadow inventory” of foreclosed homes that are not yet listed for sale, will grow even more. As a result, it will take even more time to clear all “distressed homes” from the market and clear the way for home values to grow again.