I have no fundamental problem with efficiency, economies of scale, offshoring, or any of that. People are in business to make money. Somebody has to do the work of foreclosing on properties when payments are not made, and I don't expect a vow of poverty or an overabundance of sentimentality for those who choose that unglamorous but necessary line of work. If the work can be done inexpensively and efficiently in assembly-line fashion using overseas labor, so be it.
But the fact is, when I read about some of the strange, sloppy, and possibly fraudulent nature of some of the documentation that is coming out of the operations of so-called "foreclosure mills", it doesn't inspire confidence that the job is necessarily being done well.
If it were simply the case that some corners were cut, some t's left uncrossed, and some i's left undotted, but that ultimately the party with the right to foreclose was foreclosing on the right property owner, that would be one thing-- no victim, no big deal.
But then you start getting into a gray area that goes beyond errors of omission and haste-- stuff like forgery (decide for yourself); falsified notarizations ("...judge found Stern's office presented a document with a falsified notary stamp"); notarized documents showing a single agent of a foreclosure operation signing as an officer of several large highly regulated financial institutions simultaneously; documents listing several multi-billion dollar financial institutions as somehow having the same address as their principal place of business (see here for some excerpts of court cases where judges have raised these issues); notarized documents that contain obvious nonsensical placeholders such that you can tell that nobody ever even looked at the thing (link)-- it becomes the case where this is a victimless crime kind of in the same way that it's a victimless crime when an undertaker steals the suit off a dead man or sells his organs after the funeral and then buries the coffin with the family none the wiser.
To be sure, a lot of this negative stuff about mass foreclosure operations is coming from foreclosure defense attorneys, and they certainly can be expected to have some bias. But I've looked at their evidence, and it's pretty damning. It certainly appears that people are lying and signing their names to the lies on official documents-- perhaps hundreds of thousands of times over.
It should be an eye-opener when the wrong entity attempts to foreclose due to this kind of shoddy paperwork. In a recent court case in the 6th Circuit of Florida, Judge Anthony Rondolino got some notice for dressing down a lawyer representing GMAC in a foreclosure case. The judge alluded to "several instances" which had caused him to have "great concern about the validity of filings in our mortgage foreclosure cases." In particular, he referred to an instance where this kind of bogus paperwork had led the wrong entity to attempt a foreclosure:
I have one case that was called up for summary judgment hearing and I thought it was going to be the typical granted situation and then a lawyer showed up for the defendant homeowner.
I was beginning to recite to the lawyer what I had typically recited, that there were no affidavits in opposition. And the lawyer said, "Well, I thought you might be interested in this," and handed me some documents which were out of another file in our circuit, and as it turned out, it was the same note and mortgage that was in a separate and independent file.
There was a different plaintiff pursuing a foreclosure proceeding on the same note and mortgage as the one that was being proceeded on. Both of the cases contained allegations in the original complaints that the separate plaintiffs were owners and holders of the note. Both of them had gone so far to have affidavits filed in support of a summary judgment whereby an individual represented to the court in the affidavit that the separate plaintiffs had possessed the note and had lost the note while it was in their possession.
Interestedly, both affidavits, although they were different plaintiffs, purported the same facts and they were executed by the same individual in alleged capacity as a director of two separate corporations, one of which was ultimately found to me to be an assignee of the original note.
So that really increased my interest in this subject matter, because I really honestly-- I don't have any confidence that any of the documents the Courts are receiving on these mass foreclosures are valid.
http://online.wsj.com/public/resources/documents/GMACcase1.pdf
A similar incident was reported in the Wall Street Journal in 2008:
Now comes the foreclosure case of Joanne Fredenburg, a widowed homeowner in Lehigh Acres, Fla., where real estate prices have plummeted. Last month Ms. Fredenburg was served with not one but two foreclosure lawsuits from two different plaintiffs that both claimed to own her promissory note and mortgage and said she owed them each more than $276,000. That, of course, is impossible. (Click here and here for the two complaints.)
And then there's stories of banks foreclosing on the wrong house:
Some 2.8 million homeowners faced the threat of foreclosure last year, but it wasn't supposed to happen to Charlie and Maria Cordoso. In 2005, the New Bedford, Mass. couple paid in full -- in cash -- for a house in Springville, Fla., and rented it out with plans eventually to use the home as a retirement getaway.
They said they were shocked to learn earlier this month that Bank of America had locked them out and removed their clothing and furniture from the property.
http://abcnews.go.com/Business/bank-america-sued-foreclosing-wrong-homes/story?id=9637897
This is not the only allegation of a bank foreclosing on the wrong home-- you may or may not have heard of some of these:
Bank of America Forecloses Wrong Home, Kidnaps Parrot
Lawsuit accuses bank of seizing wrong house
Man sues after bank takes wrong house
My Bad! Woman's House Mistakenly Auctioned by Bank
Bank Mistakenly Starts Foreclosure Process on Wrong House in Kissimmee
Wrong Home in Foreclosure Due to Deed Error
Some of these cases are no doubt the result of honest mistakes. But there are many problems in the foreclosure process that are apparently being caused by systematically corrupt business practices. The real danger is not the danger of being wrongfully foreclosed on-- the real danger is the further erosion of public trust in our institutions and systems as the banks and their foreclosure mill agents make a mockery of those systems.