Thursday, October 14, 2010

Foreclosure Mills? A New Way for Unscrupulous Lawyers to Make Money?

Well the bankers and crooked mortgage brokers made money on the real estate market on the way up now the lawyers are making money on the way back down.

But while the banks are ultimately responsible, the root of the problem appears to lie with "foreclosure mill" law firms like Stern's. These operations process foreclosure cases on behalf of lenders, and their business model is based on moving the paperwork through as quickly as possible. That's why such firms have pioneered practices like "robo-signing" — whereby their employees process thousands of court documents in pending foreclosures without ever actually reviewing them, as the law requires. Of course, it's in the banks' interest for their contractors to move quickly, because the faster a foreclosure moves, the less time a struggling borrower has to fight it.

Also the faster the bank can get in into their inventory to resell when the market gets better. Also the faster the banks can get these mortgages off of their books the better it is for their own bottom lines. I mean the allowances for doubtful loans can get taken back down when these doubtful loans disappear.

However, if some ways speeding up the foreclosures might be beneficial to the market. If you can get all of the houses that are at risk out of the market you can hit the bottom that much quicker. Then all new houses will be purchased under more stringent regulations that were in place before the mortgage mess occurred. The growth in home-ownership would slow but at least the era of the "nodoc" mortgage or the interest only mortgage would just be a footnote in history.

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