Malik W. Ahmad

Who is making tonnes of money in this foreclosure crisis?


Too many sad and depressing stories are coming from different parts of USA that if we read all of them, we all would be highly depressed and would not pursue any other chore in our daily lives. We know that a foreclosure not only depresses the surrounding home values but depresses the both former and current occupants of the neighborhood spiritually and physically. NOBODY wins when a home enters foreclosure — neither the borrower, who is evicted, nor the lender, who takes a loss when the home is resold and neither the neighborhood. This is how we think as this comes into our mind. But the reality is entirely different.

Someone afterall is making lots of money from the miseries of people. They are again your mortgage lenders, a small army of law firms and default servicing companies, who represent mortgage lenders, have raked in mounting profits. These little-known firms assess legal fees and a host of other charges, calculate what the borrowers owe and draw up the documents required to remove them from their homes. Now, the firms that handle loan defaults have been the primary beneficiaries. Law firms, paid by the number of motions filed in foreclosure cases, have sometimes issued a flurry of claims without regard for the requirements of bankruptcy law, several judges say. I am sure you must have seen or heard about “Motion to Lift Stay”. There is no big deal in drafting these motions. But creditors companies are making huge amount from them by filing in every case and charging an upward of $1000 on this routine motion. Oh yeah! now comes the trustee. They are generally attorneys who worked on the creditors side, and mostly were used to do only routine work. All of a sudden they have become very busy and making lots of money. Here, again in Las Vegas, there are most trustees working and hired by the Bankruptcy Courts. Formerly, there offices were shabby and building looked like rat holes. Now, they moved to fancy places, and have plenty of secretarial staff working for them. Each time I go to Bankruptcy court, more and more people are sitting in the lobby as demographic had changed and more of middle class people filing for bankruptcy.

Court documents say that some of the largest firms in the industry have repeatedly submitted erroneous affidavits when moving to seize homes and levied improper fees that make it harder for homeowners to get back on track with payments. Consumer lawyers call these operations “foreclosure mills.”

“They get paid by the volume and speed with which they process these foreclosures,” said Mal Maynard, director of the Financial Protection Law Center, a nonprofit firm in Wilmington, N.C
Let us read an interesting article in this regard.

http://www.nytimes.com/2008/03/30/business/30mills.html?_r=1&adxnnl=1&adxnnlx=1267376990-wLUi8sX59PFGI0/yTQSefw

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