Homeowners: Beware of Foreclosure Fraud

Undoubtedly, Wisconsin residents are familiar with the difficult financial times our country has been experiencing. Many individuals experiencing financial hardship are filing for bankruptcy and facing home foreclosure. The economic crisis has also resulted in an epidemic of foreclosure fraud taking place across the country and here in Wisconsin.

As the home foreclosure rate increased in Wisconsin and nationwide, banks struggled to keep up and as a result cut corners. One of the tactics used by large banks included the use of “robo-signers” who signed foreclosure documents en masse without proper review of the filing paperwork and often without any authority to sign the document initiating the proceeding. Other fraudulent practices include the recreation of lost documents or backdating records in the favor of the party initiating the foreclosure.

Many homeowners did not contest the fraudulent foreclosure practices and simply accepted the information presented to them at face value. Despite the illegality of such acts, this has become common practice in many cases. Whether it was greed, laziness or malice that began this trend of fraudulent foreclosure, it has taken place nevertheless.

There are ways to fight the ever-present foreclosure fraud. Perhaps the simplest thing to do is request documentation and authority for a mortgage owner to begin foreclosure proceedings. Often, lenders cannot produce this documentation because they either have no authority or, through the process of selling and reselling the homeowner’s mortgage, the paperwork has been lost. In addition, some homeowners seek legal representation to help protect their rights and ensure that the appropriate legal steps occur at the initiation of the foreclosure process.

Bankruptcy and home foreclosures are sometimes necessary and may even be the best course of action for all parties involved, but when there is misrepresentation or when fraud takes place, even the best of intentions can turn ugly. Foreclosure fraud is not an issue likely to go away any time soon, but through an understanding of this common practice, homeowners will have a greater understanding of their rights and how to protect themselves.

Source: LoanSafe.org, “Foreclosed Homeowners Challenge Banks to Prove They Still Hold Their Notes,” Alex Ferreras, 3/5/12.