Besides the fact that our blog shows up in this 9 minute movie, I like it because it shows the frustrations of the homeowners who, as they say in the video, are forced to play by the rules, while the banks are not required to follow any rules. More videos like this, including the upcoming one from Cameron Baxter Films, will help to educate the public on the true nature of the issues.
In the non-judicial states, the position of the banks is that just because they could not possibly prevail in a judicial foreclosure doesn’t mean they can’t foreclose using non-judicial means applying the power of sale. If that were the intent of the non-judicial enabling statute it would be patently unconstitutionality and non-judicial sale would not even exist.
In both the judicial and non-judicial states the banks are taking the position that based upon a very technical hairsplitting reading of the UCC, property laws and contract law, it is possible for a non-creditor to foreclose, as long as they have the right paperwork. The fact that they have no right to the property or the proceeds from the property, according to the banks, makes no difference.
The problem that cannot be overcome even if their tortured reasoning was accepted, is that the actual initiation of the foreclosure would need to be bifurcated (split from) the sale itself unless the initiator of the foreclosure paid cash at the auction. As it stands now, non-creditors are “winning” the auction by (a) setting a minimum bid that is clearly unauthorized and (b) submitted a “credit bid” that could only come from the creditor. Thus the same party that said it didn’t need to be an actual creditor to start a foreclosure proceeding is pretending to be a creditor at the foreclosure auction.
The net effect, notwithstanding the sounds bites on TV, is that it is non-creditors that are getting a free house, and in no case has a borrower obtained a “free house” in the sense that they had no money in the deal. Any money the borrower had in the deal, even in the rare no-money down closing, is MORE THAN the money (zero) that the non-creditor has invested or at risk in the foreclosure or sale.
At least the homeowners made some payments, bought furnishings, window treatments etc, in many cases putting themselves even further in debt than the so-called mortgage loan. The foreclosing entity neither loaned them the money, nor funded any part of the transaction before, during or after the closing with the homeowner.
Posted on February 7, 2011 by Neil Garfield