Business insiders and industry experts are all aflutter after last week’s US Bancorp v. Ibanez decision in which Massachusetts' highest court found that Wells Fargo and US Bancorp had no right to seize the homes of two delinquent borrowers since neither financial institution could prove they legally owned the mortgages at the time they foreclosed. This holding could have far-reaching impact on the foreclosure process nationwide—for some, symbolically rejecting the very predatory foreclosure practices that have forced millions of families from their homes during the lingering financial crisis.
And while analysts like Joshua Rosner of NewYork-based research firm Graham Fisher & Co., called the ruling “a landmark” and predicted it would “open the floodgates to more suits in Massachusetts and strengthens cases in other states,” this seemingly borrower-friendly precedent could seriously threaten the broader economy’s ability to dig itself out of the muck of a seemingly unending housing crisis caused by unresolved foreclosures.
In fact, according to a report by Bloomberg, alleged foreclosure fraud committed by banks and mortgage firms is slowing down foreclosure proceedings that may in turn stifle the housing market's previously predicted 2011 recovery. Mark Zandi, chief economist for Moody's Analytics, Inc., told Bloomberg:"The problems that have come to light in the legal process have the potential to cause more foreclosure delays," Zandi said from West Chester, Pennsylvania. "By the end of this year, the housing crash could be over, or, if we see foreclosures pushed into next year, we might not see a recovery until the end of 2012. It's very difficult to gauge how it will play out."
Difficult indeed. And full of mixed messages, too. Despite signs of economic life in a round of new data suggesting the economy is on the mend, such as a 1.1% increase in the Leading Economic Index in November, millions of Americans have seen their most valuable asset decrease in value as homeowners' equity fell again in the final month of 2010. These underwater mortgages mean fewer people can sell their homes when they need to, further stalling the buying and selling of real estate market investments that could, in better scenarios, drive the struggling economy.
And while many average Americans could care less if banks suffer in the wake of Ibanez, delays in foreclosure proceedings could further prevent the housing market from attracting new investors, with foreclosed homes accounting for one-quarter of total home sales. These delays in foreclosure proceedings could therefore affect both buyers and sellers, as well as the overall economy. And so goes the symbiotic relationship of the housing market to other economically-driven institutions like companies’ ability to hire, higher incomes for employees, and our old favorite: consumer confidence and spending.
Fortunately, a bankruptcy attorney can also assist homeowners as they attempt head off the fallout of a foreclosure, in some cases keeping debtors just like you in your homes and keeping your homes out of the clutches of awaiting creditors. In fact, this is the precise scenario that bankruptcy was made for, giving beleaguered borrowers a second chance against sometimes unscrupulous lenders who failed to dot “i”s and cross “t”s in their attempts to reclaim properties all across the country. In short, bankruptcy can provide the necessary financial resolutions that can move you forward in your own economic upturn.
So, remember, if you are having trouble dealing with another year’s worth of debts it may be time to join the millions of Americans who chose bankruptcy last year. The bankruptcy experts at the Law Offices of John T. Orcutt offer a totally FREE debt consultation and now, more than ever, it’s time to take them up on their advice. Just call toll free to 1-888-234-4181, or find them online during off hours at www.billsbills.com. Simply click on the yellow “FREE Consultation Now” button.