In our last blog we talked about MERS—the Mortgage Electronic Registration Systems, Inc.—and the problems it has caused for lenders and their foreclosures during the past several months. We ended that blog by telling you that we would update you in our next blog about the recent cancellations of many foreclosures in Oregon.
We’ll give you a few very recent facts about Oregon foreclosures. And then tell you what we think those facts mean.
Fact: In the last few months, a number of different federal judges in Oregon have stopped foreclosures involving MERS, with three of those decisions coming rapid-fire within a short period in February.
Fact: By mid-March, many hundreds of non-judicial foreclosures (those not involving a lawsuit) all over Oregon had been cancelled by lenders. By way of just one example, ReconTrust, which administers foreclosures for Bank of America and its various subsidiaries, went from processing hundreds of foreclosures at a time to no more than twelve, throughout the entire state of Oregon! Populous counties like Multnomah and Clackamas went from many dozens of foreclosures pending to only two apiece!
Fact: But within a matter of just two more weeks, from mid- to late-March, the processing of foreclosures resumed in a flurry. Using ReconTrust again as just one example, during just the last few days of March, it started MORE THAN 800 home foreclosures! As of the time we write this, Multnomah County went from two pending foreclosures to 142 of them.
Fact: Still using ReconTrust as an example, 140 of those Multnomah County foreclosures are all scheduled to go to foreclosure sale on one of only four days. That’s at least 30 foreclosures at a time happening supposedly all at 10:00 A.M. at the Multnomah County Courthouse entrance on each one of those four days.
So what does all this mean? What it clearly does NOT mean is what a Bank of America spokesperson said at the time of the mass cancelations: that they were being nice and wanting to “ensure that homeowners nearing a foreclosure sale have exhausted other opportunities, including loan modifications and short sales,” as an Oregonian article a month ago put it. Those “other opportunities” take months to work through. Instead, the wholesale cancellation of virtually all of ReconTrust’s foreclosures—a tremendously expensive decision—was a clear acknowledgement by the lenders that these very recent court decisions against MERS called into question all their ongoing foreclosures.
In the last few weeks and months the mortgage lenders have undoubtedly invested a huge amount of money on large law firms to figure out how to best get out of the corner they have painted themselves into. Because the judicial decisions against them in Oregon focus primarily on non-judicial foreclosures, there was a question whether lenders would switch to judicial foreclosures, but that does not seem to be happening. Instead part of their tactic now, we believe, is to flood the system with non-judicial foreclosures, getting as many of them over with as quickly as possible. Only a very limited number of homeowners have the willingness and capacity to oppose them, even just to take the first step of talking with an attorney about their legal options. Even though the law has been turning against the banks, they are trying to skip past the law by assuming, probably accurately, that most homeowners will not challenge them. The big open question is how they will act towards those homeowners that do. Will they be more AGGRESSIVE in order to discourage fair settlements? Or instead will they be more FLEXIBLE on mortgage modifications, short sales, bankruptcies and such because they are legally on the defensive and need to process their troubled mortgages more efficiently? We shall see.