Home prices have been falling for months, sending us into a second housing shock. Home values are almost down to what they were back in 2002. A key factor bringing down prices – and holding back the recovery – is the huge number of foreclosed houses.
Many of them are stuck on the market for a reason that you wouldn’t expect: banks can’t find the ownership documents. It’s bizarre, but it turns out that Wall Street cut corners when it created those mortgage-backed investments that triggered the financial collapse.
Now that banks want to evict people, they’re discovering that often the legal documents behind the mortgages simply aren’t there. Caught in a jam of their own making, some companies appear to be resorting to forgery and phony paperwork to throw people, down on their luck, out of their homes.
Wells Fargo Bank, HSBC, Deutsche Bank, Citibank, U.S. Bank and Bank of America are being accused of mishandling mortgage documents, and in some instances submitted forged and fraudulent documents to court officials.
All 50 state attorneys general are collectively seeking about $20 billion in damages for what they say is the irresponsible, perhaps criminal way, that some mortgage companies handled what is, for most folks, the most important investment of their lives.