Tim Fernholz asks whether efforts to offer borrowers mortgage modifications are endangered by the current documentation crisis?
The mortgage mess isn’t going away. Loans, sold as many as 12 times before ending up in a complex security or on a financial institution’s balance sheet, have been found with key legal paperwork misplaced or incorrectly transferred. If you’ve followed the issue, you know documentation problems prevent mortgage servicers from foreclosing on homes: They lack proof of their legal right to do so. It’s a symptom of underlying irregularities, not the end of the story. The infamous “robo-signer,” who approved 400 foreclosure filings a day without determining their validity, helped reveal these problems, but they appear to go much deeper.
