Many news outlets are reporting on the escalating foreclosure paperwork mess, and the American Bar Association’s Law Journal has a roundup describing some of the most recent calls for banks to halt foreclosures entirely.
I haven’t had time to dive into the issue extensively, but my grasp of the underlying issues leads to the following two observations:
- I’m not sure what the banks–and especially the law firms–were thinking. Lawyers are paid often-exorbitant amounts of money to dot i’s and cross t’s. This is precisely what they appear to have failed to do here: comply with important technicalities. Why?
- None of the long-term fundamentals appear to have changed. The houses in question will still be foreclosed; the only real question is how long the process will drag out. That can’t be good for the economic recovery.