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Some Foreclosed Homes for Sale Might Be Due to Bank Errors

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By : John Cutts    99 or more times read
Recent concerns over foreclosed homes for sale have emerged among homeowners. According to them, some foreclosures might not have been caused by the recession or delinquent mortgage payments, but by errors committed by banks and lenders.

Bank owned homes for sale, according to some homeowners and a handful of real estate market observers, might have reached the point of foreclosure because of disorganization within banks that provide mortgage services.

This problem, as some homeowners have complained, has contributed to the high number of foreclosures by state. According to them, communication breakdowns in some big banks have led to mistaken or premature foreclosures. Some homeowners who have experienced this kind of trouble were able to reverse the foreclosure, while others eventually lost their properties.

A number of nonprofit organizations in the U.S. that are working with homeowners have stated that a lot of mistaken and premature foreclosures have resulted in people losing their properties as foreclosed homes for sale. These nonprofits also stated that in some cases, properties become distressed houses for sale when a unit of a bank forecloses a property, while its partner company that services loans is still in the process of offering help to troubled homeowners.

In response, loan servicers stated that such mistakes rarely happen and if they did, it is due to the high volume of foreclosures and defaults that banks and servicers had to deal with. Real estate analysts have reported that this problem occurs even among servicers that participate in the government’s foreclosure prevention programs.

Under such programs, servicers are not allowed to auction a house while a decision on loan modification is still pending. However, analysts have revealed that such errors happen anyway, despite the provisions clearly stated in government programs.

Meanwhile, consumer advocate groups have weighed in on the issue by asserting that such problems continue to happen because banks and lenders who commit the errors are allowed to go unpunished. They added that the Treasury Department has never penalized a servicer company that has broken the programs’ rules.

The problem of properties becoming foreclosed homes for sale due to bank and loan servicing company errors continue to exist in the U.S., with around 50 home owners recently filing lawsuits against servicers and banks for alleged erroneous foreclosures.
John Cutts has been educated in the finer points of the foreclosure market over 5 years.

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