Battle Lines Forming Over Foreclosures

Bank officials were unperturbed. After conducting a due and diligent search, an assistant vice president simply drew up an affidavit stating that the paperwork - a promissory note committing the borrower to repay the mortgage - could not be found, according to court documents. Courtesy of Commons Wikipedia

Florida has been hit hard by foreclosures, in particular Herbert Newlands Jr. of Temple Terrace, Fla. The handling of that lost note in 2006 was hardly unusual. Mortgage documents of all sorts were treated in an almost lackadaisical way. This happened during the dizzying mortgage lending spree from 2005 through 2007, according to court documents, analysts and interviews.

Now those missing and possibly fraudulent documents are at the center of a potentially seismic legal clash that pits big lenders against homeowners. Their advocates are concerned that the lenders' rush to foreclose flouts private property rights.

That clash is expected to be played out in courtrooms across the country and scrutinized by law enforcement officials investigating possible wrongdoing by big lenders. The mortgage crisis leaped to the forefront as big lenders began lifting their freezes on foreclosures and insisted the worst was behind them.

Federal officials met in Washington, indicating that a government review of the problems would not be complete until the end of the year. In short, the legal disagreement amounts to whether banks can rely on flawed documentation to repossess homes. Delays in home foreclosures could adversely affect the landscape industry as it will take longer for those houses to find owners who can afford landscape improvements and maintenance.

While even critics of the big lenders acknowledge that the vast majority of foreclosures involve homeowners who have not paid their mortgages, they argue that the borrowers are entitled to due legal process.

- Courtesy of New York Times