According to CNN and RealtyTrac, foreclosures hit record numbers. In the last quarter of 2010, there have been 930,437 foreclosure filings, a 4% increase from the previous quarter. One in every 139 homeowners had received a foreclosure filing during those three months!
Two weeks ago, four major lenders halted foreclosures in 23 judicial foreclosure states. Washington State was not affected by this directly. However, last Friday, Bank of America announced that it was suspending the sale of its foreclosed home inventory in all 50 states.
Wednesday, agent Rob McKenna announced in a press conference that his office has uncovered evidence that suggests foreclosure trustees are ignoring consumer protection laws in Washington. He sent letters today to 52 trustees outlining his concerns and calling on them to suspend any questionable foreclosures in the state. Washington is a "non-judicial foreclosure" state, which means that a lender can proceed directly to selling a home at public auction without first filing a lawsuit. This lender-driven process was created by the state Legislature in better times. Although lenders may foreclose in court in Washington, they almost always choose non-judicial foreclosure which is quicker and less costly.
From the McKenna Letter: "I ask you to suspend all foreclosures in which you have not yet confirmed that all foreclosure-related documents were lawfully signed, that the chain of ownership is clear and has been revealed to you in full, and that state consumer protection requirements have been followed."
As a third party trustee, they are responsible for conducting non-judicial foreclosures, they have a statutory duty to perform all foreclosures in good faith and owe that duty to both the homeowner and the lender.
Some of the issues raised in the AG's letter are:
Following the news this week, it seems like there have been announcements almost every day on this issue. On October 13th, GMAC announced that it too was expanding its review of foreclosures to all 50 states.