12/1/2010
The courts in Utah are inundated by dozens of lawsuits claiming irregularities in the home-foreclosure process by banks and other companies.
More than a hundred lawsuits are pending in federal and state courts as homeowners, represented by their lawyers, allege that the foreclosures are in direct contravention of a number of Utah and federal laws.
The huge number of lawsuits filed in Utah forms just a minuscule portion of the nationwide chaos in the banking sector over whether the correct legal process was followed when they moved to foreclose the homes. This developed as hundreds of thousands of homeowners were not able to meet their mortgage obligations and have lost, or are in danger of losing, their homes.
If it is proven that the foreclosure process of major banks is erroneous, the net effect could run into billions of dollars in losses. The ripple effect could disrupt the housing market, as well as impair government efforts to keep people in their homes.
As the Congressional Oversight Panel said, the outcomes of such irregularities are quite severe, with the full impact of the situation still unclear.
The problem started when some contractors and employees of a number of major banks testified that they signed thousands of foreclosure documents without reading them. They also said that at some point, they made it appear that they signed it at an earlier date. A report said that up to $6.4 trillion worth of mortgages are involved.
