Regarding the allegations that some banks may have cut corners while foreclosing on 3 million homes since 2007, Wall Street's reaction is that homeowners should have paid for their mortgage in the first place.
As the snowball effect continues to build over whether the largest U.S. mortgage lenders used what are being called "robo-signers" as well as incomplete paperwork to force delinquent borrowers from their homes has exploded into inquiries by attorney generals in all 50 states. It's more than likely that there will eventually be a U.S. Congressional hearing into the matter as well.
Wall Street is largely unsympathetic to the plight of delinquent borrowers and is insisting that possible errors in the foreclosure process are beside the point. The foreclosure process usually begins when a borrower starts missing mortgage payments.
Walter Todd, portfolio manager at Greenwood Capital Associates, said, "If you didn't pay your mortgage, you shouldn't be in your house. Period. People are getting upset about something that's just procedural."
Anton Schutz, president of Mendon Capital Advisers said, "Everyone's responsible for following the law. If we all don't have to pay our mortgage, should we just stop paying taxes, too? Your mortgage didn't get to a robo-signer by accident, it's because you're not paying."
The term "robo-signer" is directed towards bank employees who signed hundreds of foreclosure documents daily without taking the time to truly look them over.
The reason why officials are investigating the foreclosure issue is due to the fact that some homeowners may have actually have been unfairly evicted from their homes from a lack of review regarding their mortgage.
In California, thousands of homeowners have written their representatives to show that there seems to be an "apparent pattern" of practices that led to many foreclosures that could have been avoided in the first place.
Many Californian's have reported that despite their efforts to seek loan modifications or other relief, many financial institutions have either simply failed to respond in a timely manner, misplace requested documents, and/or sent mixed messages about what is required for them to avoid foreclosures.
Kathleen Day, a spokeswoman for the Center for Responsible Lending, a Durham, North Carolina-based consumer advocate said, "We think this is the smoking gun that illustrates widespread problems in the process. No one's saying that foreclosures should stop forever, but lenders need to be abiding by the law."
Many from some of the largest lenders as well as others from Wall Street have downplayed their concerns over foreclosures and see it as nothing more than a process that's removing delinquent borrowers from their homes.
JPMorgan is reviewing 115,000 foreclosure cases after halting foreclosure sales in 23 states last week. It is expected that the review will take several weeks to complete.
Many finance executives have admitted that while mistakes are being made in the foreclosure process, borrowers are often delinquent for years before being removed from their homes.
Bank of America announced that their average borrower missed payments for 18 months before their home was repossessed.