"One of the claims we’ve heard throughout the mortgage crisis is that all the systems and records are fine, that the banks have just made a few “mistakes” and when they find out about them, they correct them promptly and cheerfully.
If you believe that, I have a bridge I’d like to sell you. Not only is evidence of widespread, and very likely systematic abuses piling up in courtrooms all over the US, but even at this late date, new types of misconduct are coming to light.
Lisa Epstein and April Charney pointed out the latest version, that of “zombie notes”. It’s another version of the “who has the note” (the borrower IOU) problem. In this case, thousands of borrowers in Florida (and potentially other states) who were being foreclosed upon were contacted by Fannie Mae and offered the opportunity to have the debt cancelled if they gave a deed in lieu of foreclosure. That’s a fancy way of saying if they gave up their rights to the house and vacated, Fannie would drop the foreclosure action. The advantage to the borrower is that he puts the matter behind him (if the house is sold for less than the mortgage balance, for instance, he can’t be sued for a deficiency judgment) and suffers less damage to his credit record.
But it appears Fannie did not live up to its side of the bargain, and even a representative of the American Bankers Association distanced itself from the agency’s action, saying it is “not a practice we’ve ever heard of.”..."
at http://www.nakedcapitalism.com/2011/06/another-layer-of-the-mortgage-mess-zombie-notes.html
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