Arizona residents may have heard about the recent claims of foreclosures abuse conducted by the nation's largest lenders, which alleged that flawed paperwork and poor loan modifications contributed to many of these foreclosure actions. Federal regulators came to a multibillion-dollar deal with these major lenders earlier this year, guaranteeing cash relief to borrowers foreclosed upon in 2009 and 2010 and to those currently in danger of foreclosure.
The collapse of the housing market affected many across the country, with mortgage balances surpassing the market value of the house. In these difficult times, banks foreclosed upon homes through erroneous processes and recent reports indicate many wrongful evictions also took place. Making ends meet in tough economic times is hard enough, but foreclosure proceedings add stress as Arizona residents may lose the roofs over their heads. Bankruptcy proceedings, such as Chapter 7, however, not only put an automatic stay on foreclosure proceedings but also raise the option of retaining the residential home.
Recent reports demonstrate that military personnel were often the subject of wrongful evictions. Federal law protects military personnel, who may deployed abroad to protect the country, but complaints indicated they were being nonetheless foreclosed upon at high rates.
Military personnel were not the only ones who were wrongfully evicted; allegedly, borrowers who had never missed a mortgage payment and borrowers not technically in default were also victims of botched paperwork that led to foreclosures.
Banks maintain that wrongful evictions are a very small proportion of the foreclosures being reviewed, but they do represent the latest development in the complicated mortgage mess.
Arizona residents facing foreclosure proceedings should check with banks to make sure their paperwork is not flawed. However, there are times when Arizona residents find themselves in difficult financial situations and they should consider all their options, including filing for bankruptcy, in order to restart their financial lives.
Source: The New York Times, "Banks find more wrongful foreclosures among military members," Jessica Silver-Greenberg and Ben Protess, March 3, 2013