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Banks, Break-Ins, and Bad Actors in Mortgage Foreclosure

60 Pages Posted: 4 Jul 2015  

Christopher K. Odinet

Southern University Law Center; University of Iowa - College of Law

Date Written: July 3, 2015

Abstract

During the housing crisis banks were confronted with a previously unknown number mortgage foreclosures, and even as the height of the crisis has passed lenders are still dealing with a tremendous backlog. Overtime lenders have increasingly engaged third party contractors to assist them in managing these assets. These property management companies — with supposed expertise in the management and preservation of real estate — have taken charge of a large swathe of distressed properties in order to ensure that, during the post-default and pre-foreclosure phases, the property is being adequately preserved and maintained. But in mid-2013 a flurry of articles began cropping up in newspapers and media outlets across the country recounting stories of people who had fallen behind on their mortgage payments returning home one day to find that all of their belongings had been taken and their homes heavily damaged. These homeowners soon discovered that it was not a random thief that was the culprit, but rather property management contractors hired by the homeowners’ mortgage servicer.

The issues arising from these practices have become so pervasive that lawsuits have been filed in over 30 states, and legal aid organizations in California, Florida, Michigan, Nevada, and New York report that complaints against lender-engaged property managements firms number among their top grievances. This Article analyzes lender-engaged property management firms and these break-in foreclosure activities. In doing so, the paper makes a three-part call to action, which includes the implementation of bank contractor oversight regulations, the creation of a private cause of action for aggrieved homeowners, and the curtailment of property preservation clauses in mortgage contracts.

Keywords: mortgage, property, real estate, foreclosure, real estate finance, lending, predatory, contractors, homeownership, contract law, creditor, debtor, bank, financial institutions, CFPB, robo-signing, Dodd-Frank, national mortgage settlement

Suggested Citation

Odinet, Christopher K., Banks, Break-Ins, and Bad Actors in Mortgage Foreclosure (July 3, 2015). University of Cincinnati Law Review, Vol. 83, No. 4, 2015. Available at SSRN: https://ssrn.com/abstract=2626547

Christopher K. Odinet (Contact Author)

Southern University Law Center ( email )

P.O. Box 9294
Baton Rouge, LA 70813
United States
225-771-4900 (Phone)

HOME PAGE: http://www.sulc.edu

University of Iowa - College of Law ( email )

Melrose and Byington
Iowa City, IA 52242
United States

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