Wednesday, December 5, 2012

Foreclosure pipeline

"The five biggest mortgage servicers- Bank of America (BAC_), JPMorgan Chase (JPM_), Citigroup (C_), Wells Fargo (WFC_) and Ally Financial- entered into a $26 billion settlement with federal and state regulators earlier this year over alleged fraudulent foreclosure practices, better known as "robo-signing".

Under the agreement, banks are required to offer various forms of mortgage relief to borrowers and also adhere to stricter standards regarding foreclosure. In states where banks need to prove a borrower is in default in court- judicial foreclosure states- scrutiny of foreclosure cases has been heightened.

Other states such as Nevada and California have enacted tough laws protecting borrowers from wrongful foreclosure practices.

The result has led to a slowdown in foreclosures, with banks increasingly preferring to pursue alternatives such as short sales and loan modifications.

Still, the pipleline of delinquent loans remains large."

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