To add to the tragic comedy that is the housing and mortgage market in the United States, it turns out that several news outlets recently reported that that Bank of America, on several occasions, has sued itself in foreclosure proceedings.
It is not as far-fetched as one would think. The problem lies with the robo-signing crisis, which, among other things, was a result of bank employees cutting corners when processing paperwork. Now lenders, borrowers, and the judicial court system are finding themselves severely backlogged in the foreclosure process. This has allowed cases to go through the system with the same bank being on opposing sides of the foreclosure.
This happens when a bank services the first mortgage on behalf of an investor while contemporaneously owning the second mortgage. The law requires the bank to name themselves as a defendant in order to dispose of the junior interest. Adding insult to injury, the bank will have to hire a lawyer to file the foreclosure suit and another lawyer to defend the suit.
Financial institutions, such as Bank of America, and Wells Fargo, will continue to see these scenarios pop up again so long as the foreclosure crisis continues. With no end in sight, we are left imagining what it must be like to contact opposing counsel, who happens to be only a cubicle or office space away.
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