This problem stems from a larger overarching problem with documentation; many lenders have not followed the legal processes required for foreclosure. In some cases, it is not even clear who actually holds the title for a property, this needs to be fixed.
While some states are considering blanket moratoria on foreclosures and many banks want to continue full steam ahead, the real problem your article identifies calls out for a different solution. Rather than ending all foreclosures, state and federal regulators should ask (and, if necessary, encourage) banks with particularly severe problems to voluntarily suspend foreclosures while problems with documentation get worked out.
A recent article from the Boston Globe examined re-foreclosures and their effects on families going through the foreclosure process more then once.
“The problem of cloudy title histories also is providing a boost to an increasing number of homeowners who are going to court to force lenders to prove they have a legal right to seize their properties.
Typically, homeowners argue against foreclosures by citing what they believe to be lenders’ shoddy paperwork and fraudulent documents. Concerns about such practices recently prompted 50 US attorneys general to spearhead an investigation into foreclosure practices, while some major lenders — including the nation’s largest, Bank of America Corp. — temporarily halted foreclosures to scrutinize their own practices.
Housing advocates argue that even if homeowners have not paid their mortgages — which is almost always the case by the time a foreclosure is underway — lenders must still be able to prove they have a right to a property before taking it.”
