This might help people that are trying to sell their homes - they won't be competing with forclosures.......


Foreclosure Challenges Will Cost Taxpayers
By Dunstan Prial

Published October 06, 2010

Many of the same banks whose lax lending standards led to the rubber-stamping of countless mortgages in the years leading up to the financial crisis are now under fire for allegedly cutting corners on foreclosures.

Ally Financial’s GMAC Mortgage, Citigroup (C: 4.19 ,+0.01 ,+0.24%), Wells Fargo (WFC: 25.95 ,-0.05 ,-0.19%), JPMorgan Chase (JPM: 39.38 ,-0.11 ,-0.28%), and Bank of America (BAC: 13.20 ,-0.11 ,-0.83%) are among the mortgage lending giants currently being targeted for allegedly mishandling foreclosure procedures.

The banks have been accused of acting improperly in an effort to rush delinquent borrowers out of their homes. Speaker of the House Nancy Pelosi, D-Calif., has called for a federal investigation.

The banks contend the problem is essentially a technical glitch caused by a flood of paperwork.On Friday, Bank of America became the first major bank to halt foreclosure sales and proceedings in all 50 U.S. states.

As a growing number of states call on big mortgage lenders to suspend foreclosures to determine whether proper procedures were followed, there is concern that widespread delays could further weaken the already fragile U.S. housing market.

Experts say it’s too early to predict a long-term impact, but it’s widely agreed that challenges to foreclosures will likely multiply exponentially in the coming months.

Under a worst-case scenario, a significant number of the estimated two million U.S. homes currently facing foreclosure could enter into a legal limbo in which the delinquent homeowner can’t be evicted and potential buyers can’t buy.

That would almost certainly stall any potential housing recovery by adding tens of thousands of additional homes to an already bloated inventory.

“It could have the effect of keeping houses off the market,â€