We are through the looking glass people: according to a Bloomberg article, the Arizona legislature is about to pass a law that would require lenders to prove they have the right to foreclose on a home before they do it. Incredibly, they would be the first state in the nation to pass such a law.
The bill, S.B. 1259, would void foreclosures and foreclosure sales if lenders cannot produce the full chain of title for the property. Similar legislation has been proposed in New York, Oregon, and Virginia. Under the new law, lenders would be required to provide a list of all former owners of the deed, as well as a description of the way the interest in the property was conveyed. The law was proposed in response to the ongoing robo-signing/foreclosure fraud fiasco.
Arizona is getting crushed by foreclosures and declines in home equity. According to Zillow, a truly ridiculous 70% of all homeowners with mortgages in the Phoenix area are underwater. 49 percent of residential home sales in the state in 2010 were foreclosures.
Predictably, lenders warn that this would make mortgage lending riskier in Arizona, and would make it harder to approve people for loans. Lenders also warn that the cost of mortgages could increase.
What is shocking to me is that this is not already a law in all 50 states. It seems to me to be common sense that someone should have to prove that they have standing to foreclose on a property in order to actually do so.
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