Foreclosure starts in Illinois are on par with those in other areas, but the state’s court-supervised foreclosure system continues to bog down properties in the process.

Almost 7.5 percent of mortgage loans on one- to four-unit residential properties in Illinois were in foreclosure at the end of March, compared with a national average of 4.39 percent, according to data released Wednesday by the Mortgage Bankers Association.

“Illinois and New Jersey trail only Florida as being the worst in the country, and they’re getting worse,” said Jay Brinkmann, the association’s chief economist. “The rate in Illinois is more than twice that of California. In the judicial states, the problem continues to get worse in terms of the backlog of loans in the foreclosure process.”

Added Michael Fratantoni, the association’s vice president of research and economics: “This is not a case that loans are entering foreclosure at a greater extent than in nonjudicial (states). It’s that they’re staying in foreclosure longer.”

Illinois is not alone, according to the trade group’s quarterly national delinquency survey. In judicial states, the percentage of loans in the foreclosure process reached an all-time high of 6.9 during the first quarter. That compares with a rate of 2.8 percent in nonjudicial states, the lowest since early 2009.

“That difference is due entirely to the systems some states have in place that effectively block timely resolution of nonperforming loans,” Fratantoni said. “Hard-hit markets like Arizona that have moved through their foreclosure backlog quickly are seeing home price gains this spring.” [read more]

What do an insurance agent in Tennessee, a homemaker in Ohio, a private investigator from Wisconsin and a helicopter stunt pilot in Hollywood have in common? Well, for one thing, they’ve all participated in some fashion in “Foreclosure Diaries,” the documentary that my company, Pacific Street Films, has been producing, in fits and starts, since 2006.

When work first started on the film, the original tag was “Follow the Money,” and the road seemed to lead towards a dark and confusing destination. There was all this talk in the industry about scads of money to be made in servicing “subprime” loans. There were seminars, conferences, it seemed all the rage.

The trajectory of the film, back then, seemed to be a journey into a mortgage-version of Heart of Darkness. Now, I’ve always had a visceral reaction to the term “subprime” — implying something less than human — and I believed that at the end of the road I’d find a Kurtz, a take-no-prisoners evil mastermind. At one point, I thought Kurtz could be John Devaney. Remember him? The short lived Wall Street wunderkind, raking in subprime generated cash, hand over foot, buying yachts and planes, mansions and art. His larger than life personae even provided an inspiration for a feature treatment I wrote called “Positive Carry,” the title: a paean to his slight-of-hand financial dealings and a nod to his yacht of the same name (his demise as a hedge fund manager was accompanied by some glee in the financial community). [read more]

“I said I was very sorry this was happening and that I was taking some pictures to show what people all around the country were going through,” Moore recalled. “And he let me stay.”

Moore is one of a small cadre of photographers who have set out to record the life-altering event of a foreclosure, which sometimes is climaxed by an eviction lasting at most two hours. Moore’s pictures and those of 10 other photographers (see slideshow below) form a new exhibit, “Foreclosed: Documents from the American Housing Crisis,” at the Alice Austen House on New York City’s Staten Island, which held its opening reception earlier this month.

This is the second New York City museum to tackle the subject this year. In February, Manhattan’s Museum of Modern Art opened “Foreclosed: Rehousing the American Dream,” exploring architectural solutions for five foreclosure-ridden suburbias.

To Carl Rutberg, executive director of the Alice Austen House, the show seemed apt for a museum honoring the legacy of a pioneering 19th-century woman photographer in her former home, which she lost to foreclosure because of financial reverses in the Great Depression.

Since 2009, Moore has photographed hundreds of evictions in Colorado. “Everybody had a different story,” he said. “Some people had lost their jobs and could no longer make their mortgage payments.” [read more]

A suburban West Palm Beach foreclosure case has even bank employees confused, with internal emails that question whether the wrong entity is repossessing the house – but that then decide to move forward anyway.

Bank attorneys now want to purge the court file with the messages, which were filed mistakenly. The emails also mention trying to avoid mounting community association fees.

“I think the emails basically say the plaintiff doesn’t own the loan, and it belongs to a different lender,” said attorney Peter Snyder, who is representing Abby Lopez. “It may be Bank of America, or Bank of America could just be the servicer. That’s where it all gets crazy.”

Homeowner advocates say the three email exchanges exemplify one of their biggest concerns – that the wrong bank will take their home.

The concern arose when boom-time loans were repeatedly bundled or broken into pieces and sold by the original lender to trusts, investors or other lenders. As a result, a bank may be responsible for collecting payments and daily loan oversight, but not be the true owner.

The emails in Lopez’s case were filed in October with a sworn “affidavit of indebtedness” that details how much Lopez owes on the mortgage, and asserts that Bank of America is the servicer of the loan.

But Bank of America is not listed as a plaintiff in the case. HSBC Bank USA, “as trustee for the holders of Deutsche Alt-A Securities Mortgage Loan Trust, Series 2007-Bar1 Mortgage Pass-Through Certificates,” is the party named as foreclosing on the home.

When concern is raised in an August email exchange that the plaintiff doesn’t match what is on the foreclosure complaint or the affidavit, and that the “investor has requested that we foreclose in our name,” the answer is to proceed with the foreclosure and quit claim-deed the property on the back end to the correct party. [read more]

It doesn’t happen often, but sometimes God smiles on us. Last week, he smiled on investigative reporters everywhere, when the lawyers for Goldman, Sachs slipped on one whopper of a legal banana peel, inadvertently delivering some of the bank’s darker secrets into the hands of the public.

The lawyers for Goldman and Bank of America/Merrill Lynch have been involved in a legal battle for some time – primarily with the retail giant Overstock.com, but also with Rolling Stone, the Economist, Bloomberg, and the New York Times. The banks have been fighting us to keep sealed certain documents that surfaced in the discovery process of an ultimately unsuccessful lawsuit filed by Overstock against the banks.

Last week, in response to an Overstock.com motion to unseal certain documents, the banks’ lawyers, apparently accidentally, filed an unredacted version of Overstock’s motion as an exhibit in their declaration of opposition to that motion. In doing so, they inadvertently entered into the public record a sort of greatest-hits selection of the very material they’ve been fighting for years to keep sealed.

I contacted Morgan Lewis, the firm that represents Goldman in this matter, earlier today, but they haven’t commented as of yet. I wonder if the poor lawyer who FUBARred this thing has already had his organs harvested; his panic is almost palpable in the air. It is both terrible and hilarious to contemplate. The bank has spent a fortune in legal fees trying to keep this material out of the public eye, and here one of their own lawyers goes and dumps it out on the street.

The lawsuit between Overstock and the banks concerned a phenomenon called naked short-selling, a kind of high-finance counterfeiting that, especially prior to the introduction of new regulations in 2008, short-sellers could use to artificially depress the value of the stocks they’ve bet against. The subject of naked short-selling is a) highly technical, and b) very controversial on Wall Street, with many pundits in the financial press for years treating the phenomenon as the stuff of myths and conspiracy theories. [read more]