The New York Times reports that foreclosures may slow down, as lenders have learned about mistakes in their processing of documents and default documentation.
Needless to say, finding a defect in documents isn’t uncommon (nor fatal), but the results can be catastrophic if the defects are found too late. The worst time to discover defects in your loan documents is after you’ve started the adversarial enforcement process.
At that point, it may be too late to have the customer agreeably sign any corrective documents. Even more dangerous is the Bankruptcy Trustee, who can exploit certain defects in security documents and take collateral from both the customer and you.
Before a creditor declares default, it should take a few minutes to review the signatures and terms of the loan documents and to confirm that your collateral documents are in order and properly recorded.
That way, every subsequent step in the collection action on those documents will be on solid footing.