“As a non-judicial foreclosure state, Tennessee should not be one of the states where the ‘robo-signing’ of court documents has created a wide-spread problem regarding legitimacy of foreclosures in the documents submitted to courts,” Attorney General Cooper said. “However, we want to determine if there are any other types of problems regarding mortgage foreclosure documents in Tennessee and whether there is any kind of troublesome pattern.”

The banks, overall, have incentives to keep people in their homes. It reduces the loss the banks would have to write down on the asset after a foreclosure, and it reduces the real estate expense the bank would incur by taking title to the property. Ergo, if they’re foreclosing, the banks are probably doing so in a “fair” manner, in Mutascio’s view.

Halting of foreclosures cut home sales of distressed as well as add to already enormous shadow inventory of homes. In an ironic twist, median home prices may temporarily rise because of decreased sales of distressed properties.

At first blush, this statute seems to limit the arguments available to borrowers. However, in reality, our experience has been that, unless a borrower could show fraud or irregularities in the sale process, most courts have assumed that the foreclosure sale price was a fair market value. Given this, while the statute might streamline some individual lawsuits, it might not change the result in many cases. We will have to see how the statute is used by parties and applied by the courts.