What is HAMP and why is the program not working as contemplated?

HAMP is a program introduced in February 2009 by the Obama Administration’s comprehensive Financial Stability Plan during the housing market collapse to help homeowners modify and/or refinance their existing mortgage.  HAMP is an acronym for Home Affordable Modification Program.  It is designed to help those homeowners with an economic hardship modify the terms of their mortgage so that it becomes more affordable, manageable and thereby helps avoids a foreclosure.

To qualify for the program the following criteria must be met:

1)  The mortgage is for your primary residence.

2)  The amount of your first mortgage is equal to or less than $729,750.

3)  You have a qualified hardship.

4)  The Mortgage was obtained before January 1, 2009.

5)  The payment on your first mortgage (including principal, interest, taxes, insurance and   

     homeowner's association dues, if applicable) is more than 31% of your current gross

     household income.

 

Trial Period vs. Permanent Modification

Permanent mortgage modification rose to about 31,000 in November, up from about 26,000 in October.  That brings the total active permanent modifications to just over 500,000 since the programs inception.  Considering how slow new modifications are being offered, it is clear that the program designed to prevent three to four million foreclosures will be lucky to hit even 25% of its target.
Let's look at trial modifications.  A trial modification is when the lender provides a temporary trial periods in which modified payments are to be made for several month (usually 4-6), and if paid timely, should be made permanent.  Trial modifications peaked at nearly 160,000 in October 2009, but have declined ever since.  The number of new trial modifications increased to about 30,000 in November, up from about 24,000 in October. 

With so few active and new trial modifications, it will be harder for this number to increase in the future.  18,000 modifications were cancelled in November 2010.  This is mostly due to loan servicers finally having worked through most of their backlog of "aged trial modifications" which were modifications that were active for an extended period without being cancelled or made permanent.  Many were ultimately cancelled, which is why there was a flood of cancellations from March through July 2010.

So what’s next in 2011 for the program? 
All indications are that foreclosures are expected to rise, even though HAMP appears to be winding down and comprehensively not having the teeth to compel lender compliance as envisioned. 
As of December 2010, more troubled homeowners are dropping out of the Obama Administration's HAMP program, which has been widely criticized for failing to help more homeowners keep their homes and modify “bad loans” to more traditional long- term fixed-rate mortgages.

On December 22, 2010, the Treasury Department said that about 774,000 homeowners have dropped out of the program as of last month.  That's about 54 percent of the more than 1.4 million people who applied for a modification.  As noted, this program is intended to help those at risk of foreclosure by lowering their monthly payments. Borrowers start with lower payments on a trial basis, but for reasons not made very clear or public, lenders have not converted them into permanent loan modifications, causing trouble for the program as a whole.

Foreclosure filings fell by 21 percent last month, their largest monthly decrease since 2005.  However, the government warned that this decrease is only temporary.  Lenders are expected to revise and resubmit paperwork in the coming months to reignite their foreclosures. 
Borrowers applying for HAMP relief are faced with a bureaucratic black hole, with banks losing documents, failing to return phone calls, and simply not keeping track of all documents submitted. 
Lenders are blaming homeowners for failing to submit needed and requested documentation.  Lenders are often times operating on a dual track, where on one hand they are attempting to modify a loan, and on the other hand prosecuting a foreclosure on that property.

A homeoner should be extremely careful when entering into a trial modification.  There is no guarantee that the terms will become permanent.  Thus the bank is collecting payments for several months (from thousands of borrowers) and then for frivolous reasons is not making that modification permanent.  At the same time, continues to prosecute the foreclosure lawsuit.  Such behavior can be classified as violating the lenders obligation to operate in good faith and conduct fair dealings with the borrowing public.        

Homeowners accepted into HAMP can receive lower interest rates and can repay their loans over a longer period of time.  Those who remain in the program on a permanent basis see their monthly payments cut on an average of about $500.

If you or someone you know is dealing with a potential foreclosure of their mortgage, it is in your best interest to speak to a competent lawyer in your specific jurisdiction.

By: Eran D. Grossman, Esq. (212) 227-6755

New laws in New York affecting foreclosure lawsuits

On October 22, 2010, Governor David Paterson of New York signed into law the Access to Justice in Lending Act.  This law makes attorney-fee provisions in mortgages reciprocal, thereby allowing homeowners (defendants in foreclosure lawsuits) to get attorney's fees if and when they prevail in foreclosure actions.

Currently in New York State, it is standard for a mortgage agreement to contain language giving the lender the right to collect attorneys' fees if it is successful in a foreclosure action.  However, there is no requirement that the borrower have the same right to collect if he or she is successful in defending the foreclosure action.  This new piece of legislation will benefit homeowners defending a foreclosure in several important respects.  First, it will level the playing field for borrowers facing foreclosure by clarifying that the obligation to pay attorneys' fees and costs is mutual.  Moreover, it will allow a greater number of borrowers to obtain legal representation.  By authorizing borrowers with meritorious defenses to recover attorneys' fees from their lender, it will increase access to legal representation for borrowers who cannot otherwise afford an attorney.  Finally, it should create an incentive for lenders to resolve cases earlier in the foreclosure process.

Rick Wagner, the longtime Brooklyn Legal Services Corporation Director of Litigation who passed away last year, was well known for his advocacy on behalf of homeowners.  He once wrote, "For far too long, plaintiff banks have benefitted from a huge number of default judgments in foreclosure actions and/or proceedings. Perhaps the single most important tool in the avoidance of default judgments is legal representation...Those of us in the legal services community—including those of us who are presently prohibited from seeking attorneys' fees— can make a sizable contribution toward leveling the foreclosure playing field by establishing this right for homeowners and, hopefully, generating a private foreclosure defense bar fueled by a substantial revenue stream in the form of recoverable attorneys fees."

New York State Assemblyman Rory Lancman (D-Queens) and Senate Deputy Majority Leader Jeff Klein (D-Bronx) announce passage of the “Access to Justice in Lending Act” by both houses of the legislature.  Almost all mortgage agreements require borrowers to pay attorneys fees to lenders who foreclose on their mortgage, but borrowers are not given the same contractual right.  As a result, few homeowners are able to retain attorneys in foreclosure proceedings – most default or try to represent themselves.  Many homeowners have valid defenses to foreclosure and could save their homes with adequate legal representation.  To add insult to injury, these homeowners then have the lenders' attorneys fees tacked on to the overall amount they owe the bank, pushing desperate homeowners further into debt.  This new law creates a reciprocal right to attorneys’ fees for borrowers who successfully defend against foreclosure where the mortgage agreement gives such a right only to the lender.

“We cannot let people with valid defenses to foreclosure lose their homes merely for lack of legal representation, particularly when the mortgage agreement written by the bank tilts the legal playing field in the bank’s favor,” said Assemblyman Lancman (D-Queens).  “If homeowners had the money to pay for a lawyer to represent them in foreclosure, they probably wouldn’t be in foreclosure in the first place.  This legislation will allow lawyers to take on meritorious foreclosure cases with the fair and reasonable expectation that they will be compensated if they succeed.  We know that many of the families that we see being foreclosed upon today entered into their mortgages due to predatory lending. These are the very people who should have the best defenses to foreclosure, but lose their homes simply because they could not secure counsel to defend them.  Today, we have put homeowners on even playing ground with the lenders that are foreclosing on them, and given them a fighting chance to stay in their homes," said State Senator and Deputy Majority Leader Jeffrey D. Klein (D-Bronx/Westchester).

On October 22, 2010, in response to the robo-signing crisis affecting the nation, New York's office of Court Administration issued a new rule requiring that in all residential foreclosure actions plaintiff's attorneys file an affirmation certifying that counsel has taken reasonable steps to verify the accuracy of the documents filed.  In all new cases, the affirmation must accompany the Request for Judicial Intervention.  In pending cases, the affirmation must be submitted with either the proposed order of reference or the proposed judgment of foreclosure.  In cases where a foreclosure judgment has been entered but the property has not yet been sold at auction, the affirmation must be submitted to the court referee and a copy filed with the court five business days before the scheduled auction.  Plaintiff's counsel must also file an amended version of the affirmation if new facts emerge after the initial filing. 


 

MERS on the hot seat?

On December 2, 2010, the House Judiciary Committee held a hearing on the mortgage crisis affecting the American homeowner.  Disturbing testimony came from Christopher Peterson, associate dean for academic affairs and law professor at the University of Utah.  He indicated in his written submission how big banks basically destroyed America’s land-recording system, which is a method of tracking property titles changing hands since colonial times and the founding of this Republic.

What big banks did was create a company called MERS (Mortgage Electronic Registration Systems, Inc.).  This company was purposely designed to get around physically recording mortgages upon transfer or sale of the note and mortgage.  As shown below, the way they prepare their documents is legally questionable, and makes tracking mortgage ownership extremely difficult, from a consumer’s perspective, since nothing is publicly recorded upon sale/transfer of the note.  Ownership of the note, however, is something that must be proven in court during a foreclosure action.  This creates confusion.   

MERS states on its website that “MERS is an innovative process that simplifies the way mortgage ownership and servicing rights are originated, sold and tracked.  Created by the real estate finance industry, MERS eliminates the need to prepare and record assignments when trading residential and commercial mortgage loans.”

So let’s examine this statement.  MERS was created by the real estate finance industry, meaning those big banks that produce home mortgages.  They also eliminate the need to prepare and record assignments, which is contrary to the way mortgage ownership has been recorded since the founding of this country.

MERS was created by banks, for banks, to satisfy their interests and also to limit their liability since MERS is on the original mortgage and note as “nominee” only.  What this actually means is really contentious and there is no definitive answer, yet, since courts are now faced with this issue. 

In addition to tracking ownership and servicing rights, MERS has taken on another more aggressive legal role.  When closing on a home, the lender (example Wells Fargo) lists MERS as the mortgagee of record on the actual paper mortgage, rather than the lender who funded the loan.  When recorded, the mortgage is under MERS, even though MERS does not solicit, fund, service or actually own any of the mortgages.  MERS continues to be the mortgagee for the life of the mortgage even after the original lender (Wells Fargo) or a subsequent assignee transfers the loan into a pool of loans that are then sold to investors- a process known as securitization.  MERS is legally involved in the origination of about 60% of all mortgage loans in the U.S. 

MERS justifies its role by explaining that it is acting as “the mortgagee of record in nominee capacity.”  This allows for 2 things: 1) MERS does not have to record any subsequent assignments since it is the mortgagee, thus avoiding county recording fees on millions of mortgages- this amounts to millions in savings for the banking industry. 2)  MERS brings foreclosure proceedings in its own name, rather than the actual owner of the loan, which is often a trust owned by investors.  This eliminates the need for the trust to foreclose in its own name or reassign the loan to a servicing company to bring the foreclosure suit.  This does create a host of legal problems.  For example, does MERS have standing to bring a foreclosure action?  Is MERS considered a debt collector under the federal Fair Debt Collection Practices Act?  

Why is this important?

Million of foreclosure documents produced by MERS may have been signed in MERS’s name by people without the power to do so.  A lack of authority to sign these crucial documents calls into question their validity.  While the full scope of its ramifications continues to remain uncertain, this creates more uncertainly in the already murky swamp of foreclosures.

MERS tracks and holds mortgages in a huge electronic database that is created, financed and maintained by its “members” who are the giants in the residential mortgage business.  This database simplifies securitization and makes it cheaper by foregoing the requirement that every change in ownership of a mortgage be recorded in the county where the mortgaged property is located.

Instead of recording the documents as required by law and has been the rule for countless decades, the mortgage is recorded in the name of MERS one time only, and all other transfers of ownership of the note and mortgage in the future, are tracked by the MERS system.  However, entering data into the MERS database is optional for its members.  MERS Chief Executive R.K. Arnold told Congress that “members tend to register only loans they plan to sell.”

The land registering system in each county is losing tens of thousands of dollars since MERS is helping banks bypass the recording process.  In fact MERS boasts of saving the “industry up to $200 million annually by creating an electronic clearinghouse for mortgage ownership rights and information.”

What’s more interesting is that MERS has no employees.  MERS members upload and manage their own data, and whenever a MERS member wants MERS to do something for it, the member just tells a MERS “certifying officer,” roughly 20,000 of them, to do whatever that member wants.  These certifying officers who have a traditional corporate title like vice president do not report to anyone at MERS and do not get paid by MERS.  The only link to MERS is a corporate resolution signed by MERS Secretary Hultman appointing them as officers of MERS.  How and who is appointed a certifying officer has come under attack.  When Hultman was deposed last April, he pointed to a 1998 corporate resolution giving him the power to approve certifying officers.  However, the resolution appears to say that only member employees can be certifying officers.  MERS CEO Arnold told Congress that “MERS relies on specifically designated employees of its members, called certifying officers.”  Regardless of this, Hultman has made numerous attorneys at law firms initiating foreclosure lawsuits for MERS member banks certifying officers.  Further, the resolution that authorizes Hultman to approve certifying officers was originally adopted by an earlier incarnation of MERS, and it may not have been ratified by the current version of MERS.  So unless the current MERS ratified the authorizing resolution or replaced it with a new one, that authority ended by January 1, 1999, when the current MERS was established.  During his deposition, Hultman said he did not know if the current MERS ratified his appointing power.  However, as corporate secretary he is in the best position to know this information.  Mark Malone, the former New Jersey assistant U.S attorney and former New Jersey deputy attorney general who took Hultman’s deposition in April, indicated that Hultman has not turned over evidence that MERS had ratified his power.  Lastly, Hultman’s power to appoint is rooted in MERS’s bylaws, which gives only the board of directors the power to choose officers.  A board of directors cannot pass resolutions that violate their company’s bylaws.  So even if MERS did ratify his power to appoint, it may be invalid anyway.

What Hultman states in the resolution he signs is false according to Malone.  Hultman is not saying he is signing according to the power delegated to him by the board, but rather the board met and adopted a resolution, and what he is signing is a true copy of that resolution.  Malone says this is also false since there is no original resolution that it is a true copy of. 

MERS had 66 million mortgages in its database at one point, and currently has about 31 million.  So this begs the question… how many foreclosures were achieved throughout the Unites States using documents that these “certifying officers” signed and how many pending foreclosures are based on these fraudulent documents?

Homeowners facing a foreclosure lawsuit in New York and elsewhere must be aware this is going on and must consult an attorney so that they can challenge any MERS signed documents.  This is a growing problem that must be addressed by the borrowing public, state and federal authorities.

By: Eran D. Grossman, Esq.

New York attorney files class action lawsuit against Steven J. Baum and Merscorp, Inc.

Attorney Susan Chana Lask filed a Federal class action lawsuiton on behalf of thousands of New York homeowners who lost their homes to an alleged foreclosure fraud orchestrated for many years by “foreclosure mill” attorney Steven J. Baum and major mortgage companies that they do business with.  The case is filed in the United States District Court, Eastern District of New York, captioned Campbell and Miller vs. Steven J. Baum, Esq., Steven J. Baum, P.C., Merscorp., Inc., et al., case number 10-3800. It alleges among other things, Racketeer Influenced and Corrupt Organizations Act (RICO) civil racketeering violations, wire fraud, fraud and deceipt, false oaths, unjust enrichment, RESPA violations, Fair Debt Collection Practices Act (FDCPA) violations and that homeowners paid inflated foreclosure and other fees fictionalized by Steven J. Baum and/or his agents and/or employees who profited from the scheme since about 2005.  The complaint seeks punitive damages.


The lead attorney, Susan Chana Lask, discovered the alleged scheme after a foreclosure suit was filed by attorney Steven J. Baum, P.C., representing the lender HSBC, against her clients Caroll Gardens home located in Brooklyn, New York. 


The court filings in the case were allegedly false as filed in HSBC v. Concepcion Campbell, New York Supreme Court, Kings County, index number 20393/07.  Baum’s complaint was HSBC against Campbell.  However, it admited the loan was never assigned to HSBC, yet Baum sued representing HSBC anyway.  A satisfaction of mortgage was not filed for HSBC but for Mortgage Electronic Registrations Systems, Inc. (MERS) thus admitting HSBC never owned the loan- meaning the foreclosure lawsuit should have never been filed in the first place.  The original mortgage was in MERS’s name and never assigned as required in a foreclosure lawsuit in New York.  Potenitally thousands of homeoowners were foreclosed upon in New York in similar fashion, specifically those homeowers who were not represented by a lawyer in their case.  The class action complaint alleges that Baum did this knowlingly and intentionally.


Wait there more.  The documents filed in court are signed by attorneys working for Steven Baum’s law office under penalty of perjury that the filings are with knowledge of the transaction and/or documents.  In reality though, they had no knowledge as they admit they do not have the documents in their possession that they attest to in the court filings.


In the underlying foreclosure case, Susan Chana Lask subpoenaed Baum’s firm for the original note, to wit, Baum’s office responded in an email that the original note is not required in the State of New York and “we do not have the original note” implying they never had it, yet they swore they reviewed it in their court filings under penalty of perjury.  Moreover, Baum filed documents signed by an alleged officer of MERS named Rebecca A. Cosgrove and witnessed by a notary public from Erie County, New York.  MERS is located in Virginia and Erie County is in Buffalo, New York where Steven Baum’s office is located.  It’s thus suspicious that  Cosgrove is even an officer of MERS, no less that she flew all the way to Buffalo New York that day just to sign a document before a notary public in Erie county, new York.   The class action alleges that Cosgrove is not an officer of MERS and that the notary is a fraud. 


The false foreclosure filings potentially affect thousands of New Yorkers who were foreclosed upon by Baum’ office and those like it.  The Manhattan U.S. Trustees office started an investigation of Steven Baum months ago.


People are being victimized by the economic crisis who do not know how to defend themselves nor have the means to hire a qualified attorney.  People are losing their properties although these filings are false and known to be false by those instituting the foreclosure process.


The MERS system basically allows banks to avoid recording loans in the proper owners name, which saves the banks recording fees and allows them to resell the mortgage under different names that are harded to trace if not recorded in the county where the property is located.  Banks profit at every turn through the mortgage maze, starting with fees charged at a closing (origination), then reselling the mortgage on the secondary market to investors, then foreclosing to take the property and selling it at fair market value.


The borrowing public must be informed of developments in the foreclosure crisis in New York and elsewhere.  Do not let banks walk all over you during the foreclosure lawsuit.  Make sure you speak to a qualified lawyer so that your rights are fully protected.


By: Eran D. Grossman, Esq.   

What is at the core of residential Foreclosure Defense in 2011?

A person’s shelter is connected to his core, its necessity for survival can be compared to the need to eat or sleep.  It represents a sense of security and independence in a world filled with challenges and danger.  Shelter is what is under attack when the bank is trying to foreclose on your primary residence. The good news is that the massive banking institutions that are paying big bucks to law firms to foreclose on the American homeowner are rotten to the core with ethical, legal, and often criminal taint.   

A very reasonable argument could be made that the massive securitization fraud run by the upper echelons of the banking institutions artificially inflated and then crashed the real estate markets, and the American economy with it. The securitization system allowed for the creation of easy money by offering debt without limit.  Everybody could get a mortgage, and even if you have no income, no problem!  It was a free for all, that brought with it massive greed, fraud, and criminal activity.  Often in that order.  Once the mortgages are signed, the banks now become the owners of the promissory note- which to them is just as good as cash. 

With millions of promissory notes created by the American peoples’ sweat and brow, commercial and investment banks created fancy securitization and financing products that allowed them to sell the aggregated promissory notes for exponentially greater values then on their face.  Thanks to convenient accommodations from the insurance companies (i.e. AIG) insuring these transactions and investment ratings agencies grading them AAA.

Because of the billions of dollars in sales being generated from the sale of these mortgage backed securities, word was put out on the street that they need as many of these mortgages as possible, and artificially created money flooded the system.  This was indeed aided by government laws, regulations and de-regulation going back to Clinton with the HUD, FANNIE and FREDDIE- which in time created spreadsheets filled with “exotic loans.”   Of course the only thing fancy about these loans was how fraudulent they were.

For example, homebuyers’ Earnest and Joy needed a 400k mortgage to buy a modest home. Since they were making 60k per year would have to pay ~$2,400 monthly in principle and interest (at 6%). When we compare that to Obama’s HAMP program, quite glaring in classic self-destructive form, fraud once again shoots itself in the foot. HAMP says that such an individual, under the Making Home Affordable should pay a monthly PITIA payment (principle+interest+insurance+taxes) of close to $1,500, which is what our couple budgeted as affordable.  Clearly there is this obstacle between Joy’s goal of owning this home:  however, the broker from SCAMS Mortgages saves the day.  He tells them about an exotic mortgage where they only pay $1,500 per month for five years.  They jump on it, Earnest is confident he will increase his salary, and Joy also has good prospects.

After five years of struggling to make payments, poor Earnest and Joy started defaulting because they could not afford $2,400. Especially since Joy is now living off of unemployment and Earnest’s company halted all raises and bonuses.  After 60 months of paying $1,500 interest only payments ($90,000 total), the bank files for foreclosure on them and they face the risk of losing their shelter, their down payment and all the improvements they made. The fanciness of the mortgage they signed induced them to give away equity in their property under the false pretense of stability, though temporary.

The only business model that would sanction such mortgage instruments is one that wants to collect as much money as possible from homeowners’ and then take their properties from them and sell them for full value. I would venture to say that this model may possibly be the main reason such mortgage fanciness ran rancid.  Throw in all the major players like Lehman Brothers, Bear Stearns, Washington Mutual, Merrill Lynch, IndyMac Bank, Countrywide, AIG, Fannee Mae, Freddie Mac, MERS, and on and on.  Add also the victors, Chase Bank, Citibank, Bank of America, Wells Fargo, and others.  As if things didn’t start rotting yet, give these foreclosures to lawyers to serve their interest by serving people with papers and take them to court.  What you get is a mess so bad and so deep that an attorney armed with the laws of this country should wreak a lot of havoc in court.  Foreclosure defense with these types of loans in its simplest form is letting the superwealthy crooks know that you know what skeletons they have in their closets.

By: Alexander Levkovich, Esq.

Elements lender must establish in a foreclosure case.

Usually the suing party is the lender, servicer, company or entity stating that they own the note and are the party seeking foreclosure against the homeowner.  The lender is the plaintiff and the homeowner/borrower is the defendant in the case.

The plaintiff must establish that:

1) Establish the existence of the mortgage and note;

2) Prove it was the owner or holder of the note and mortgage at the time that it commenced the foreclosure action;

3) Prove that the defendant defaulted.

A plaintiff may prove ownership of the note by demonstrating that it was the assignee of the mortgage and the underlying note or the assignee of the mortgage and by endorsement the holder of the note at the time that the action was commenced.

This is called Standing.  Standing requires an inquiry into whether the plaintiff litigant has an interest in the claim at issue in the lawsuit that the law will recognize as sufficient predicate for determining the issue at the litigant’s request. Where standing is raised as an issue by a defendant’s answer, the plaintiff must prove it has standing if it is to be entitled to relief.  Standing is an aspect of justiciability which, if challenged, must be considered at the outset of any case.  Standing is critical to move forward in the case and is a threshold question.  If standing is denied by the Court, the pathyway to sue is blocked, and therefore the case cannot go forward. 

A foreclosure of a mortgage cannot be brought by one who has no title to it, and an assignee of such mortgage does not have standing to sue unless the assignment is legally complete at the time the action was initiated.

The Court is the decider of whether or not standing exists when the suit was filed as a matter of law. Without the above elements, a plaintiff cannot proceed in a foreclosure action. 

If you or anyone you know is a defendant in a foreclosure lawsuit, be fully informed about your legal rights.  The more knowledge you have the more leverage you will gain in trying to work out a mutually agreeable resolution.  Without knowing your legal rights, the lender may skip some steps, and without calling them on it, you may waive crucial rights in defending your home. 

Should you have any questions in a New York foreclosure, do no hesitate to call

Eran D. Grossman, Esq. at 212-227-6755.

Depositions of Robo-Signers appear on YouTube

A Florida foreclosure defense attorney, Christopher Forrest, posted the depositions of three robo-signers  on youtube.  This footage gives a rare but very real glimpse into the shady world of robo-signing and how their work is carried out.  Three robo-signers, Crystal Moore, Bryan Bly and Dhurata Doko are questioned about their work for lending servicer National Title Clearing (NTC).  Some of the answers to questions are appalling and makes you scratch your head.  For example, one of the answer Ms. Doko, a former hotel maid, gave was "i don't usually read the docs i sign." "I just look for my name and sign."  She and her colleagues signed thousands of mortgage documents a day.  Whats even more disturbing is that they did not know basic mortgage terms or what documents they were signing.  They did not know what an "assignment of mortgage" was, a crucial document in foreclosure proving who the holder of the note is.  When asked if she was a vice president of the company as stated in the document she signed, she answers "I dont pay attention to that." When asked if she signs as vice president of the company or as a witness, she answers "I just sign my name." 
Banks have seized about 900,000 homes through the first 10 months of 2010 and are on pace to foreclose on more than a million homes by the end of the year.  Judges will have the ultimate say over the process and how these cases play out in court.  Some judges throughout the country are questioning the validity of the documents that lenders are presenting in court to prove their case.  With that being said, stay tuned for more as we uncover what is happening during the foreclosure process/crisis in the United States.

See the depositions here:
 http://www.youtube.com/watch?v=QS-zPBelnVw
 http://www.youtube.com/watch?v=pkApYwxJku8      http://www.youtube.com/watch?v=an0p56mq7Ok
 http://www.youtube.com/watch?v=mw0TqLJfzsA      http://www.youtube.com/watch?v=JaAq5cgDuC4





      

Robo Signing- Whats going on?

Documents submitted to a court are sworn to and therefore presumed to be true and accurate on its face.  If the information contained therein is not verified as so stated, that is very troubling should a court find out- in fact it may be fraud upon the court.

Over the last several months we have heard nationally that banks and/or their service providers have engaged in
robo-signings- which has caused significant concern to the courts and goverment authorities. 

So what is Robo-Signing?
Essentially a robo-signer is a person who in a short period of time signs hundreds or even thousands of documents (in a foreclosure case) and swearing in those documents that they have personally reviewed the mortgage documents, when in fact, they have not. 

In a recent Palm Beach County Florida foreclosure case, Indymac Federal Bank, FSB v. Machado, (Fifteenth Circuit Court in and for Palm Beach County, Florida), an admitted robo-signer, Erica A. Johnson-Seck, employed by OneWest Bank, swore at her deposition that she signed about 750 mortgage documents a week, without a notary public present, does not spend more than 30 seconds signing each document and doesn not read the documents before signing them.

So why are banks doing this?
One of the reasons is that when a lender wants to foreclose on a property, they must prove that they have standing to sue, meaning that they in fact own the note and accompanying mortgage.  The problem arises in that the securitization of mortgages and changes in ownership of the the debt can make it cumbersome for lenders to establish the chain of title in ownership of the note and the production of original documents.  Its especially difficult when lenders are initiating large number of foreclosures and are crunched for time.  One major foreclosure company Lending Processing Services, Inc. rates attorneys on how fast they complete the process, giving lawyers green, yellow and red labels to reflect the Attorney Performance Rate.  If an attorneys office is in the red for too long, they will not receive any more business from the banks that LPS works for.  This creates an environment where time becomes money, so rather than take the time to produce the correct documents, they employ robo-signers to cut corners, and we are all seeing the results of this.  LPS, in its 2009 Form 10-K, filed with the U.S. SEC, states that it is "a provider of integrated technology and services to the mortgage lending industry, with market leading positions in mortgage processing and default management services in the U.S.; we offer lenders, servicers, and attorneys certain administrative and support services in connection with managing foreclosures, our two largest customers, Wells Fargo Bank, NA and JP Morgan Chase Bank, NA each accounted for more than 10% of our aggregate revenue."  LPS is the subject of a federal criminal investigation related to its foreclosure document preperation.  ON October 13, 2010 the Florida Attorney General issued to LPS an "Economic Crimes Investigative Subpoena Duces Tecum" seeking various foreclosure documents prepared by LPS and employment records for various robo-signers.

Warning: If you or anyone you know is facing a potential foreclosure, make sure you have an attorney scrutinize the loan documents.  You may be able to save your home or work out a meaningful modification to remain in your home.

Eran D. Grossman, Esq. 

Attorneys General in all 50 States Probe Foreclosures

Attorneys General in all 50 United States opened a joint investigation into home foreclosures stating they will seek an immediate stop to all improper practices at banks or mortgage companies.  The AG's began a coordinated inquiry into whether banks and their loan servicers used false documents and/or signatures to justify hundreds of thousands of foreclosures.  Iowa Attorney General Tom Miller is leading the probe and intends to establish independent monitoring.  Goverment officials in at least 10 other states including Ohio and Florida have previously announced separate probes into questionable foreclosure practices. 

Ohio’s AG recently announced that he sued Ally’s GMAC Mortgage Financial Inc. in state court, claiming the GMAC unit committed fraud and violated state consumer law by filing false affidavits in foreclosure proceedings. On October 8, 2010 Bank of America Corp., the largest lender in the United States, extended a freeze on foreclosures to all 50 states as concern spread among federal and state officials that homes were being seized based on faulty or fraudulent documents.  Litton Loan Servicing LP, a mortgage-servicing business owned by Goldman Sachs Group Inc., also stated on October 8, 2010 that it was halting some foreclosures to review how they are handled.

As part of the probe, the group established an executive committee of legal officers from 12 states. The group’s initial goals include stopping improper foreclosures, reviewing past and present practices by mortgage servicers, evaluating potential remedies and establishing a mechanism for more effective independent monitoring of future mortgage foreclosure practices.

Some lenders have acknowledged that employees have completed affidavits without confirming their accuracy.  In a deposition of a foreclosure case in West Palm Beach, Florida, a GMAC employee stated under oath that a team of 13 people signed about 10,000 documents a month without verifying them.

Based on recent developments, affidavits and other documents have been signed by persons who did not have personal knowledge of the facts asserted in the documents and many affidavits were signed outside the presence of a notary public, contrary to state laws.