The foreclosure fraud bombshell has hit the fan. Updating an earlier post, Bank of America has now halted foreclosures in 23 states:
Bank of America is joining JPMorgan Chase and GMAC is suspending foreclosure processes in 23 states that weren't reviewed properly.
A BoA exec admitted she signed up to 8,000 documents in a month and typically did not read them.
Connecticut has halted all foreclosures:
Connecticut Attorney General Richard Blumenthal on Friday ordered a moratorium on all foreclosures by all banks for 60 days--the most radical action taken by a state on issue of document irregularities.
California also expanded the moratorium on foreclosures it announced last week on Ally Financial foreclosures to include those by J.P. Morgan Chase.
Calling the companies' review of key foreclosure documents "a ruse," California Attorney General Jerry Brown (D) ordered J.P. Morgan to prove it is following the law before it continues foreclosures in the state.
Both J.P. Morgan Chase and Ally have frozen foreclosures in 23 states because some employees had signed off on foreclosure paperwork without properly reviewing the files.
Colorado and Illinois have stopped foreclosures by Ally and at least seven other states have launched probes into the issue. But Connecticut is the first to institute an industry-wide ban.
The robo-signing of affidavits has hit mortage title insurance companies:
Title insurance protects home buyers against losses arising from disputes over the ownership of their property.
In recent weeks, controversy has erupted over employees of mortgage lenders or servicers who sign thousands of affidavits supporting foreclosures that have to be cleared by judges in many states. These employees have become known as robo-signers because they sign so many documents in such a short time.
Below is the original post, written 9 days ago, on the start of the bombshell tidal wave of news, injunctions, halts mentioned above.
Something is amiss in Florida with foreclosures. Something is amiss nationally with foreclosures. When one is foreclosed on, the creditor must file an affidavit with the court. It seems GMAC was manufacturing 10,000 fake affidavits per month. That's right. Signing judgment affidavits, which evict real live people, without checking the statements and data contained within as even being correct. Get's worse. The courts are so overwhelmed, they are processing cases like the delousing chambers at Dachau.
Bloomberg broke the story when GMAC suddenly stopped foreclosures in 23 states. GMAC is the 4th largest mortgage originator. Seems there is a huge problem with foreclosure mills, evicting with improper procedure.
Florida Attorney General William McCollum in August announced an investigation into three law firms that represent loan servicers in foreclosures. McCollum issued subpoenas to the firms, which are alleged to have submitted fraudulent documents to the courts in “numerous occasions” or failed to submit documents at all, according to an Aug. 10 statement from McCollum’s office.
“Thousands of final judgments of foreclosure against Florida homeowners may have been the result of the allegedly improper actions of the law firms under investigation,” the statement said.
Congressman Alan Grayson even wrote a letter to the Florida Supreme court asking all foreclosures be stopped by court order:
September 20, 2010
Chief Justice Charles T. Canady
Florida Supreme Court
500 South Duval Street
Tallahassee, FL 32399-1900
Dear Chief Justice Canady,
I am disturbed by the increasing reports of predatory ‘foreclosure mills’ in Florida. The New York Times and Mother Jones have both recently reported on the rampant and widespread practices of document fraud and forgery involved in mortgage assignments. My staff has spoken with multiple foreclosure specialists and attorneys in Florida who confirm these reports.
Three foreclosure mills - the Law Offices of Marshall C. Watson, Shapiro & Fishman, and the Law Offices of David J. Stern - constitute roughly 80% of all foreclosure proceedings in the state of Florida. All are under investigation by Attorney General Bill McCollum. If the reports I am hearing are true, the illegal foreclosures taking place represent the largest seizure of private property ever attempted by banks and government entities. This is lawlessness.
I respectfully request that you abate all foreclosures involving these firms until the Attorney General of the state of Florida has finished his investigations of those firms for document fraud.
I have included a court order, in which Chase, WAMU, and Shapiro and Fishman are excoriated by a judge for document fraud on the court. In this case, Chase attempted to foreclose on a home, when the mortgage note was actually owned by Fannie Mae.
Taking someone's home should not be done lightly. And it should certainly be done in accordance with the law.
Thank you for your consideration of this request.
Member of Congress
Of course GMAC denies, they are running a foreclosure factory, claiming it's just a technical issue. That said, the New York Times reported that the courts are overwhelmed homeowners are only getting a 5 minute hearing. That's not cool. Supposedly in the United States, everyone is entitled to a fair and full hearing.
The Florida Supreme Court has consistently recognized the need to hire retired judges on a temporary basis, Mr. Combs said, and has ruled that such a “temporary” use is constitutional.
But because the retired judges are being given foreclosure assignments “repeatedly and consecutively” to the point of usurping the elected judges’ jurisdiction over all residential foreclosure cases, he said, their use may not qualify as temporary and could thus violate the Florida constitution.
The fact that these judges are being paid to reduce the court’s case load creates a perception among homeowners that the judges have a financial interest in dispensing cases prematurely, Mr. Combs said, creating a potential bias against borrowers and possibly violating their right to due process.
He pointed to a recent case in Broward County in which a retired judge refused to postpone a borrower’s foreclosure sale even though the bank had agreed to it. The judge stated that she was there to “dispose of cases.”
“If you are an individual whose house is being foreclosed and you hear these judges are being paid to clean out the backlog, under a realistic appraisal of human tendencies, do you think that the average judge would be biased in favor of prematurely terminating your case to clean out the backlog?” Mr. Combs asked.
J. Thomas McGrady, chief judge in the Sixth Judicial Circuit, said in a press release announcing the program: “We have to clear these cases because of the negative impact they are having on other civil litigation. The real estate crisis has placed a tremendous burden on our judges, and people with other types of pending litigation are also entitled to their day in court.”
Yves Smith on Naked Capitalism asks, How Serious is the GMAC Problem? Pretty Serious and Not Just GMAC, is the problem limited to GMAC Mortgage?
GMAC Mortgage and other banks may hope to sell the story line that its problem is limited to a lone “rogue servicing officer.” Unfortunately, the servicing officer in question indicated in his testimony that he prepared 10,000 or more affidavits per month, so it strains credulity to think that GMAC management was ignorant of his actions.
Lovely, while the Banksters get trillions, millions of people are being treated like financial cattle, even through our court system.
We will assuredly be hearing more on this one. From the Bloomberg article a quote:
“All the banks are the same, GMAC is the only one who’s gotten caught,” said Patricia Parker, an attorney at Jacksonville, Florida-based law firm, Parker & DuFresne. “This could be huge.”
Q2 2010 foreclosures by state. Notice Florida is foreclosure ground zero.
Rep. Grayson also wrote a letter to Fannie Mae on this subject: on stopping fraudulent foreclosures. It’s not clear if Fannie/Freddie are going to stop using foreclosure mills, as the letter asked. The mills are still in Fannie Mae's Retained Attorney Network.
Alan Grayson is hot on this story and below is an incredible video clip describing how bad foreclosure mills are. Note you get to talk to someone in India about your foreclosure.