A couple of articles of interest from around the country regarding the foreclosure process.
Fraud-closure Biz Fizzles Out
Bank lawyers prosecuting the 80,000 foreclosure cases in New York are all but admitting that the cases they have filed over the past number of years have been riddled with fraud.
In the three weeks-plus since New York State Chief Judge Jonathan Lippman put the foreclosure lawyers on notice that any fraud in foreclosure paperwork would be met with severe penalties — he is making lawyers sign affirmations promising they took “reasonable” steps to make sure the legal papers are true — practically no new foreclosure cases have been filed, The Post has learned.
And existing cases have ground to a halt, a source close to the state’s foreclosure practice said.
“Banks do not want to be the first to test the new rules,” the source said.
The virtual shutdown of New York’s foreclosure business comes despite chest-thumping, bravado-filled statements made by some banks in October that they had nothing to be afraid of when it came to foreclosure fraud and that the lawsuits aimed at kicking delinquent homeowners from their houses would continue shortly.
It seems lawyers pressing the foreclosure cases are not willing to bet their law licenses on such claims.Read more: New York Post
Foreclosure mess prompts growing number of public officials to slow down process
“Because the court is now on notice of the potential flaw in the system, we decided that we couldn’t turn a blind eye toward that,” Judge Eileen P. Gallagher, head of the Cuyahoga County court system’s foreclosure committee, said in an interview.
One month ago, the city of Chicago and the surrounding suburbs of Cook County became a foreclosure-free zone. It wasn’t the banks or judges that instituted the moratorium, because they were still moving cases forward at a rapid clip. The holdup was elsewhere: at the sheriff’s office.
Sheriff Thomas J. Dart, whose office is responsible for physically evicting delinquent homeowners, announced Oct. 19 that his deputies would “no longer be doing the banks’ work for them anymore.”
“I can’t possibly be expected to evict people from their homes when the banks themselves can’t say for sure everything was done properly,” he explained.
After reading about problems such as banks “robo-signing” foreclosure documents without verifying their accuracy, Dart asked that attorneys for mortgage companies sign something personally confirming that evictions are justified. None did. So Dart has refused to honor their requests.
There’s now a backlog of over 1,000 evictions in his office, and the pile is growing each day.
Frustrated by the banks’ response to the foreclosure mess, a growing number of public officials – including chief judges, attorneys general and sheriffs from jurisdictions big and small – are pushing the boundaries of their powers to slow down foreclosures in their areas.
The new challenges are throwing a wrench into the plans of mortgage companies, which in recent weeks have tried to put the robo-signing mess behind them by rapidly reviewing or fixing their paperwork and resuming foreclosures. Such challenges, experts say, are likely to further prolong a foreclosure process that already takes an average of 16 months to complete – helping homeowners facing eviction but hurting the still-fragile housing market.
The allegations of improper foreclosures “have incited something of a populist revolt, and it’s become a political issue,” said Clifford Rossi, a former Citigroup lending official who teaches business at the University of Maryland. While there seemed to be some optimism in the industry that the worst of the crisis has passed, the new roadblocks are “again creating an air of uncertainty,” he said.
In D.C. and Maryland
In the District, for example, Attorney General Peter Nickles said on Oct. 27 that the law requires every transfer of a mortgage from one party to another to be recorded within 30 days of the transaction. That created an opening for foreclosure challenges; such transfers often went unrecorded when mortgages were packaged and resold as investments on Wall Street through the securitization process.
In Maryland, the state’s highest court adopted an emergency rule on Oct. 19 allowing judges to appoint experts to study paperwork in foreclosure proceedings and to require lawyers to swear to their accuracy.
And in New York state, the chief judge on Oct. 20 issued an order similar to Dart’s, requiring that attorneys for mortgage companies sign affidavits saying they had verified the accuracy of the documents submitted, under “penalties of perjury.” Ohio’s Cuyahoga County, which includes Cleveland, followed suit last week. The county’s judges also said they would give mortgage servicers 30 days to ensure their paperwork is sound – or their cases would be dismissed.
Catch the rest Washington Post
Keep em comin Ariana…