Md.'s high court will weigh idea of foreclosure 'examiners'
Maryland's highest court will consider a proposal next week that could mean "massive audits" of documents filed by firms trying to foreclose on homeowners.
The committee that proposes rules for the courts, concerned about admissions that people are submitting what its chairman calls "bogus" affidavits, thinks there ought to be examiners looking closely at potentially thousands of case files.
Affidavits are key legal documents, and they're serious business. When you sign them, you're attesting under oath that you have personal knowledge of the facts therein. And you have to sign them yourself.
Unless you've been under a rock the last few weeks, or perhaps put your hands over your ears and cried "la la la" whenever you heard "foreclosure," you're probably already aware that loan-servicer employees have said they're signing so many foreclosure affidavits that they don't have personal knowledge of those therein facts. And two Maryland foreclosure attorneys acknowledged in court documents that their signatures on some affidavits were not in fact made by them.
Court rules committee chairman Alan M. Wilner said in a letter that an examination of affidavits could be required in thousands of files. (In a memo earlier this week, he said judges are "alarmed" by the potential scope of the problem.)
I realize that some of you are exasperated by the slowdown in foreclosures that these revelations have caused. "Who cares how lenders are foreclosing?" some readers have said. "The borrowers didn't pay -- what else matters?"
Homeowner advocates argue that some borrowers did pay or they paid more than they're getting credit for, etc., but let's set that aside for the moment to let Wilner, a retired judge, bring up a larger point:
"In the Committee’s view, the use of bogus affidavits to support actions to foreclose liens on property, apart from prejudice to the homeowners, constitutes an assault on the integrity of the judicial process itself," he wrote in a letter to the Court of Appeals, which will take up the rules proposal next Tuesday.
It's not just about foreclosures. Until now, Wilner notes, "courts, with good reason and really of necessity, have relied on the accuracy of affidavits, especially when filed by attorneys, unless there is something on the face of the document to suggest otherwise or the validity of the affidavit is challenged."
"Evidence that has recently come to light, largely through admissions under oath by the affiants themselves, has shaken the confidence that the courts have traditionally given to those kinds of affidavits," Wilner wrote.
Consumer attorneys have long complained about problematic affidavits filed in credit-card collection cases and similar consumer debt issues. The courts are overwhelmed with these cases, just as they're now overwhelmed with foreclosure suits, so close scrutiny just hasn't been in the cards. But now the rules committee's recommendation could lead to a change in the foreclosures arena.
Scrutiny won't come for free, the committee warns. Its suggestion: charge the plaintiff -- unless the affidavits under review were filed by the homeowner, the defendant in a foreclosure action. The proposal the committee is sending to the Court of Appeals would not allow those charges to be passed on to borrowers as an item on their tab.
Categories: The foreclosure mess
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Comments
Personally I hope the firms and management (especially senior management) are held legally accountable for ignoring the law and effectively lying under oath.
Posted by: Paul | October 16, 2010 8:21 AM
Crams downs are the only fair answer this...Banks can not police themselves...
Posted by: jerry Simon | October 16, 2010 8:31 AM
Mountain
Molehill
Get a grip people. 99.9% of the foreclosures were legitimate because the homeowner wasnt paying their mortgage. Who gives a flip who signed some standard paperwork. For those that had a real error, it will get fixed.
I cant beleive the lemmings are falling for this distraction hook bait and sinker. Y'all like a bunch of housewives in a Rikki Lake audience, shaking your head and giving a collective uh-huh while she interogates a cheating husband.
This is like debating gays in the military while we are at freaking WAR. Who cares? Our country is way over sphinctered.
Posted by: elweedz | October 16, 2010 9:50 AM
I think this "foreclosure crisis" stuff is great for the economy. First - people are living rent free in big homes at least for a few more years thus being able to spend $$ on IPADS, groceries, etc. Second - jobs will be created for lawyers, loan processers and auditors to "examine" documents for years and years. Third - Home Prices will stay artificially high as no new home sales will take place (thus allowing people and maybe banks to pretend homes are worth what they paid for them). Fourth- all the uncertainty will allow an excuse for the welfare for the rich to continue (WE, the FED and taxpayers are STILL GIVING FREE MONEY TO BANKS through 0% interest rates TO TRADE in the stock markets, etc)
This is a strange financially illiterate country we live in. It is great for the rich people who lost their bets to not have to pay up. Listening to Bernnake testify the other day was high comedy.
Posted by: Peter Frailey | October 16, 2010 11:50 AM
If the banks illegally processed foreclosures, they should be held accountable. Even if it is a "technicality", they did not follow the law. There are signed Affidavits they did not read or sign personally. That is perjury and they should all go to jail. The only way to end these illegal practices is to punish those that break the law.
The real issue is not making or not making payments. The real issue is the legality behind enforcing contracts. The "robo signing" of Affidavits is only the tip of the iceberg. The real problem lies in how these loans were securitized. Were these loans properly transferred? Did MERS have the legal authority to transfer a Deed of Trust and NOTE they may not own? Were these documents transfered from originator, to depositor, to the Trustee legally? This is the real problem. These loans may end up being invalid due to how they were sold/transfered.
Posted by: Frank Rizzo | October 16, 2010 3:35 PM
While I think there are grains of truth in assertions that some of this paperwork will result in absolutely legitimate foreclosures (robosigned or not), there still is the separate issue of ensuring that banks and mortgage companies are adequately following process and procedure. It is apparent that yet again that they are not. And make no mistake--there are individuals who applied for NINJA loans, and other individual buyers who also fraudulently reported income. But most of those people were pressed into foreclosure earlier on in the crisis--they do not represent the majority of people facing foreclosure at this point in time. So please keep the vehemence toward those currently in foreclosure to a minimum.
Like it or not, there are a number of unseemly events that have caught the attention of individuals who monitor the real estate and banking sectors as to "new" questionable practices over the past year or so. Some of these involve asking seemingly illegal (and at other times blatantly illegal) questions of mortgage applicants, under the guise of adequately vetting mortgage applicants (i.e., what are your fertility plans? fertility status?). Other reports have come to the forefront about individuals in fine economic standing purchasing foreclosed properties, only to be served with foreclosure paperwork themselves--even though they never defaulted or were late on payments. Add to this the stats that foreclosed-upon houses take much longer on average to close than homes not in foreclosure. Banks aren't exactly leaping to get rid of these properties, unless they can be guaranteed to get the highest price possible.
So given all three of those circumstances (shady questions during mortgage application time, the possibility of being served foreclosure papers in error, and having a bank unnecessarily draw out or stall on selling a foreclosed property), why would anyone wanting to purchase a home really consider purchasing a foreclosed-on property? Particularly when now it has come to light that these companies seemingly hold affidavits and other legal documents so lightly from their end of things?
Simple fact of the matter is that those who were in charge of the financial institutions in the creation of the mortgage and housing crisis are still in charge of the industry, now. Why would anyone think that this group of people suddenly changed their overall business strategies?
End rant.
Posted by: Laura | October 16, 2010 3:46 PM
There are two sides to this.
On the one hand, this has become hand to hand class warfare with the banks. It is reasonable to make them "work for it" if they are going to try and take your home.
On the other hand, this is only delaying the inevitable. These are procedural errors that will not result in any homeowner getting their mortgage or note voided.
Under normal circumstances a valid argument against such delay tactics would be that they are counterproductive to home prices falling to equilibrium. These are anything but normal circumstances and the Fed and its member banks are working to stop or slow the fall. Before you blame a broken market on a homeowner who employs delay tactics, make sure to blame the Fed for using an iron fist on an interest rate that used to be determined by free markets, various Fed subsidies that have allowed banks to be in no hurry unloading these properties, and banks the banks for taking their time as evidenced by already averaging 435 days per foreclosure to slowly drip their shadow inventory into the market .
But alas I'm reminded of a recent quote from Investor's Business Daily: "To some extent, unconventional Fed monetary policy actions may be arcane enough to make them an unlikely target of populist politicians and grass-roots activists."
Posted by: Josh Dowlut | October 16, 2010 4:36 PM
The one question, and its a simple protection, is do we have equal protections under the law?? If so very homeowner has the right to fight, use every technicality, and manipulate the legal system to his advantage, if banks werin a contract that did not suit their needs, they would ligigate the contract out of existence,especially if they found the existence of fraud. Is this america, do we have do process? Ifthe banks left themselves open to the contract with the homeowner possibly being voided, and good for, finally a level playing field, as Govt always sides with the banks.
Posted by: Paul Assante | October 16, 2010 5:55 PM
I wonder if Barry Glazer will get involved.
Posted by: ironhide196 | October 17, 2010 3:08 AM
This issue of borrowers not paying is actually a “separate” issue… Here’s why…
The borrowers went to the bank and obtained a mortgage loan. A mortgage loan is two separate transactions. A Deed of Trust - which remains at the County Courthouse Records - and the Note (Promise to Pay).
The Banks sold the Promise to Pay to another financial institution. That financial institution sold it again and the next sold it again… however, each of those transactions requires these bank & financial institutions to RECORD those sales - pay a fee & taxes each time. Each time that NOTE “transferred” to the next entity - they MUST pay the fees & taxes and record the transaction by “permanently affixing” the signatures & stamps - ONTO the DEED of TRUST. However, these lenders and financial institutions DELIBERATELY did not follow these laws.
The penalty for not following these strict laws is “forfeiture of collateral rights”. These lenders and especially these foreclosure mill attorneys KNOW THESE LAWS because they’ve been the law of this country for eons. THEY KNEW THE PENALTY and did it anyway! This is Tax Evasion - if we fail to pay our property taxes - they take our homes. Fail to certian bills in certain counties, they foreclose and take the property. These lenders FAILED to pay their taxes DELIBERATELY and forfeit the right to take the property. These lawyers are accomplices to the crime and should be prosecuted.
This makes it ILLEGAL for these lenders & foreclosure mills to TAKE the properties from the homeowners no matter if they are paying or NOT paying. Those LAWS are very strict for a reason. These laws are not new. The LENDERS knew the consequences. The reason this is so outrageous is because they are manipulating these families and violating their Constitutional Rights of Due Process and Illegal Seizure of Private Property.
These lawyers and their law firms should be disbarred and their properties confiscated. This is violates the Mortgage Fraud Act passed by O’Malley in 2008. Gansler should force these law firms to shut down - revoke the licenses of these lenders - THEN - allow these borrowers to negotiate a NEW loan and keep their homes.
The borrowers did NOT break the law. They may have made bad decisions but they did NOT break the law. These lenders & lawyers KNEW the law - KNEW the consequences and DID IT ANYWAY… They should be made an example of by our AG.
The real question is WHY are these lenders & foreclose mills willing to break the law and risk so much - unless they reason to hide something else illegal?
How do we know these loans were even legal? They weren’t…
Posted by: Nehemiah | October 17, 2010 6:00 PM
of course you can alway avoid this issue by PAYING YOUR MORTGAGE!
Posted by: double B | October 18, 2010 1:10 AM
bofa is going to resume foreclosures in 23 states next week.
http://finance.yahoo.com/news/Bank-of-America-plans-to-apf-2257980810.html?x=0
Looks like the market will be allowed to correct itself again.
Posted by: ironhide196 | October 18, 2010 4:16 PM
Maryland isn't on the list of 23 states because it's not fully judicial, so it's among those where Bank of America is still reviewing cases.
Posted by: Jamie Smith Hopkins | October 18, 2010 4:25 PM
Great Articles on Maryland foreclosure, corrective affidavits, and updates. Keep it up
Posted by: Joe C | April 16, 2011 4:33 PM
Thanks, Joe C. I don't think the issue is going away soon. Here's the latest:
http://articles.baltimoresun.com/2011-03-08/business/bs-bz-foreclosure-complaints-20110307_1_foreclosure-irregularities-foreclosure-processes-deeds
http://articles.baltimoresun.com/2011-03-31/business/bs-bz-shapiro-burson-freddie-20110331_1_foreclosure-law-foreclosure-cases-firm
Posted by: Jamie Smith Hopkins | April 16, 2011 10:09 PM