Major Servicers Face Possible Suspension of Foreclosures in New Jersey Over Robo Signing

We had questioned the cheery assumption of the major banks regarding their robo signing abuses, namely, that they could simply resubmit their improper court documents and proceed as if nothing had happened.

Improper affidavits are a fraud on the court, and robo signing is the mass, deliberate production of fraudulent submissions. Some jurisdictions, like New York and Florida, are requiring that attorneys certify the accuracy of documents presented in foreclosure. New Jersey is going one step further by having a Supreme Court justice demand an appearance by six major servicers to explain why their foreclosure operations should not be suspended. I suspect the sort of sanctimonious explanations we’ve seen in Congressional hearings, “We act to correct mistakes as soon as they come to our attention,” would not go over well.

From Associated Press (hat tip April Charney and Lisa Epstein):

Six lenders who have combined to file nearly 30,000 foreclosure actions in New Jersey this year face the possible suspension of their operations next month under a court order announced Monday by state Supreme Court Chief Justice Stuart Rabner.

OneWest and five other lenders were ordered to appear in state Superior Court in Trenton on Jan. 19 to demonstrate why the state shouldn’t suspend their foreclosure actions. The others are Ally Financial, formerly GMAC; BAC Home Loan Servicing, a subsidiary of Bank of America; JP Morgan Chase’s Chase Home Finance; Wells Fargo Financial New Jersey and CitiResidential Living, a subsidiary of Citibank.
“It’s important that the judiciary ensures judges are not rubber-stamping documents that may not be reliable,” Rabner said in a conference call Monday….

He said he believes New Jersey is the first state to take such action against mortgage lenders, a view echoed by Ira Rheingold, an attorney and executive director of the Washington-based National Association of Consumer Advocates, which has tracked the foreclosure crisis.

“To have a state Supreme Court haul in these lenders, it’s something I have not seen reach this level,” Rheingold said…

Rabner announced that 24 other lenders will be required to submit documentation to a special master, retired state Superior Court Judge Walter R. Barisonek, to demonstrate that there are no irregularities in their handling of foreclosure proceedings. Rabner stressed that that group of lenders has not been accused of wrongdoing and was selected because each had processed at least 200 foreclosures this year.

The six lenders scheduled to appear in court next month have processed more than 29,000 foreclosures in New Jersey this year, Rabner said. The other 24 have filed about 16,000. The total represents nearly three-quarters of the 65,000 foreclosures filed in New Jersey, a number that has tripled since 2006, Rabner said.

More problematic, he said, is that 94 percent of the foreclosures have been uncontested, often due to homeowners’ inability to afford legal counsel.

“That means there’s no meaningful adversary process to protect them,” Rabner said.

The Supreme Court on Monday also issued an order requiring attorneys in all residential foreclosures to certify that lenders have reviewed documents for accuracy and confirmed the accuracy of all court filings.

Given the level of abuses, and the continued malarkey coming from banks, in particular their insistence that there were no errors in their foreclosure processes, when media reports have found numerous examples to the contrary, this sort of measure is long overdue. I hope the New Jersey measure emboldens the supreme courts of other states to take similar measures, since the banks have made it abundantly clear that they will do no more than make pro forma changes. We’ll know real change is on the way when we see attorneys disbarred over abuse of court procedures in foreclosures.

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12 comments

  1. kravitz

    The story led the WNBC-TV4 11PM News. Meaning, it’s getting clearer to understand and explain. Andrew Siff didn’t get into too much detail, but it was impressive nonetheless.

  2. YY

    Shouldn’t lawyers be losing their bar licenses on basis of fraud like this? This is not a rhetorical question.

  3. Barbara Ann Jackson

    Whether or not some people never should have been given mortgage loans; and whether or not homeowners realize any legal basis to challenge foreclosures, it is urgently important to look white collar foreclosure activities! Also, illegal, fraudulent foreclosure causes useless deeds for property sales; title insurance denials, blight –and more. http://chn.ge/eU2zAm

    Furthermore, some PREDATORY mortgage loans are issued for the very purpose of default so that properties can become flipped, repeatedly (hence blight); and lenders gain tax credits, mortgage-default insurance, and more! Additionally, too often, not only has the lender NOT filed foreclosure, certain homes wound up being flipped by the foreclosure mill lawyers who execute simulated auctions whereby “straw buyers” fraudulently “credit bid”!

    White collar foreclosure fraud entails intentionally fraudulent foreclosures naming defunct mortgage companies, or having no ownership of notes; unfair fees beyond “Acceleration Clauses” that impairs borrowers’ ability to repay arrears; falsified Bankruptcy Court motions to “Lift Stay” for accomplishing”simulated” foreclosure auctions via “straw buyers.” And lawsuits against foreclosure lawyers for fraud and “Unfair Debt Collection Practices,” generates more lawyer fees.

    Scores of homeowners do not contest foreclosures because of: not having knowledge of the law in order to recognize legally challengeable foreclosures or fraud; lack funds to pay for attorneys to represent them; homeowners are told to come to foreclosure auctions with money that they do not have, so they stay away from foreclosure auctions. It is extremely troubling that there are families living outdoors whose homes have been confiscated via real estate racketeering!

    *Request for Congressional Foreclosure Panel to Examine Foreclosure Lawyers @ http://chn.ge/eU2zAm

  4. mannfm11

    We can only hope these judges are interested in the rule of law and not in continuing the biggest financial fraud in history. This is a fraud model that has now circled the world.

  5. attempter

    Out of curiosity, I went to Blue Jersey, a self-described progressive blog, to see if there was anything about this.

    http://www.bluejersey.com/

    Nothing about this event, and sparse posts came back when I searched on “foreclosure”. They say it’s reaching crisis levels, they mention Obama’s veto of the electronic mortgage bill, and one poster even implicitly calls upon sheriffs to stop enforcing foreclosures. But really nothing about Foreclosuregate.

    So while I’m not an expert on NJ political blogs (and I suppose I better become one if I’m serious about putting together a presentation about Foreclosuregate and trying to propagate it), based on that evidence there’s not much awareness of this stuff.

    1. Fractal

      check out creditslips(dot)com, firedoglake(dot)com (especially “emptywheel” and posts by David Dayen), and Mike Konczal’s blog at rortybomb(dot)wordpress(dot)com.

  6. Eugene Villarreal

    I’m from New Jersey, I’m in foreclosure and like ” attempter ” says there is much info within New Jersey. Websites like this and others is where I have been getting great info. New York and Florida is where info is coming from that and these websites have been extremely good in giving us homeowners awareness of the foreclosure process and to see the options available if we intend to fight the foreclosure. There are one or two Class Actions in New Jersey that if someone chooses to join. Like most other states, finding a good Attorney that ” Gets It ” is the hardest part in defending your foreclosure because, first, they don’t want to tell you that there’s not enough money to be made, second, they say that you don’t have a case to win. But, you as the homeowner know that you want to do everything you can to keep your home and thinks there is a case. Too many people in New Jersey and the rest of the counrty have justed walked from their homes without knowing that they do have some rights and justifications for trying to keep their homes. I think, NOW, more attorneys will help homeowners because of all the hard work that Attorneys who “Get It”, websites like this and others, foreclosure advocates and extremely good Judges is who we all habve to thank.

  7. Fractal

    Yves, thank you for never giving up on this. This is the bottom line, as you said at the end: “We’ll know real change is on the way when we see attorneys disbarred over abuse of court procedures in foreclosures.”

    I would also like to see whether any new internal operating procedures have been added by state courts to force judges to scrutinize the lawyers’ conduct in order to facilitate discipline and/or disbarments. For example, what are the exact terms of this order by NJ’s highest state court?

    “The Supreme Court on Monday also issued an order requiring attorneys in all residential foreclosures to certify that lenders have reviewed documents for accuracy and confirmed the accuracy of all court filings.”

    If that order were thorough and effectively-targeted, it would require attorneys to verify, on pain of sanctions, the chain of custody of the mortgage notes. It would require attorneys to engage the services of title search firms, at the lenders’ expense, to track assignments of the notes. It would prohibit attorneys and lenders from padding charges to homeowners to recover the cost of tracking assignments. It would explicitly bar attorneys and lenders from using MERS as the service for tracking assignments of notes.

    For your readers in Florida who were looking for ways to require judges to demand truth & accuracy in foreclosure filings, these actions by NJ’s highest court could be a model.

  8. Diogenes

    Many of these mortgage assignments in Mercer and Passaic Counties were robo-signed/submitted by the Zucker Law firm in Mountainside NJ. Clearly, looking at the sheer volume of these documents on a daily basis they cannot be real or legit. The AG in NJ should raid their offices, arrest them and have them disbarred. Many of these mortgages were securitized which seperates the note from the collateral-the property, hence there is no basis for foreclosure. The note has become unsecured, like credit card debt. Also TARP has paid these banks for these bad loans already, hence the loan has been paid off by the UNAMERICAN FEDERAL RESERVE. The bill was given to the American people via the US Treasury via Geithner and Paukson et al. Wake up Americans-you have been robbed twice and now they want to take your real estate on top of it all….Revolution!!!

  9. Ray

    I don’t know where to begin. First, Barbara Ann Jackson has no idea what she is talking about. They do not contest it because there is nothing to contest. The facts are 1. The bank lent money to a borrower to buy a house. 2. The borrower promised to pay it back. 3. The only recourse the bank has to get the money back is through foreclosure.

    No one forced these people to borrow the money. There are no straw buyers from the bank. People are living in their houses for years without paying anything. What is the bank supposed to do? say “don’t worry about it”? “Just pay it whenever you get a chance”?

    Today the bank and thier attornies have to jump through so many hoops just to be able to foreclose on a house. It takes years, there are adjournments, bankruptcies, modifications, mediation, judges who adjourn sales for months. It costs banks tens of thousands of dollars to foreclose on a home and years to do it. The hurdles that they have to overcome are overwhelming.

    I do not say that banks and thier attornies havent made mistakes. But, it is wrong to make them the bad guy.

    Does anyone else have a better idea of what to do when a bank loans money and a borrower stops paying? There is a contract. It was signed by both parties. What do you think the bank should do? Give me some ideas. Remember that the bank does not owe the borrower anything AND has not done anything wrong, but tell me what a bank should do when they lent out say…$400,000 and the borrower stops paying them back…I’m waiting….

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