Some Foreclosure Mills Disregarding Post-Robo-Signing Requirements

As much as a whole bunch of bank executives and securitization industry types have given Congressional testimony in which they maintained that they were duly concerned about “technical” errors like robo signing and would clean up their act, it appears that follow-through has been less than stellar.

New York State responded relatively promptly and imposed new requirments. On October 20, it issued a new rule requiring attorneys in foreclosure actions to certify that they have taken reasonable steps to verify the accuracy of documents they submit to the court. Although that might sound a tad redundant (aren’t they supposed to be doing that now?), the preamble to the new requirement discussed some of the practices that were cause for concern:

N.B.: During and after August 2010, numerous and widespread insufficiencies in foreclosure filings in various courts around the nation were reported by major mortgage lenders and other authorities. These insufficiencies include: failure of plaintiffs and their counsel to review documents and files to establish standing and other foreclosure requisites; filing of notarized affidavits which falsely attest to such review and to other critical facts in the foreclosure process; and “robosignature” of documents by parties and counsel. The wrongful filing and prosecution of foreclosure proceedings which are discovered to suffer from these defects may be cause for disciplinary and other sanctions upon participating counsel.

Today, published that a single judge, Peter Cohalan, had denied 127 foreclosures under this new provision. Although the site did not offer any commentary, it appeared to regard this development as positive.

I see it as the reverse. Despite some jurisdictions taking a tougher stand and banks piously saying that they had cleaned up their “procedural” problems, it appears relatively little has changed on the ground. Rather than file the required certifications, the lawyers on these cases apparently figured they’d proceed as usual, which puts the onus on the judge to enforce. Or perhaps they are simply playing the odds, and assuming this issue will come up only on contested foreclosures, and those are few enough in number that the cost of delays in those cases is more than offset by the savings on the ones that are rubber stamped by the court.

ForeclosureFraud gives another New York sighting of a failure to provide the needed certification, this time before the famously tart Judge Schack. The bank lawyer’s explanation that it was his client’s, meaning Citigroup’s fault, did not go over very well:

In this foreclosure action, plaintiff, CITMORTGAGE, INC. (CITI), moved for summary judgment and an order of reference for the premises located at 38 Norwood Avenue, Brooklyn, New York (Block 3905, Lot 28, County of Kings). On October 25, 2010, the case was on my motion calendar for oral arguments. The matter was adjourned, pursuant to a short form order, on consent to today. Plaintiff CITI’s counsel agreed to file the affirmation required by the Chief Administrative Judge for foreclosure cases, as per the October 20, 2010 Administrative Order. Plaintiff’s counsel informed the Court, today, that he did not have the affirmation because CITI did not have in place, prior to November 8, 2010, procedures to comply with the Administrative Order of Chief Administrative Judge Ann T. Pfau. The Court does not work for CITI and cannot wait for CITI, a multi-billion dollar financial behemoth to get its “act” together. [*2]

Therefore, to prevent the waste of judicial resources, the instant foreclosure action is dismissed without prejudice.

While New York is providing a window on whether foreclosure mills are really changing behavior, sightings in other jurisdictions suggest not as much as bank PR would lead one to believe. For instance, in Florida, Default Law Group filed a “Motion to Ratify Summary Judgment“, which evidently is novel from a procedural standpoint, and included an argument that the previous affidavit was not a fraud on the court. But the law firm then canceled the hearing on that motion (maybe they realized it might not be too smart to have the judge turn down the motion, since it might be construed to be a ruling on the matter of the affidavits being an abuse). Another judge also questioned the validity of “ratifying” a motion for summary judgment. (Note that Florida plans to raise the summary judgment bar as of January 3 by requiring plaintiffs in foreclosures to attach copies of payment records to summary judgment filings).

Admittedly, we are only in the early stages of the post robo signing adaptation by banks and servicers, so the situation bears monitoring.

This testimony before the House Judiciary Committee by Thomas Cox, the attorney who brought GMACs’ robo signing to national attention, explains why these “procedural” matters are crucial:

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  1. attempter

    Today, published that a single judge, Peter Cohalan, had denied 127 foreclosures under this new provision. Although the site did not offer any commentary, it appeared to regard this development as positive.

    IOW we’re still where we started, dependent upon the accident of whether or not a particular judge chooses to do his alleged job.

    And if we could have relied on judges to do their jobs, the new rules wouldn’t have been needed in the first place. (Sounds alot like the FDA and the “food safety” bill, doesn’t it?)

    But I see even the “good ones” are still dismissing these contemptuous-of-court cases without prejudice. So even they still just tell a brazen criminal, “Don’t make me look bad with such a shoddy forgery. Come back with a better one.”

  2. Omni737

    This is just another example of what America has become – complete disregard for the law and absolute lack of morality.

    And so this will continue until the government begins prosecuting (or even recognizing for that matter), the fraud, lawlessness and lack of government investigation will bring America to it’s knees.

    As long as the criminals on Wall Street, and those related to this mess, feel they can bribe our federal officials to look the other way while they pillage America this will only get worse.

  3. steelhead23

    Let’s see. If enough judges rule that forged paperwork ends a foreclosure proceeding, one would expect that the servicers would bend over backward to get the paperwork right – or at least as right as they can. Instead, they are still hoping to get the “right” judge and proceed merrily along, handing in fraudulent or forged paperwork. To me, this indicates that the servicers are willing to make foreclosures cost the trusts more than absolutely required and that they pass all of the foreclosure costs along to the trusts. Why in the world would anyone purchase a MBS CDO? You guys (insurance companies, pension funds) are the marks in this deal. You got screwed by the originators when you bought the pig in a poke, and you’re getting screwed by the servicers on the back end when the deadbeats don’t pay. Just say no!

  4. Barbara Ann Jackson

    1. They don’t have knowledge of the law in order to recognize which aspects of foreclosure are legally challengeable or even fraudulent.
    2. And even those who identify wrongdoing lack funds to pay for attorneys to represent them.
    3. Homeowners are told to come to foreclosure auctions with $$$$$$$ that they do not have, SO THEY STAY AWAY from foreclosure auctions.

    These homeowners are oblivious about sometimes “straw buyers” and sometimes lawyers in charge of foreclosures, obtain ILLEGAL ownership of people’s homes; and pay literally nothing through “credit bids;” and that those recorded deeds from such auctions are null! For these very reasons, there needs to be a probe of lawyers who file foreclosures.

    Also, the average lay person doesn’t know about legal REQUIREMENTS of “standing” that prevents their homes from being repossessed via non-existent lenders or via lenders which have no ownership of promissory notes.

    Yet, COURTS ARE SUPPOSED TO ENFORCE STANDING and compliance with established laws! Illegal, defective, fraudulent foreclosures are the cause of useless property deeds for real estate sales; title insurance companies refuse coverage on foreclosed properties –and more!

    Further, after certain foreclosure auctions (via simulation) result in fraudulent – NOT LENDER ACQUISITIONS, by lawyers or straw buyers, the common scenario becomes property flipping, neighborhood blight, rodents, and so on!

    *Sample of fraudulent foreclosure acts:

    –Deliberately use defunct lenders, lenders without “standing” for false civil and bankruptcy foreclosure proceedings.
    – Create and conceal malpractice foreclosure delays and engineer billable litigation.
    – Orchestrate sham foreclosure auctions; property never acquired by lenders, but ‘straw buyers’
    – Commit actionable wrongs (unfair debt collection, fraud, various torts) that create lawsuits
    – Self-dealing foreclosures which certain lawyers themselves obtain foreclosed properties for flipping.
    –Foreclosures naming defunct lenders, illegally recorded property deeds, flipping, blighted communities.
    – Unconscionably create false deficiency judgments against property owners after straw buyers acquire homes for pennies on the dollar.
    – Intentionally false BANKRUPTCY COURT “Motion to Lift” and “Proof of Claim” on behalf of non-existent lenders which conceals fact of “NON-SECURED” mortgage debt.
    –Involved in fraudulent collection of property damage insurance, as well as mortgage-default insurance.
    –Fraudulent foreclosures abet loss of property taxes to city revenue, rodents, vagrants
    – Thousands of families made unlawfully homeless from null foreclosure proceedings.

    Foreclosure lawyers are officers of the court. Lawyers are required to know applicable laws and civil procedure; this knowledge is not required from mortgage lenders, nor loan servicers. Lawyers are the ones who file those inadequate or questionable foreclosure which lead to useless property deeds and impediments to real estate sales; title insurance companies reluctance to cover foreclosed properties; mortgage default claims disputes due to defective foreclosures.

    *MORE info: Request for Congressional Foreclosure Panel to Examine Foreclosure Lawyers

  5. mannfm11

    You know what Yves? They are going to keep doing this until the government or Congress rubber stamps it. I can’t stand Democrats, but if the new Congress comes out and attempts to rubber stamp this under the commerce clause, I will never vote Republican again. If Obama signs it, he should be impeached.

    I have to believe the entire MERS game was set up, not to save money, but to conceal fraud. If MERS isn’t signing something to transfer these mortgages, they have never been transferred. Instead, this allows for a shell game, a swapping of bad assets, creating opaque cover for a game steeped in fraud. The fraud is systematic and it appears it was premeditated.

    I watched the c-span on this topic from Wednesday. I wasn’t impressed with the Professor from Utah, but the securitization expert was a baldfaced liar. If this is how securitization works, then its purpose is fraud and nothing but fraud. Read what guys like Hernando De Soto put out on the subject of property rights and you will realize that the recording system that has evolved in the United States is what has given the property rights in the country validity. It appears the banks are hell bent on destroying the system, relegating the United States to the level of Mr. De Soto’s native Peru. Read the most recent documentation on property rights ratings around the world from De Soto’s organization. I would read what he writes about Saudi Arabia, a country not rated last year, but one that has standing because they have the most up to date recording of real property ownership in the world. A hidden system of who owns the deeds of trust is nothing but a means to destroy property rights in the United States.

  6. Jack Rip

    Among the myriad dysfunctional parts of our society is the judicial system that allows criminal activities to sail through the courts. Foreclosures require a set of documents and in absence of some documents judges should stop the process. As it stands, most judges ignore the law.

    When the commenter mentions deadbeats, he probably refers to our big banks that have their hat in hand for additional infusion of government (our) money.

  7. Chris

    One way to have your rights trampled is to not show up in court. Judges have little patients for cases where only one of the parties is there. The banks take advantage of this everyday. If no one is there to represent the homeowner the judge is not going to do anything but rubber stamp the bank request. They won’t even give the file a second look.

    The case may be changing in some areas as Yves mentioned but the vast majority of cases where the defendent fails to appear are wins for the bank. It won’t matter if they have the right to foreclose or not.

    The judges I have seen have had large or fragile egos of course and consider their time extremely valuable. It always seemed to me that the judges considered no shows as disrepectful to the judge and the court.

    I don’t think there is a solution that will help homeowners other than the judges being skeptical of the banks. I don’t anticipate a great number of judges bending over backwards to stand up for homeowners that fail to appear.

    Yes the law is the law but reality is reality. Judges can get away with just about anything and if they can move through cases more quickly I am sure they will do it.

    The fact that tarp money was not allowed to be used for legal aid etc, could still prove to a major set back that will keep thousands of homeowners from showing up in court.

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