Court orders New York lawyers to be accountable for foreclosure paperwork

October 21, 2010 by Todd Murray · Leave a Comment 

New York chief judge Jonathan Lippman has had enough with the suspect paperwork being filed by banks in foreclosure cases. The judge has ordered that New York attorneys representing lenders in foreclosures must sign something affirming that all of the papers have been thoroughly reviewed. The form created by the court requires the lawyers to identify the bank employee who affirmed that the records were accurate and disclose the date the conversation occurred.

In New York (and in most other states including Minnesota), by signing court documents, attorneys are attesting that all of the paperwork is accurate. But in light of the recent foreclosure document scandal, Judge Lippman has taken a step further. “We want to make sure that everyone is focusing like a laser on these particular types of proceedings,” he said. “It puts them on notice. That’s what this is all about. We all have to make doubly sure that we are doing what we should be doing in the first place.” Lippman added that “you are talking about tremendous consequences. You are talking about taking people’s homes. Those papers have to be accurate. They have to be credible.”

New York Judge Orders Foreclosure Lawyers Held Accountable For Accuracy Of Paperwork | Huffington Post | October 20, 2010

Up to 40 states to conduct joint investigation of improper foreclosures

October 13, 2010 by Todd Murray · Leave a Comment 

Led by Iowa’s Attorney General Tom Miller, up to 40 states’ attorneys general are working together to review the shoddy foreclosure practices that have come to light recently. “We want the companies to put in a system such that this will not happen again,” Miller said in an interview with The Associated Press. “We want to explore what other remedies might be available, in a way that makes homeowners and the general housing economy better off.”

To recap, in about half of the states in the country, lenders are required to file a sworn statement with the court about the underlying facts that give the lender the right to foreclose. The person signing this statement–or affidavit–is swearing under oath that he has reviewed the facts in the affidavit and that everything is accurate. But bank employees have admitted in depositions that they were not actually reviewing the case before signing the affidavit. This comes as no surprise to anyone familiar with the banks’ procedures. As reported by the Washington Post, many banks engage in a practice known as “robo-signing”. For example, the head of GMAC’s foreclosure document processing team signed about 10,000 affidavits per month. By my math, that’s over 60 affidavits per hour, which means GMAC’s robo-signer spent less than a minute “reviewing” each affidavit. Think about this for minute: millions of Americans have lost their houses to foreclosure without banks even taking the time to, you know, make sure that they had the right to foreclose. And courts have been signing off on many of these foreclosures. Awesome!

And robo-signing is not limited just to foreclosures. Most debt collectors rely heavily on boilerplate affidavits signed by the thousands with little or no review of the underlying facts. But like the foreclosure affidavits, courts routinely accept the facts in these affidavits as gospel. My hope is that the foreclosure document scandal will result in more courts and judges viewing all of these boilerplate affidavits with more skepticism.

UPDATE: This story details some of the astonishing testimony from several of the employees tasked with signing these foreclosure affidavits. The story is littered with a lot of revealing information, but this is my favorite:

The depositions paint a surreal picture of foreclosure experts who didn’t understand even the most elementary aspects of the mortgage or foreclosure process — even though they were entrusted as the records custodians of homeowners’ loans. In one deposition taken in Houston, a foreclosure supervisor with Litton Loan couldn’t define basic terms like promissory note, mortgagee, lien, receiver, jurisdiction, circuit court, plaintiff’s assignor or defendant. She testified that she didn’t know why a spouse might claim interest in a property, what the required conditions were for a bank to foreclose or who the holder of the mortgage note was. “I don’t know the ins and outs of the loan, I just sign documents,” she said at one point.

UPDATE 2: It’s unanimous. All 50 states have joined the probe. Washington Post story here.

States Set To Unveil Joint Probe Into Foreclosures | NPR | October 13, 2010