Loan servicers are filing false documents in Court to speed up foreclosure-What about California?
California is a non-judicial foreclosure state. Therefore, lenders do not have to offer documents to a judge proving "standing" or loan ownership in order to foreclose.
In states where lenders must foreclose through the courts, lenders are under growing legal pressure as a result of the revelation that lenders are using unauthorized "robo signers" to sign phony documents naming new lenders as the current owners of the thousands of loans. As aresult of this growing legal and political pressure the big lenders like Bank of America, Chase and GMAC, have suspended foreclosures in the "judicial foreclosure" states.
So what can California homeowners in financial distress do to combat these lenders?
Because there is no court case in most California foreclosures, borrowers never get to see any evidence of the phony transfers....but there is an exception.
The lenders are filing these phony documents in almost every BANKRUPTCY case in California. If you have filed a bankruptcy, chances are there is a paper trail including phony loan documents that may be used against your lender in a separate lawsuit.
For more info about the "Robo signer" scam, read below. If you are a California homeowner who has filed or is considering bankruptcy, contact our office.
ARTICLE:
Senator Al Franken is asking the feds to launch investigations into potential criminal activity by Ally and its subsidiary GMAC Mortgage, which have come under scrutiny of late for allegedly using fraudulent foreclosure documents to boot people from their homes.
In a letter to a veritable who's who of financial regulators, Franken says he's "deeply concerned about recent reports of misconduct by Ally Financial and the company's policies and procedures that resulted in the routine filing of false affidavits in foreclosure proceedings." He goes on: "It is crucial that Ally and its employees are held fully accountable for any criminal misconduct."
Strong stuff! Franken sent the letter to Treasury Secretary Tim Geithner, Housing and Urban Development Secretary Shaun Donovan, Attorney General Eric Holder, Fed Chairman Ben Bernanke, acting Comptroller of the Currency John Walsh and FDIC chief Sheila Bair. Oh, and he also cc'ed Elizabeth Warren, to give the letter that added kick of little-guy advocacy.
Reports have lately emerged that Ally Financial and other mortgage lenders have been skirting legal convention in their rush to process an overwhelming load of foreclosure documents. The apparent consequence is that many recent evictions, repossessions and foreclosure sales may not have been legal.
Article:
This week we saw the first major legal challenge to the mortgage servicers and lenders at the center of the kerfuffle over "robo-signers"--the mortgage servicer employees who allegedly signed thousands of documents authorizing foreclosures across the country, without actually having reviewed the loan documents, as the law requires.
Some say these middle-manager types (who have been identified at GMAC Mortgage LLC, J.P. Morgan Chase & Co., Bank of America Corp. and OneWest Bank, in depositions by consumer lawyers), if they did what they say they did, committed fraud in hundreds and even thousands of foreclosure cases by claiming knowledge of a financial matter of which they had no personal knowledge.
This chaffed Ohio Attorney General Richard Cordray so badly that he filed suit Wednesday against GMAC and its parent company Ally Financial Inc., seeking $25,000 in civil penalties for each instance of fraud, plus untold thousands of dollars more in consumer restitution.
"That means, for each time a robo-signer's signature appears on an Ohio home loan (and all we know at this point is that there are "hundreds" such loans) and the signature was not based on personal knowledge or properly notarized, the state's AG could make them pay big bucks in penalties."
At the same time, Mr. Cordray sent stern letters to Wells Fargo & Co., Chase, Bank of America Corp., and CitiMortgage, Inc. asking them all to halt foreclosures in Ohio and meet with him to discuss how to solve the problem. His office sent a similar letter to GMAC before suing, suggesting that similar legal action against these other banks is not far off.
State AGs have been raising a ruckus over the foreclosure document fraud issue since it emerged in the public consciousness late last month. Top law officers in California, Connecticut, Illinois, Iowa, Maryland, Massachusetts, North Carolina and Texas have all sent similar letters to lenders and servicers, demanding either answers or a halt to foreclosures until the matter is resolved.
But the interesting thing about Mr. Cordray's case in Ohio is that it specifically names Jeffrey Stephan, GMAC's alleged robo-signer, as a defendant.
In an interview Wednesday, Mr. Cordray explained why Mr. Stephan was a target of the suit:
"Fraud is fraud. If you're ordered to violate the law and you violate the law, you're not innocent," he said. "That's the Nuremberg defense. In the trials after World War II, the defendants, the Nazis claimed, I did this, but someone ordered me to do it. You can't just say you're not responsible because someone told you to do it."
Does Mr. Stephan deserve to be compared to a Nazi? Was he actually maliciously signing fraudulent documents, or just doing what he was told to do? Well, we can't know for certain, because GMAC immediately circled the wagons around Mr. Stephan as soon as this news broke.
GMAC has repeatedly declined to make him available for comment, and calls to Mr. Stephan's house, cell phone and wife, as well as messages sent through the social-media network MySpace.com have gone unreturned. A Washington Post reporter even drove to his house in Sellersville, Pa. to chat with him, only to be turned away by Mr. Stephan.
A GMAC spokeswoman, in response to questions about the suit, wrote in an email that "there was nothing fraudulent or deceitful about GMAC Mortgage's practices," and vowed that the company "will vigorously defend this lawsuit and expects to be fully vindicated by the Ohio courts."
By Robbie Whelan
