Wednesday, October 20, 2010

West Palm Beach Judges To Stop Ignoring Court Procedural Rules In Uncontested Foreclosure Actions

In West Palm Beach, Florida, The Palm Beach Post reports:
  • Thousands of Palm Beach County homes have been repossessed by lenders that failed to follow a court rule requiring evidence be attached to foreclosure affidavits, something judges often allowed to happen when no one contested the case.(1)

  • After revelations in recent weeks that sworn affidavits from several major banks and home loan servicers may be flawed, Palm Beach County Chief Judge Peter Blanc said banks will increasingly have to prove their foreclosure claims with sworn or certified supporting paperwork.

***

  • "In the past when affidavits came in on defaults, the judges haven't been requiring the documents because no one was there objecting," said Blanc, who added that about 80 percent of foreclosures in the county are not contested. "Dealing with the volume we are dealing with we want to make sure that all or i's are dotted and t's crossed."

***

  • Foreclosure defense attorneys have argued for months that in the rush to take back homes, that large law firms representing lenders and overwhelmed judges ignored the evidence rule. Only when attorneys or homeowners protested did the rush to summary judgment slow, they claim.

For more, see Palm Beach County judges want more evidence in uncontested foreclosures.

(1) What happens now to all the foreclosures that have slipped through in disregard of this rule. Are those foreclosure judgments now absolutely void (ie. void ab initio), or are they merely voidable, but nevertheless subject to attack?

While they're at it, in cases where foreclosure mills and others submit bogus "lost note" affidavits to cover up for their inability to "produce the note" prior to obtaining a foreclosure judgment, Florida judges should at least be sure to comply with Section 673.3091(2) of the Florida Statutes ("Enforcement of lost, destroyed, or stolen instrument"), which states the following with regard to a lender's attempt to enforce a lost, destroyed, or stolen promissory note or other negotiable instrument (bold text is my emphasis, not in the original text of the statute):

  • The court may not enter judgment in favor of the person seeking enforcement unless it finds that the person required to pay the instrument is adequately protected against loss that might occur by reason of a claim by another person to enforce the instrument. Adequate protection may be provided by any reasonable means.

"Adequate protection" has commonly been believed to mean the posting of a "lost note" indemnification bond in the amount of double the face amount of the homeowner's mortgage to adequately protect the homeowner against loss that might occur if, in the future, someone else comes along with the actual note that was purportedly lost and attempts to enforce it against the homeowner.

For an example of what one Miami judge did when a lender proceeded to foreclose without posting a "lost note" indemnification bond after being court ordered to do so, see Daily Business Review: Blasting Bank's Lawyer, Judge Wipes Out Homeowner's $207,000 Mortgage. Go here for the associated transcript of the May 6, 2010 court hearing, in which Judge Jennifer Bailey voided the promissory note and stuck the bank with the tab for the homeowner's attorney fees for good measure.

Sworn Statement: Foreclosure Mill Spread Around Gifts In Exchange For Altering, Forging Key Court Documents

The Tampa Tribune reports:
  • Some employees of Florida's largest "foreclosure mill" were given jewelry, cars and houses from the firm, in exchange for altering and forging key documents used to obtain foreclosures, according to a statement released today by the Florida Attorney General's Office.

  • The office released transcripts of two interviews it conducted for its investigation into the law offices of David J. Stern. The sworn statements were from Kelly Scott, a former employee of Stern's and Mary R. Cordova, a former employee of G&Z, a process server used by Stern's office. The women's testimonies appear to back up that of former Stern's employee Tammie Lou Kapusta, whose statement was released last week.

  • The three statements paint a picture of a secret system designed to speed up the foreclosure process. Attorneys and staff members forged signatures, changed dates, passed around notary stamps, the women say in interviews with attorney general's staff.

For more, see Witness: Foreclosure firm owner gave gifts for altering documents.

For the depositions, see:

The Controversy Continues On Role Of MERS In Foreclosures

Bloomberg News reports:
  • On July 1, a federal judge took away Robert Bellistri’s house in Arnold, Missouri. Bellistri, who bought the house as an investment after it was seized for non-payment of taxes, failed to notify Mortgage Electronic Registration Systems Inc. of his purchase, the judge said. A state appeals court last year had ruled otherwise, finding Bellistri didn’t need to tell MERS, a company that lets banks electronically register their sales of home loans so they can avoid trudging down to the county land-records office.

  • The case highlights a debate raging in courts on the role MERS has, if any, in home foreclosures. How it’s resolved will determine whether MERS’s involvement produced a defective process and clouded millions of property titles.

For more, see Foreclosure Crisis Triggers Debate on Role of Mortgage Registry.

White House Supports 50 State AG Probe Into Allegedly Fabricated Court Documents As BofA, GMAC Announce Foreclosure Resumption

The Wall Street Journal reports:
  • The White House is committed to holding banks accountable for any legal violations tied to housing foreclosures, White House Press Secretary Robert Gibbs said Tuesday. Gibbs also reiterated that the administration "strongly" supports an investigation by 50 state attorneys general into allegations that bank employees signed foreclosure documents without carefully reviewing the contents. Gibbs' statement comes as several large financial institutions, including Bank of America Corp. and GMAC Mortgage, a lender and loan servicer, said they were restarting foreclosures.

Source: White House To Hold Banks Accountable Over Foreclosure Violations (requires subscription; if no subscription, GO HERE, then click the appropriate link for the story).

Tuesday, October 19, 2010

Florida AG Releases Additional Depositions In Ongoing State Robosigner Probe Into Allegedly Fraudulent Foreclosure Mill Practices

From the Office of the Florida Attorney General:
  • Attorney General Bill McCollum [] released three additional sworn statements in the ongoing investigations into The Law Offices of Marshall C. Watson, P.A. and the Law Offices of David J. Stern, P.A. for their alleged involvement in presenting fabricated documents to the courts in foreclosure actions to obtain final judgments against homeowners. The office will continue to release statements as we receive them.(1)

Source: Attorney General Releases Additional Sworn Statements in the Investigations Involving David Stern and Marshall Watson.

For the depositions, see:

(1) See also Business Week: Witness: signatures were faked at foreclosure firm.

  • A former secretary at a Florida law firm under investigation for fabricating foreclosure documents says the firm's office manager would sign her name to 1,000 files a day and sometimes would allow paralegals to sign her name for her when she got tired.

  • Kelly Scott, a former assistant at the law offices of David Stern, says in a deposition released Monday that office manager Cheryl Salmons would sign 500 files in the morning and another 500 files in the afternoon without reviewing them and with no witnesses. Scott says paralegals would then collect the files and swap them with each other, signing them as witnesses even though they had already been notarized and executed.

C. Fla. F'closure Rescue Scammer Gets 10 Years In Ripoff Using Phony Non-Profit 'Front'; Described By Prosecutor As "A Kind Of Slow-Motion Theft"

In Tampa, Florida, the St. Petersburg Times reports:
  • Peter J. Porcelli, a Pinellas businessman who made millions in telemarketing and owned the world-champion Tampa Bay Smokers fast-pitch softball team, was sentenced to 10 years in federal prison [] for defrauding dozens of local homeowners with a foreclosure relief scam.(1)

  • Using a phony nonprofit, Porcelli promised residents facing foreclosure he would save their homes. But victims instead saw illegal loan fees, annual interest rates ballooning as high as 260 percent and a provision to forfeit their homes if payments were missed. Prosecutor Thomas N. Palermo called Porcelli's lending operation "a kind of slow-motion theft."

For more, see Belleair Beach millionaire scam artist Peter Porcelli finally faces justice.

See also The Tampa Tribune: Pinellas man gets 10 years in foreclosure scam.

(1) U.S. District Judge Susan Bucklew reportedly deferred the start of Porcelli's ten-year prison sentence until such time that he finishes off an eight-year sentence he is currently serving for an earlier, unrelated telemarketing fraud conviction.

NJ AG Reaches $800K Deal w/ Firms, Principals To Settle Phony Loan Modification Allegations; Outfit Allegedly Used 'Non-Profit' Front To Con Victims

From the Office of the New Jersey Attorney General:
  • Attorney General Paula T. Dow announced [] that the owner of several New Jersey loan modification companies has agreed to pay the state $805,000 and stay out of the foreclosure rescue business to resolve allegations he defrauded struggling homeowners who sought help in staving off foreclosure.

  • Defendant Stephen Pasch of Greenbrook Township, Somerset County, agreed to a judgment of $805,000 -- $205,000 of it payable to the Division of Consumer Affairs within 60 days – to settle charges that his New Day Financial Solutions, Inc. and other companies collected up-front fees from homeowners in return for promised mortgage modification help – a prohibited practice in New Jersey. Pasch’s other companies include American Credit Repair and Settlement, NDROA Inc. and Paramount Debt Settlement USA.

  • In addition to Pasch, another defendant in the same lawsuit, licensed attorney Ejike N. Uzor of Newark, has settled claims against him for $25,000. Two Uzor companies were also corporate defendants in the state suit: Uzor Financial Solutions and Ejike N. Uzor and Associates.

  • In most cases, the foreclosure rescue services for which homeowners paid Pasch and Uzor up front never materialized or actually made their situations worse. In addition, the state’s lawsuit charged that a Pasch/Uzor “non-profit” known as American Financial Advocacy Council – through its Web site at www.lordsavemyhome.com – fraudulently sought to instill consumer confidence in the defendants’ profit-making operations.

For the entire press release, see Attorney General Announces Settlement of Fraud Case with Mortgage Rescue Firms; Principal Defendant Agrees to Judgment of $805,000, Ban on Future Involvement.

Go here for the Consent Judgments.

State AG Scores Win In Civil Suit As Central Florida Loan Modification Racket, Owners Get Tagged With $4.3M Court Judgment

From the Office of the Florida Attorney General:
  • Attorney General Bill McCollum [] announced that his office received a $4.3 million dollar judgment against what is believed to have been Central Florida’s largest loan modification operation. [The] judgment is against Wineberg, Lopez, & Rodriguez, and its owners, William Rodriguez, Jr. and Freddie Lopez, Sr. for violations of Florida’s Foreclosure Fraud Prevention Act.

***

  • [The] judgment resolves a lawsuit filed last March alleging that Mr. Rodriguez and Mr. Lopez were illegally charging consumers up-front fees for loan modifications. According to complaints received by the Attorney General’s Office, consumers paid upwards of $1,995 for loan modifications that were never completed.(1)

For more, see Attorney General's Office Receives Multi-Million Dollar Judgment From Loan Modification Operation.

Go here for the lawsuit against Wineberg, Lopez, & Rodriguez (and here for the initial press release).

(1) According to the press release, the Florida AG received a judgment against Mr. Rodriguez for almost $500,000 in civil penalties, restitution, and attorney’s fees in a separate civil case brought against him, National Payment Modification Company and The Bostonian Group, also involving allegations of illegal clipping of up-front fees from homeowners.

Chicago FHLB Accuses Banks Of Unloading Crappy RMBS On Them; Lawsuit: We Unwittingly "Purchased A Toxic Stew Of Doomed Mortgage Loans"

Bloomberg News reports:
  • Federal Home Loan Bank of Chicago sued lenders including Bank of America Corp. claiming their failure to disclose relaxed subprime mortgage underwriting standards, led it to unknowingly buy risky mortgage-backed securities. The lawsuit was filed an Illinois state court in Chicago(1) by the congressionally chartered wholesale bank, which describes itself on its website as one of 12 regional U.S. institutions serving smaller retail home lenders.

  • Bank of America and the other defendant commercial banks, including Citigroup Inc., Goldman Sachs Group Inc. and Wells Fargo & Co., sold it more than $3.3 billion in residential mortgage-backed securities, according to the complaint.

  • The defendants did not tell the bank the truth about the loans that comprised the mortgage pools,” underlying the securities, the Federal Home Loan Bank alleged. While it believed it was acquiring “safe” securities, “in fact the bank purchased a toxic stew of doomed mortgage loans,” according to the complaint.

For more, see Bank of America Sued by Chicago Home Loan Bank Over Subprime Mortgages.

See also the Announcement from the Federal Home Loan Bank of Chicago.

For the Illinois lawsuit, see Federal Home Loan Bank of Chicago v. Bank of America Funding Corporation, et al.

(1) According to their announcement, the FHLB of Chicago also filed similar suits in the Superior Court of California, County of Los Angeles; and the Superior Court of Washington, King County. The announcement went on to say that the FHLB of Indianapolis also filed similar complaints on the same day, and that the FHLBs of Pittsburgh, Seattle, and San Francisco have previously filed similar lawsuits.

Monday, October 18, 2010

Indictment Details Use Of Owner Financing, Double Loans At Closing In Home Equity Ripoff Targeting Northern California Seniors

In Modesto, California, The Modesto Bee reports:
  • Investor, beware. That's the best, most concise advice experts give to avoid losing big bucks in alleged property schemes such as those making recent headlines in Modesto. But even extreme vigilance won't stop deception when the bad guys are sophisticated and resort to forgery, said Tom Pool, spokesman for the California Department of Real Estate.

  • "It's a horrible story," Pool said of an account provided by federal prosecutors who indicted the owner of a venerable Modesto real estate company. Authorities say he and his companion targeted elderly homeowners, gained trust and robbed them blind.

  • In some cases, alleged victims died before authorities found out their property was lost, obituaries and recorded documents suggest. Others include their survivors, and maybe tenants in rentals facing foreclosure.

***

  • Federal authorities say [ex-Century 21 Apollo owner Jim] Lankford and his roommate, Jon McDade, bilked $10 million from lenders and elderly homeowners over 11 years.(1)

For more, see Indictment of Modesto realty agent tells about suspected scams.

(1) For the U.S. Attorney (Sacramento/Fresno) press release, see Modesto Century 21-Apollo Realty Owner Charged With Defrauding Elderly Homeowners ($10 Million in Losses Alleged).

For the indictment, see U.S. v. Lankford, et ano.

For earlier posts on Lankford and his alleged scams, see:

Florida AG Tags LPS, Docx With Subpoenas Ordering Firms To Fork Over Foreclosure Documents, Vendor Contracts As State Robosigner Probe Expands

Bloomberg News reports:
  • Lender Processing Services Inc. and Docx LLC, affiliated companies [and connected with Fidelity National Financial, Inc.] providing mortgage-processing services to lenders, were subpoenaed by the office of Florida Attorney General Bill McCollum as part of its investigation into possible foreclosure-document fraud. The state told the Jacksonville, Florida-based companies to hand over any network agreements with law firms having offices located in the state, according to the subpoena.

  • The companies were ordered to provide any contracts for payments to and from four Florida law firms already under investigation, and any communications on arrangements for backdating or otherwise altering court documents used in property transactions.(1)

For more, see Florida Subpoenas Records of Foreclosure Companies.

Go here for the Florida AG's subpoena.

Thanks to Deontos .is for the heads up on the story.

(1) See also Firedoglake: Florida Foreclosure Employees Had Better Protect Themselves, which adds:

  • They want documents showing that Korell Harp, Jessica Ohde, Pat Kingston, Christina Huang, and Tywanna Thomas had authority to sign “in any capacity for any lender and/or servicing company.” They want a list of employees, identifying those who provide notary services. And they want policy and procedure manuals and training materials related to the business of DOCX.

Go here for the DOCX document "fabrication" price list for a variety of foreclosure documents.

Flood Of Suits Tagging GMAC With 'Robo-Signer' Charges Appears Imminent; Ohio Man Charges Bank w/ Consumer Law Violations; Lawyer Has 10 More Coming

In Newark, Ohio, the Newark Advocate reports:
  • The inevitable legal response to allegations of fraud on foreclosure documents reached Licking County on Friday with a Johnstown man's lawsuit against GMAC Mortgage and one of its employees.

***

  • Michael A. Fox, [of] Johnstown, claims in his complaint that GMAC violated the Ohio Consumer Protection Sales Practices Act, committed common law fraud, abuse of process and civil conspiracy in seeking to foreclose on his 22-acre horse farm.

  • In his complaint, filed in Common Pleas Court, Fox seeks at least $25,000 in compensatory damages and $25,000 in a civil penalty, plus undetermined punitive damages that his attorney said will be 2 percent of GMAC's 2009 gross revenue.

  • The complaint states that Jeffrey Stephan, who signed Fox's foreclosure assignment Jan. 26, 2009, also testified in a Florida state foreclosure case that he signed 10,000 affidavits and assignments in a month without knowledge of the cases or verifying the accuracy of the information.(1)

***

  • The complaint likely will become part of a class-action lawsuit, [Fox's attorney John] Sherrod said, as many similar cases will be filed throughout Ohio and across the country. "I'll be filing 10 more in a week or so,"(2) Sherrod said. "There should be some (of those) in Licking County."

For more, see Johnstown man sues GMAC Mortgage, alleges fraud in foreclosure process.

In related stories, see:

(1) Go here for additional Jeffrey Stephan testimony from a deposition in a Maine foreclosure case.

(2) Why stop at ten??? Just set the photocopier on '99' and have at it!

Title Agent Gets 34 Months For $800K+ Real Estate Escrow, Closing Cash Ripoff

From the Office of the U.S. Attorney (Minneapolis, Minnesota):
  • A 61-year-old Alexandria man was sentenced [...] in federal court in Minneapolis on charges connected to a scheme to defraud mortgage lenders and others out of more than $800,000. United States District Court Judge Joan N. Ericksen sentenced Dale Charles Dodge, Jr., to 34 months in prison on one count of wire fraud and one count of engaging in a monetary transaction with property derived from unlawful activity, commonly referred to as money laundering. Dodge was indicted on September 15, 2009, and pleaded guilty on May 12, 2010.

  • In his plea agreement, Dodge admitted that from 2002 through 2005, he operated a title closing company under the names Premier Title & Abstract, Inc., and Verity Title & Abstract. [...] The plea agreement goes on to state that between 2002 and 2005, Dodge executed a scheme to defraud mortgage lenders and others out of large sums of money by diverting loan proceeds from the escrow account at his title company. The money was used for his personal benefit as well as the benefit of his company and others involved in the scheme. [...] Furthermore, Dodge admitted concealing those actions from his title insurer and mortgage lenders as well as from property sellers and purchasers.

  • Dodge’s fraud scheme caused losses of more than $800,000. Approximately $844.561.60 is owed to one specific mortgage lender, who mistakenly deposited money into Dodge’s escrow account. An additional amount is owed to First American Title Insurance Company, Dodge’s title insurer, which was required under law to pay certain outstanding escrow obligations for which Dodge was unable to pay.(1)

For the U.S. Attorney press release, see Alexandria man sentenced for $800,000 mortgage-fraud scheme.

(1) In Minnesota, those who have been screwed out of money due to the fraudulent, deceptive or dishonest practices of, or conversion of trust funds by, a state-licensed closing agent (or state-licensed real estate broker or salesperson) can apply to the Minnesota Department of Commerce's Real Estate Education, Research and Recovery Fund to try and recover some or all of their losses. According to their website:

  • The improper action that was committed must be an activity that required a license,
  • Applicants may be awarded any amount from $0 to $150,000, depending on a number of factors.

According to the Fund's website, there is no guarantee that a claim will be paid. Whether an applicant will receive payment from the fund depends on the specific facts of the case.

Sunday, October 17, 2010

Sloppy Servicers Now Feel The Heat From Disgruntled Mortgage Bond Buyers As Concerns Rise Over Crappy Monthly Remittance Reports

Asset-Backed Alert (a weekly update on worldwide securitization) reports:
  • Mortgage-bond buyers are losing faith in the accuracy of remittance reports, and some say the apprehension could soon factor into their investment strategies. Remittance reports, distributed monthly by securitization trustees, are supposed to provide routine snapshots of the cashflow-collection and distribution activities of servicers. However, investors say there has been a rash of recent instances in which the reported data differed considerably from what actually happened - making it impossible to determine values for their holdings.

  • Frustrated with what they consider insufficient efforts by servicers to address the discrepancies, certain buysiders are even grumbling that they'll direct their money elsewhere. Should they take such steps en masse, the conflict could undermine both recent gains in the secondary-market values of mortgage bonds and plans by issuers to bring new deals to market.

For more, see Investors Grumble Over Flawed Remittances.

Fort Lauderdale Judge Gives Florida AG The Go-Ahead In David Stern Robo-Signer Probe; Foreclosure Mill's Counsel Says Appeal Will Follow

In Fort Lauderdale, Florida, the South Florida Sun Sentinel reports:
  • A Broward County judge's ruling on Friday gives Florida Attorney General Bill McCollum the right to continue his investigation into a Plantation foreclosure law firm. Circuit Judge Eileen O'Connor denied a request from the law offices of David J. Stern to quash the state's subpoena for documents relating to the firm's procedures, clients and investments.

  • That leaves the lower courts split on which agency has the right to police law firms employing hundreds of people who prepare thousands of documents monthly for lenders and loan services.

  • Palm Beach County Circuit Judge Jack Cox, presiding over the Shapiro & Fishman foreclosure law firm's bid to throw out the state's subpoenas, had ruled against the attorney general a second time on Thursday. Cox said The Florida Bar, the State Supreme Court and the lower courts have jurisdiction over lawyers and their conduct, not the attorney general.

  • O'Connor gave no reason for her decision. Her order said the motion based on the argument "that the Attorney General has no jurisdiction to issue a subpoena to a law firm" was denied. "We respectfully disagree with the ruling," said Miami attorney Jeffrey Tew, representing Stern. He said he would file an appeal.

  • Tew had echoed the argument used by Shapiro & Fishman attorney Gerald Richman in Tew's hearing before O'Connor earlier this week. But Tew's focus was that the foreclosure firm's practices did not fall under the deceptive and unfair trade statute cited by the state because it had no direct relationship with homeowners. Tew would not speculate why two judges ruled differently on the subpoena cases, given the motions cited the same legal grounds.

  • Who will investigate the foreclosure firms' actions ultimately may be decided by the appellate courts. The Attorney General's Office said Thursday that it still was considering an appeal of Cox's decision on Shapiro & Fishman, which has offices in Boca Raton and Tampa.

For the story, see Broward judge denies firm's bid to stop state probe.

Retired Maine Attorney Attracts Spotlight For Work In GMAC Robo-Signer Case

The AmLaw Daily recently interviewed Maine attorney Thomas Cox, one of the attorneys whose deposition of GMAC robo-signer Jeffrey Stephan resulted in a Maine court overthrowing an earlier foreclosure judgment against Cox's client (and thereby forcing GMAC to go to trial on their foreclosure action and sticking them with the tab with some of the fees Cox would have charged his client had he been being paid - note that Cox is handling the case pro bono(1) - see Court Order, FNMA v. Bradbury, et al.), and was one of the keys to triggering the recent brouhaha on faulty foreclosures.

Asked what it feels like finding himself roped into the middle of such a crazy story, Cox responds:
  • I'd like to go back into the previous pattern where for most of my career I ducked the press. I'm looking forward to going back into that mode real soon, but it seemed like this was a story worth keeping out there.

For the interview, see The Lawyer Who Put the Brakes on Rubber Stampers and Robo-Signers.

See also From a Maine House, a National Foreclosure Freeze for the recent front page story in The New York Times featuring Mr. Cox and his work on this case.

(1) On the entitlement of prevailing party attorney's fees to an attorney representing a client on a pro bono basis, state court Judge Keith A. Powers noted in footnote 4 of the Court Order:

  • That Defendant's counsel is entitled to an award of attorney's fees is not affected by the fact that he labored in this case on a pro bono basis. Cf., Foster v. Mydas Assoc., Inc., 943 F.2d 139, 144 n.7 (1st Cir. 1991) (noting that civil rights attorneys who work pro bono and prevail are usually awarded attorney's fees under civil rights statutes).

It's worth noting that, in footnote 7 of the Foster case, the 1st Circuit made this observation on a losing party's attempt to dodge having to pay statutorily allowed prevailing party attorney's fees simply because the prevailing party's attorney took the case pro bono (ie. for free):

  • [T]he characterization of the lawyers' efforts as "pro bono" lacks the moral fiber that appellants and the amici ascribe to it.

Two Maryland Foreclosure Mill Lawyers Come Clean, Confess That They Had Others Robosign Their Names On Affidavits; Could Affect 1000s Of State Cases

The Baltimore Sun reports:
  • Lawyers at two Maryland firms handling foreclosures filed court documents without actually signing the papers themselves, a development that is calling into question the validity of at least some of the home foreclosure cases in the state. The two attorneys, one based in Hunt Valley and the other in Bethesda, have filed more than 20,000 foreclosure cases in Maryland courts since 2008.

  • The lawyers have acknowledged that in documents filed in court for some of their foreclosure cases their names were signed by others at their behest. The documents, known as affidavits, are the written equivalent of court testimony. Maryland law requires that affidavits be signed by the person whose name they bear, according to the state attorney general's office.

  • The lawyers have submitted "corrective affidavits" in counties across the state in recent months in an effort to remedy the signature problem. The courts could not immediately say how many corrective affidavits have been filed, but Mike Morin, an Annapolis attorney who represents homeowners, said there have been hundreds. "We believe the issue extends to thousands of cases," said Morin, who has defended borrowers with other attorneys.

***

  • In the corrective affidavits filed by Jacob Geesing, of Bierman, Geesing, Ward & Wood in Bethesda, and Thomas P. Dore, with Hunt Valley-based Covahey, Boozer, Devan & Dore, both lawyers said the information in the original documents was accurate — except for the signatures.

For more, see False signatures cloud Maryland foreclosure cases (Two attorneys acknowledge that their affidavits were not signed by them; state removes notaries from positions).

PBS NewsHour On Flawed Paperwork Used In Foreclosure Process

PBS NewsHour with Jim Lehrer recently ran a story on the flawed paperwork being used to challenge foreclosures in court. The story addresses both:
  • The screw-ups taking place on the back end of the securitization process - lenders' attempts to enforce the notes through foreclosure and the use of robo-signers, and

  • The screw-ups that took place several years back on the front end of the securitization process - the failure to properly transfer the promissory notes (a chain of transfer that begins with the loan originators) into the mortgage backed trusts that are supposed to be holding these notes.

Among those interviewed for the story are Brooklyn, New York trial judge Arthur Schack, and consumer lawyers Max Gardner and April Charney.

To watch the story, or read the accompanying transcript, see Faulty Paperwork Prompts Deepening Foreclosure Problems.

Why “Blank Name” Matters and Trustee Obligations

On the blog, The Big Picture, analyst Josh Rosner at independent research firm Graham-Fisher in New York discusses the significance of assigning mortgage-secured promissory notes in "blank" name, and the potential liabilities that arise for the trustees of the mortgage-backed trusts that are supposed to have custody of these promissory notes.

He notes that "potential paperwork errors on some of the $1.34 trillion of securitized home mortgages may give investors an opening to challenge the legality of deals, threatening to unnerve financial markets."

For more, see Why “Blank Name” Matters and Trustee Obligations.

Thanks to Mike Dillon at GetDShirtz.com for the heads-up on the story.

Saturday, October 16, 2010

Bogus Docs, Depos Wanted Now! WaPo Puts Out Call For Robo-Signer Foreclosure Documents, Depositions

According to The Washington Post's Political Economy blog:
  • A number of employees of mortgage servicers who signed documents indicating that they had reviewed the accuracy of thousands of foreclosure proceedings have testified in sworn depositions that they didn't actually perform at least some of the reviews.

  • If you have a copy of a foreclosure document that appears problematic or a deposition of one of these employees, please post it here. Or you can also send us information on your foreclosure using the form below [see story for intake form].

  • Send us your tips: foreclosure case reviews. We will not share your personal information.

Source: Do you have foreclosure documents or depositions related to 'robo-signers'?

How 2 Civilian Sleuths Brought Foreclosure Problems To Light

The McClatchy Newspapers report:
  • More than a year before lenders, law firms and document companies began owning up to widespread paperwork problems with their foreclosure filings, Lisa Epstein and Michael Redman already knew that something was wrong — very wrong.

  • Redman, a former online automobile consultant, got his first taste of the problem in early 2008, when he tried to help a relative who was facing foreclosure. [...] Epstein, a nurse who cares for cancer patients, also is going through foreclosure. She got her baptism in the world of shoddy foreclosure paperwork in the summer of 2009, however, when she tried to help a brain tumor patient keep her home.

***

  • Within a year, [Epstein] and Redman — who didn't know each other at the time — would leave their respective jobs to pursue their passion for helping others and exposing injustice in the foreclosure industry. After meeting late last year at a foreclosure fraud seminar, they teamed up to become two of the nation's most influential civilian beat cops for the beleaguered foreclosure industry.

  • Equal parts agitators, activists and advocates, Redman and Epstein have made their presence felt in Florida and nationally through their respective websites, 4closureFraud.org and foreclosurehamlet.org.

For more, see How 2 civilian sleuths brought foreclosure problems to light.

See also Daily Business Review: Grassroots effort leads to attorney general probe.

The Bogus Foreclosure Document Drumbeat Continues

The New York Times reports:
  • At JPMorgan Chase & Company, they were derided as “Burger King kids” — walk-in hires who were so inexperienced they barely knew what a mortgage was. At Citigroup and GMAC, dotting the i’s and crossing the t’s on home foreclosures was outsourced to frazzled workers who sometimes tossed the paperwork into the garbage. And at Litton Loan Servicing, an arm of Goldman Sachs, employees processed foreclosure documents so quickly that they barely had time to see what they were signing. “I don’t know the ins and outs of the loan,” a Litton employee said in a deposition last year. “I’m not a loan officer.”

  • As the furor grows over lenders’ efforts to sidestep legal rules in their zeal to reclaim homes from delinquent borrowers, these and other banks insist that they have been overwhelmed by the housing collapse.

***

  • And even when banks did begin hiring to deal with the avalanche of defaults, they often turned to workers with minimal qualifications or work experience, employees a former JPMorgan executive characterized as the “Burger King kids.” In many cases, the banks outsourced their foreclosure operations to law firms like that of David J. Stern, of Florida, which served clients like Citigroup, GMAC and others. Mr. Stern hired outsourcing firms in Guam and the Philippines to help.

  • The result was chaos, said Tammie Lou Kapusta, a former employee of Mr. Stern’s who was deposed by the Florida attorney general’s office last month. “The girls would come out on the floor not knowing what they were doing,” she said. “Mortgages would get placed in different files. They would get thrown out. There was just no real organization when it came to the original documents.” Citigroup and GMAC say they are no longer giving any new work to Mr. Stern’s firm.

For more, see Bankers Ignored Signs of Trouble on Foreclosures.

ABC News On Bank-Ordered Illegal Lock Outs

ABC News reports:
  • It's one of the few booming businesses in this bruised economy – companies hired by banks to change the locks and take over homes that have been foreclosed. But in a growing number of cases, these real estate repo men are showing up before the foreclosure process is done – and sometimes, before a home is even in foreclosure.(1)

For more, see Mortgage Bullies?: Banks Accused of Illegally Breaking Into Homes Facing Foreclosure (Business for Property Preservation Companies Booms).

(1) Earlier media reports reveal that at least one Massachusetts law firm is apparently going around the country taking on these illegal lockout cases on behalf of screwed-over homeowners. See:

For those homeowners who've been screwed over by wrongful lockouts by foreclosing lenders (and their confederates) and seek some possible guidance on how much their cases might be worth if they seek to sue, see:

NY AG Brings Criminal, Civil Charges Against Buffalo Bill Collector Targeting Servicemembers; Outfit Made Threats To Tell Commanding Officers: AG

From the Office of the New York Attorney General:
  • Attorney General Andrew M. Cuomo [] announced the filing of felony charges against the owner of a debt collection company that targeted military personnel and harassed active members of the military and their families.

  • The investigation led to the filing of criminal charges against Stephanie Lowinger of Anderson Place in Buffalo, owner and operator of Neimen, Rona & Associates, formerly Morgan, Stone & Associates and now known as Gordon, Cappolli & Associates, all debt collection companies based in the Buffalo area.

  • In addition to the criminal charges, the Attorney General has also filed a civil lawsuit seeking to shut down Lowinger’s operation and secure restitution, penalties, and costs. The action is the latest in Attorney General Cuomo’s ongoing probe of illegal practices in the debt collection industry.

  • Attorney General Cuomo’s investigation found that Lowinger specifically targeted military personnel, referring to their alleged debts as “special accounts.” Lowinger instructed employees to find out where the military members were stationed and identify their commanding officers. Lowinger had employees threaten to call and, in some cases, actually did call the commanding officers, both of which are illegal debt collection tactics.(1)

For more, see Attorney General Cuomo Announces Felony Charges Against Owners Of Debt Collection Company That Targeted Military Personel (Cuomo also files civil suit to shut down company; Actions part of industry-wide investigation into abusive debt collection companies).

(1) According to the NY AG press release, complaints already received and evidence uncovered during the investigation show that military service members and their families were subjected to wrongful practices, including:

  • Unauthorized calls to commanding officers,
  • Threats of arrest by military police,
  • Threats of a dishonorable discharge,
  • Threats of loss of security status,
  • Threats of court martial.

Robo-Signing Scandal: Foreclosing Lenders Acting Like 'Hyenas On The Serengeti'???

An anonymous Guest Author on the blog, The Big Picture, recently referenced a (satirical) press release purportedly from Bank of America regarding its approach to handling foreclosures. An excerpt:
  • Bank of America announced that it has discovered a few trivial, easily-remedied technical problems with some of its mortgages. “We will stop foreclosure sales in some states until our assessment has been satisfactorily completed, or until the politicians whom we have compensated so generously do their damn jobs and get rid of those pesky laws and rights that are slowing us down."

On the issue of multiple lenders simultaneously foreclosing on the same property, the purported BofA statement continues:

  • "I know it is a bit confusing to citizens when our competitor HSBC and another bank simultaneously try to foreclose on the same property, especially when they are in a federal foreclosure prevention program. It’s sort of like one of those programs on Animal Planet where each hyena grabs a leg of the still twitching gazelle and tries to pull it away from the other hyenas. But that’s the way nature works—nobody asks those hyenas petty-minded questions about whether title to the gazelle was properly transferred, and to which hyena, and whether the title was properly notarized by an authorized local cheetah. Sometimes a company just has to sink its fangs into a customer, lock its jaws, which can exert a pressure of 1,000 pounds per square inch, brace its legs, yank, and see what tears loose. If we get the wrong gazelle, we will make every effort to compensate it for our erroneous gnawing, bone-crushing, and marrow-sucking.”

On the issue of due process, and the concern that JPMorgan may invade its turf, the purported statement continues:

  • "On the Serengeti, due process means that the gazelle runs as fast as it can and the pack keeps ripping small chunks off until the gazelle collapses due to shock and blood loss and inability to pay for a lawyer. There may have been some trivial, unimportant problems with the relevant documents, but we are confident that many of those gazelles really did owe us money, and we believe that our ripping them into pieces, digesting them, and regurgitating their horns and hooves is ecologically sound and generally in accord with the law of nature. Now, if you’ll excuse me, I will have to go mark the boundaries of my pack’s territory with the musk from my anal scent gland. We don’t want other hyena packs like J.P. Morgan invading our turf."

For more, including the response from a purported JP Morgan spokesperson, see Bank of America Announces That It Has Discovered Some Trivial Technical Problems With a Small Number of its Mortgages.

Friday, October 15, 2010

Five Face Criminal Charges For Roles In Now-Defunct Upstate NY Sale Leaseback, Equity Stripping Foreclosure Rescue Peddling Operation

In Albany, New York, the Albany Times Union reports:
  • A honeymoon in Europe, cruise to Antigua, spa treatments and free rent. It all came about, authorities say, because of a massive mortgage fraud scheme based on Central Avenue in Colonie. And now five defendants -- including a once-disbarred local attorney -- face felony charges from state Attorney General Andrew Cuomo that could send every one of them to state prison.

  • They stand charged with taking part in a multi-million-dollar scam in which Rivertown Investments of 1762 Central Ave. allegedly used bogus buyers to dupe banks, lenders, real estate owners and title insurance corporations.

  • Kevin P. Wheatley, 37, a Waterford lawyer for the company, was quietly arraigned Thursday before Judge Stephen Herrick in Albany County Court on a 23-count felony indictment accusing him of first-and-second degree grand larceny, scheming to defraud, forgery and falsifying business records. The indictment alleged Wheatley stole property and the proceeds of a mortgage loan exceeding $1 million on April 24, 2007, in Albany County. It stated he committed the same crimes for several other properties in Albany County. All exceeded $50,000. The first-degree grand larceny count alone carries a possible 25-year prison sentence.(1)

***

  • Rivertown owner Geoffrey Goldman, 34, of Albany faces a possible 15 years behind bars on charges of second-degree grand larceny and falsifying business records. Goldman started the company in 2002.

  • Criminal complaints in the case described its actions as follows: Rivertown would solicit homeowners in financial distress to sell their homes to the company. Rivertown, in turn, would lease the homes back to them for a term, usually 18 months. It was under a promise that net equity would be held for downpayment on repurchase of the property.

  • But despite promises that Rivertown would purchase the properties, the company allegedly used straw buyers who would obtain properties -- then immediately sign deeds transferring the titles to a Rivertown holding company without notifying lenders or getting their consent. Court papers noted an investigator said one defendant told him the monthly income of straw buyers was grossly inflated on mortgage applications.

  • A criminal complaint against Geoffrey Goldman noted that a portfolio for Rivertown showed 105 lease-back properties in New York, Pennsylvania and New Jersey at prices ranging from $112,000 to more than $2.6 million. Closing dates ranged from August 2003 to March 2008. But authorities say in some cases homes were never sold back, customers were evicted and some clients who repurchased homes had to spend thousands of dollars beyond their initial agreement.(2)

***

  • Wheatley is the only defendant who has been indicted.(3) Complaints show all the other defendants gave interviews with an investigator. A person with knowledge of the case said some defendants, if not all, have agreed to cooperate against Wheatley. Lawyers for the defendants could not be reached.

For more, see Loan fraud probe nets 5.

Thanks to an anonymous reader for the heads-up on the story.

(1) Repotedly, Wheatley, who started working for Rivertown in 2005, previously worked at law firms in Troy and Latham and was disbarred in 2002 by the Appellate Division's Committee on Professional Standards for "dishonesty, fraud, deceit and misrepresentation." Wheatley, who did not initially challenge the allegations, was reinstated in 2005, the story states. Wheatley's prior professional misconduct, which led to his disbarment, included failure to show up at court conferences, hiding files from clients and misrepresenting the status of cases to the court and clients, the story states.

(2) Others charged include:

  • Jonathan R. Goldman, 28, of Newburgh, Rivertown vice president and chief marketing officer and an alleged straw buyer, was charged with scheming to defraud;

  • Jordan Laccetti, 30, of Saratoga Springs, a loan officer at Rivertown, was charged with falsifying business records. Both face up to four years in prison;

  • Jessica Peryea, 27, of Albany, a licensed real estate broker and sales director at Rivertown, who faces a grand larceny charge. Peryea, an alleged straw buyer, faces up to seven years behind bars.

(3) To the extent Wheatley, an attorney, was acting in his capacity as such when allegedly screwing over the victims, the victims may be able to turn to The Lawyer's Fund for Client Protection of the State of New York for recovery of money.

For similar "attorney ripoff reimbursement funds" that cover the financial mess created by the dishonest conduct of lawyers licensed in other states and Canada, see:

Maps available courtesy of The National Client Protection Organization, Inc.

Spotlight Continues On Head Of Alleged South Florida 'Robo-Signer' Racket

Columnist Max Abelson writes in The New York Observer:
  • Every good crisis deserves a good villain, and every good villain deserves a good yacht. As if the ongoing foreclosure fiasco wasn't already scary enough, the top Wall Street Journal item right now is the news that Fannie Mae and Freddie Mac are reviewing the work of the enormous Florida law firm run by David J. Stern, which they both have sent work to for years. It's the first time the mortgage giants have been directly drawn into the ongoing crisis, because though they don't actually service loans, they do use the foreclosure mills that are turning out to be rife with fraud.

For more, see Is This Foreclosure Supervillain David J. Stern's Yacht 'Misunderstood'?

In a related story this week on Stern, see The Wall Street Journal: Document Mess Hits Fannie, Freddie (Fannie, Freddie cut Stern income stream).

Four Attorneys Face 'Robo-Signing' Allegations In Civil Suit That May Affect As Many As 10,000 Maryland Homeowners

In Baltimore, Maryland, WBAL-TV Channel 11 reports:
  • A lawsuit accuses several Maryland attorneys of falsifying foreclosure documents. The suit was filed Wednesday on behalf of three Marylanders who have faced or could face foreclosure.

***

  • [The Lembachs] hired an attorney, who they said they found a common theme in their case and others: falsified documents. [...] A lawsuit filed on behalf of the Lembachs and two other Maryland homeowners accuses four Maryland attorneys of filing invalid foreclosure documents by not signing the paperwork themselves.

  • The lawsuit claims that the practice caused "hundreds if not thousands of inaccurate documents to be filed as part of foreclosure proceedings before Maryland state courts." "There was fraud all the way through this. I mean, every one of them falsified these documents by having other people sign for them. And the signatures never matched up," Gerald Lembach said.

  • The attorneys listed in the suit include Howard Bierman, George Geesing and Carrie Ward, and 11 News was not able to reach any of them for comment. The Lembachs’ attorney said as many as 10,000 people could be affected in the state of Maryland. The attorney predicts the case will grow to a class action lawsuit.

For the story, see Suit Filed Over 'Falsified' Foreclosure Documents (Attorneys Say Case Could Affect More Than 10,000 Marylanders).

Class Action Claims Loan Servicer Pocketed Payments From Financially Strapped Homeowners In Exchange For 'Bad Faith' Loan Modification Promises

In Los Angeles, California, Courthouse News Service reports:
  • Indymac Bank and its successor, OneWest Bank, defrauded homebuyers by promising to modify their mortgages, but "never at any time possessed a good faith intention to perform on these loan modification agreements," a class action claims in Superior Court. "Defendant sought only to induce homeowners into making further payments and defraud homeowners of their money."

***

  • "Hoping to keep their homes, thousands of defaulted borrowers relied upon defendants' promises and paid to defendants significant amounts of money that they would not otherwise have paid, had they known that defendants did not possess a good faith intention to perform pursuant to the loan modification letter agreements. ...

***

  • The class seeks promissory estoppel(1) and punitive damages for fraud, breach of contract, breach of faith, unjust enrichment, negligent misrepresentation, and business code violations.

For more, see Class Claims Indymac Bank Hustled Them.

(1) See Court: "Promissory Estoppel" Could Make Lender’s Verbal Agreement To Halt F'closure Sale Enforceable, Even Absent Consideration For Promise To Stall, where a California appeals court earlier this year applied the doctrine of promissory estoppel to hold a lender to its verbal agreement with a borrower to halt a foreclosure sale, even though there was no contractual obligation for the lender to do so (ie. the borrower paid no consideration in exchange for the lender’s promise to postpone).

The Lionization Of The "Deadbeats" In The Bogus Foreclosure Documents Scandal

Some interest appears to be building about the 'lionization of the deadbeats' involved in the foreclosure "robosigner" scandal. However, there is some disagreement as to who exactly these deadbeats are.

For opposing views, see:

Maryland Boots Six Notaries Over Robosigning Allegations In Foreclosure Actions

Buried at the end of a recent story on robosigners, The Washington Post reports:
  • [S]ix notaries have been removed from office since August, said Rick Morris, director of charities and legal services at the Maryland secretary of state's office. All worked for law firms that handled foreclosures, Morris said. These notaries did not witness the person sign the document or did not keep not keep a registry as a record as required by state law.

  • "The six notaries involved in this were afforded the opportunity for a hearing in the office of secretary of state," Morris said. "Based on failure or refusal to have a hearing, we removed them from office."

Source: Prince George's court reviewing foreclosures over filing concerns.

Thursday, October 14, 2010

Wells Fargo May Be Added To 'Robo-Signer Scandal' List

The Wall Street Journal reports:
  • Wells Fargo & Co. (WFC) may be added to the list of big mortgage companies that use "robo-signers" to execute piles of foreclosures.

  • In a deposition for a lawsuit in Palm Beach County, Fla., an employee in Wells Fargo's sprawling mortgage servicing business said she signed "hundreds" of foreclosure affidavits a day without verifying the documents' information, as her signature would imply.

  • The San Francisco bank had until recently avoided the revelations of improper foreclosure practices that have dogged large competitors like J.P. Morgan Chase & Co., Bank of America Corp. and government-controlled Ally Bank. A number of banks and mortgage servicers have issued moratoriums on foreclosure sales while they review how they process foreclosures.

For more, see Florida Deposition Offers Evidence Of Wells Fargo 'Robo-Signing' (requires subscription; if no subscription, GO HERE, then click appropriate link for the story).

F'closure Mills Yield To 'Voluntary Emasculation' To Win Loan Servicing Work; Industry Insider: "Law Firms Have Been Flat-Fee'd Into 'Vendor' Status!"

In a recent editorial, Housing Wire publisher Paul Jackson makes this observation on the relationship mortgage loan servicers have with their attorneys:
  • I’ve seen first hand the sort of nonsense that passes as ‘efficiency’ in mortgage servicing, since I spent years working as part of the industry. I’ve seen bank clients demand that a law firm I once worked for proceed with an eviction prior to the expiration of a given notice period; and I’ve seen line staff at banks threaten attorneys with removing cases should the law firm fail to do their bidding, even if that bidding directly contravened existing laws. (And this was in 2004; I can't imagine what it's like now.)

  • Beyond witnessing it myself, I’ve heard stories over the years from numerous attorneys that practice in the field about the nonsense their clients would demand of them. The insults on top of injury here are as numerous as they are now part of the servicing industry’s very fabric. Attorneys that manage foreclosures often aren’t usually even referred to as legal counsel anymore, insofar as many banking personnel are concerned.

  • The law firms have been flat-fee'd into “vendor” status, instead, no different than whatever vendor is delivering office supplies. And these attorneys are often also subjected to the indignation of having to go through vendor management departments just even to be able to begin working for a given bank. Show me one other industry where this is how legal work gets done.

***

  • [W]hen banks decided to take the GSE guidelines as literal gospel, requiring that the law firms manage every case exactly to the published timelines or else, things began to change. Non-attorneys placed in management roles at banks and elsewhere were trained only on the importance of timelines, rather than the virtues of legal risk management. Many were thrown into servicing operations with marching orders to ‘manage process’ without really knowing what, exactly, they were supposed to be managing. So everything became about the timeline. And I mean everything.

  • There’s an old adage that says when all you have is a hammer, everything starts to resemble a nail. It applies in spades here. Layer on top of this a surge in foreclosures so large that it has quite literally overwhelmed attorneys and servicers alike.(1) With a series of bank managers that have now been trained to only understand timelines, and a glut of foreclosures now stuck in the system, law firms — ahem, make that vendors — found themselves having to answer to angry bank managers that wanted to know why so many of their files were stuck in “exceptions” and not hitting the timelines that the bank’s computer systems said they were supposed to.

For more, see Foreclosure mess exposes the rot from within.

(1) The foreclosure processing system operated by the loan servicers and foreclosure mill attorneys (or are they now just 'vendors') has been likened by some as 'Lucy on the chocolate factory assembly line' - a reference to the episode of the 1950s "I Love Lucy" situation comedy in which characters Lucy Ricardo (played by Lucille Ball) and Ethel Mertz (played by Vivian Vance) are furiously grabbing chocolates off a fast-moving conveyor belt and stuffing them into their mouths. See, for example:

By the way, for those of you who have never heard of "I Love Lucy" or never saw the referenced-episode that now dates back over half a century, go here to watch the excerpt of Lucy on the chocolate factory assembly line (and watch Lucy and Ethel play the roles of the loan servicers/foreclosure mills, 50+ years ahead of their time - approx. 3 minutes).

Use of 'Corrective Affidavits' in Foreclosure Actions Now Under Court Scrutiny In Prince George's County

In Prince George's County, Maryland, The Washington Post reports:
  • A Maryland court has begun to review some of 14,500 foreclosure cases pending after finding that the documents were not always signed by the lawyers who claimed to have signed them.

  • The Prince George's County Circuit Court is reviewing foreclosure cases that have a "corrective affidavit," said Judge Thomas P. Smith, who heads the court's new foreclosure committee. In those affidavits, foreclosure lawyers said that they did not sign the original affidavits or other documents that they purportedly signed before a notary public under oath, but that they reviewed them and affirmed the information is correct, Smith said.

For more, see Prince George's court reviewing foreclosures over filing concerns.

Media Reports Continue Shining Light, Applying Heat On Florida's Foreclosure "Rocket Dockets"

In Martin County, Florida, Bloomberg News reports:
  • Home to more foreclosures than 47 U.S. states, Florida sought to clear out its backlog with a system of special court hearings that dispensed with cases quickly, sometimes in less than a minute.

  • Homeowners like Nicole West now threaten to slow that system, Florida’s so-called rocket docket, to a crawl. West, who has been fighting to save her Jensen Beach house from foreclosure, has leveled a new allegation in her three-year battle: the entire process is based on fraud. [...] The banks said they are investigating homeowner charges like West’s that signatures were forged and documents were backdated.

***

  • Four employees of Lender Processing Services signed assignments transferring West’s mortgage, according to an affidavit submitted on her behalf by Lynn Szymoniak, a West Palm Beach attorney. They signed the documents as officers of American Home Mortgage Servicing Inc. and Option One Mortgage Corp. even though they were actually employed by Lender Processing Services, according to Szymoniak’s affidavit.

  • These assignments were signed and notarized more than a year after Deutsche Bank filed the foreclosure suit. For that reason, the Wests question whether the bank has the legal right to file a lawsuit seeking foreclosure. [... M]ichelle Kersch, Jacksonville-based Lender Processing’s spokeswoman, said in a statement that its subsidiary, Docx, executed the documents and that “it had proper authority and review processes in place.”

For the story, see Florida's 30-Second Foreclosure Dash Hits Wall of Fraud Claims.

More On Mortgage Loan Servicers & Their Screw-Ups

Mike Konczal writes in the blog, Rortybomb, on how mortgage loan servicing companies fit into the robosigner foreclosure mess. An excerpt:
  • [T]he first rule of mortgage lending is that you don’t foreclose. And the second rule of mortgage lending is that you don’t foreclose. I’ll let Lewis Ranieri, who created the mortgage-backed security in the 1980s, tell you:

    The cardinal principle in the mortgage crisis is a very old one. You are almost always better off restructuring a loan in a crisis with a borrower than going to a foreclosure. In the past that was never at issue because the loan was always in the hands of someone acting as a fudiciary. The bank, or someone like a bank owned them, and they always exercised their best judgement and their interest. The problem now with the size of securitization and so many loans are not in the hands of a portfolio lender but in a security where structurally nobody is acting as the fiduciary.”

  • In the past you had Jimmy Stewart banks. The mortgages were kept on the books of the bank. You had someone who you could go to and renegotiate your mortgage. With mortgage-backed securities, the handling of payments and working-out of troubles moved to servicers. If you are learning about this crisis for the first time, understanding what is broken here is very important.

For more, see: