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Saturday, October 02, 2010

Courts - "GMAC Mortgage Stops Foreclosures in 23 States"

This includes Indiana.

What does this mean for the future?

What does it mean for finalized foreclosures?

The ILB hopes to find some answers.

[More] The initial reports were confusing:

Here is a Sept. 21st story by Denise Pellegrini of Bloomberg. A quote:

GMAC Mortgage may “need to take corrective action in connection with some foreclosures” in the affected states, according to a two-page memo dated Sept. 17 and obtained by Bloomberg News. Ally Financial spokesman James Olecki confirmed the contents of the memo. Brokers were told to stop evictions, cash-for-key transactions and lockouts, regardless of occupant type, with immediate effect, according to the document, addressed to GMAC preferred agents.

The company will also suspend sales of properties on which it has already foreclosed. The letter tells brokers to notify buyers that the company will extend the closing date on all sales by 30 days. Buyers will be able to cancel their agreement to purchase and get their deposit back, according to the letter.

But here is a story from the same day from Dan Burrows of Daily Finance which contains a lengthy denial from Ally Financial that GMAC Mortgage is halting foreclosures. According to Daily Finance, "GMAC Mortgage is a division of Ally Financial (GJM), which was known as GMAC Inc. before the financial crisis hit. The company received than $17 billion in federal bailout funds before rebranding itself last year." Re the Mortgage Electronic Registration System (MERS)
But today, Oct. 2, 2010, the LA Times has a story headed "Bank of America freezes evictions in 23 states: The bank cites concerns over whether its foreclosure paperwork was handled properly." E. Scott Reckard reports:
Citing concerns over whether its foreclosure paperwork was handled properly, Bank of America Corp. on Friday put evictions on hold in 23 states — joining two rivals that have taken similar steps.

The freeze is taking place in states where courts have jurisdiction over foreclosures, Bank of America said. [ILB - that includes Indiana] It will not apply to California and 26 other states where foreclosures usually take place without a court order, but the action could put added pressure on banks to ease back on foreclosures more broadly amid high unemployment and continued turmoil in the housing market. * * *

Detroit-based Ally Financial Inc. halted evictions in the 23 states last month after the head of Ally's document processing team acknowledged in a deposition that he signed thousands of affidavits certifying that foreclosure paperwork was correct even though he hadn't read the documents.

JPMorgan Chase & Co., the giant New York bank, suspended its evictions this week after problems surfaced with signatures on some of its affidavits.

Charlotte, N.C.-based Bank of America — which became the largest mortgage customer-service provider when it acquired Countrywide Financial Corp. in 2008 — followed suit Friday.

"To be certain affidavits have followed the correct procedures, Bank of America will delay the process in order to amend all affidavits in foreclosure cases that have not yet gone to judgment in the 23 states where courts have jurisdiction over foreclosures," the bank said in a statement.

The affidavits are required to be filed in court when banks make motions for summary judgment to obtain foreclosure orders from judges. * * *

The banks have said they believe the information in the affidavits — such as how much is owed and when the mortgages went into default — is accurate even if the affidavit signers didn't take the time to read them thoroughly because of the glut of foreclosures.

Reuters reported yesterday that: "Fannie Mae (FNMA.OB) and Freddie Mac (FMCC.OB), the largest providers of funding for U.S. residential mortgages, on Friday said they are taking steps with their regulator to strengthen oversight of thousands of loan servicers.."

Take a look at some of the Oct. 1, 2010 entries on this mortgage blog. This entry quotes Connecticut Attorney General Richard Blumenthal:

This freeze should stop a foreclosure steamroller based on defective documents and enable effective remedies. The actions of GMAC/Ally and JP Morgan are inexcusable, a possible fraud on the court undermining the integrity of the legal process and consumers’ ability to fight foreclosures.
And this one from the same mortgage blog is also well worth reading.

Finally, Delaware Online has this opinion piece today that concludes:

The admission adds to a growing list of private lenders and mortgage companies whose employees signed documents in foreclosure cases without verifying the information in them.

What's particularly galling is that hundreds of stressed homeowners were made to jump through multiple paperwork hoops to comply with refinancing programs.

Now it turns out the cost to secure documents and upfront fees may have been a cruel hoax furthered by avoidable incompetence.

It's not enough to cite the burden of millions of foreclosures as an excuse, as one BofA employee complained.

With this mortgage crisis, the ball has always been in the hand of the lender.

Now that it's known that these homeowners never stood a chance of having their efforts to save their home even reviewed, much less the expectation of being fairly reconsidered, how will these lenders make good on this error?

Here are some earlier ILB entries worth reviewing:

Posted by Marcia Oddi on October 2, 2010 08:46 AM
Posted to Courts in general | Indiana Courts