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Bank Bravado Lacking Substance: Thousands of Foreclosures Halted in NYC for Inaccuracies

25 Oct

Bank of America, so full of bluster and brimming with boasts that their processes are all fine, nothing to see here people, move along, move along.

Here is what we love the most about this: it is the New York courts that required the attorneys representing the banks to sign on the dotted line for responsibility for the accuracy of the documentation – seemed slight enough that we thought it might mean nothing – but; it turns out that this one thing has brought up a lot of  very interesting ‘alternate foreclosure universes’ as the judge quipped in one instance.

And it is not all about a few missing papers on some ‘dead beat homeowner’s’ loan. oh no, these are cases involving lenders who do not own the mortgage, houses whose debts have been paid off and all sorts of other fun things.

Yes, it’s a bit of a serious inaccuracy when the house has no mortgage on it, fairly serious, indeed.

Not so fast, it seems, at least not in New York City.

nakedcapitalsim reports:

So Much For Bank Claims That Nothing is Wrong with Foreclosures: 4450 Foreclosures Halted In NYC Due to Inaccuracies

from naked capitalism by Yves Smith

After the dramatic multi-state foreclosure halts by three major servicers, GMAC, Bank of America, and JP Morgan, over the use of improper, “robo signed” affidavits, the new party line from these banks and others who also used robo signers, like Wells Fargo, is that this was a mere “technical” problem, that they had reviewed ten of thousands of pending foreclosures and claimed the underlying information and processes were sound.

A review by the New York Daily News indicates otherwise. Note that New York is a judicial foreclosure state. Be sure to read down to the sentence I boldfaced:

Thousands of foreclosures across the city are in question because paperwork used to justify the seizure of homes is riddled with flaws, a Daily News probe has found.

Banks have suspended some 4,450 foreclosures in all five boroughs because of paperwork problems like missing and inaccurate documents, dubious signatures and banks trying to foreclose on mortgages they don’t even own…..

Last week, New York’s top judge, Jonathan Lippman, began requiring all bank lawyers to sign a form vouching for the accuracy of their foreclosure paperwork.

That could have been a problem for one Long Island foreclosure that was being brought by GMAC Mortgage last year.

A sworn affidavit dated March 30 was signed by someone identified as Sherry Hall, vice president of a GMAC affiliate called Homecomings Financial Network.

Fifteen days later another sworn affidavit surfaced in another Suffolk County foreclosure, this time signed by a GMAC vice president named Sheri D. Hall.

Despite the difference in the names, the signatures were identical – and were vouched for by the same notary.

Suffolk Supreme Court Justice Peter Mayer refused to approve the foreclosure bearing the name Sherry Hall and ordered her, and the notary, to appear in court Nov. 17. GMAC officials did not return calls..

Judges are also seeing banks foreclosing on homes they don’t yet own – a problem that concerns Brooklyn Supreme Court Justice Arthur Schack.

Schack said it’s become increasingly “murky” trying to determine who holds a mortgage at the time of foreclosure because they’re often passed from one lender to another….

Last August, Schack dismissed a foreclosure the Bank of New York was bringing on an E. 48th St. home in Brooklyn that was filed 61 days before the mortgage was assigned to the bank.

The judge dubbed as “nonsensical” a computer printout the bank claimed proved it held the mortgage before the foreclosure was brought.

In May, Schack rejected a lawyer’s claim that the assignment of the mortgage on a Jefferson St. home in Bushwick to HSBC was valid.

“Counsel appears to be operating in a parallel mortgage universe, unrelated to the real universe,” he said.

He shot down yet another foreclosure on a Rockaway Parkway home in Brooklyn because JPMorgan Chase couldn’t prove it held the mortgage until 75 days after the proceedings began….

Last year, Schack tossed a foreclosure that involved a woman who claimed to be many things.

On one foreclosure, she swore she was an assistant vice president for a bank, and also an official for a lenders’ clearing house. In another, she was an assistant vice president for yet another institution.

“She is a milliner’s delight by virtue of the number of hats she wears,” the judge quipped.

Some banks also pursue foreclosures even after delinquent homeowners have sold the houses and paid off the mortgages.

Schack told The News he expects to see more paperwork snafus. “It’s like an onion we keep peeling,” he said. “It seems to be layers and layers of problems.”

Let’s do a simple extrapolation. New York City has a population of roughly 8.4 million. It has the lowest household size in the nation (hence more housing units per capita) but also a very low level of homeownership compared to the nation as a whole. We’ll assume that nets out.

The population of the US is roughly 308 million. If the rate of problems with foreclosures in the US is the same as in New York, that suggest that 163,000 foreclosures underway NOW have significant documentation problems, and some of them indicated in the article (foreclosing on people who have discharged the mortgage, lack of clear ownership of the note) are not mere “paperwork” problems, but point to more serious failings.

Note also that at least some judges are not persuaded by the banks’ breezy assurances that all is now well.

Keep in mind that this quick calculation applies to foreclosures now underway. The cumulative number is clearly vastly greater.

 

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