Homeowners facing eviction due to foreclosure proceedings can rest easier for the moment.
Following several adverse court decisions throughout the country and the Florida Attorney General’s well publicized investigation into the Florida Default Law Group, the Law Offices of Marshall C. Watson, P.A.; the Law Offices of David J. Stern, P.A.; and Shapiro & Fishman, LLP., both JP Morgan Chase and GMAC Mortgage have suspended mortgage foreclosure proceedings in 23 states.
While several mortgage lenders have dramatically slowed the pace of foreclosures in favor of short-sales or loan modifications, Chase and GMAC have admitted to rubber-stamping documents without reviewing them in an effort to streamline the foreclosure process for maximum volume and profit.
As state and national law enforcement officials take a closer look at the business practices of Chase and GMAC, these mortgage lenders have suspended foreclosure proceedings in Arizona, California, Colorado, Connecticut, Florida, Georgia, Idaho, Illinois, Indiana, Kentucky, Louisiana, Michigan, Nevada, New Jersey, New York, Ohio, Oklahoma, Oregon, Texas, Utah, Washington, West Virginia, and Wisconsin.
Because most mortgages have been bought and sold many times, the documentation required to obtain foreclosure judgments is often incomplete or missing. On numerous occasions, fabricated documents have allegedly been presented to courts in support of a final judgment against homeowners. Chase and GMAC have reported that they will review every pending foreclosure action to determine whether they have created and filed improper affidavits in proceedings pending before any court.
The JP Morgan Chase moratorium came after GMAC Mortgage called a temporary halt to pending foreclosures based upon its own affidavit concerns. Chase took this extraordinary action because it could not determine whether it had committed perjury or had submitted false affidavits in any pending foreclosure matter. When announcing the move, Chase downplayed its importance as being “mere technical errors.”
As part of the foreclosure process, mortgage lenders routinely file sworn affidavits that employees have reviewed bank records for completeness and accuracy. At both Chase and GMAC, employees have now admitted that they almost never review bank records prior to executing an affidavit.
Attorneys general in several states have initiated investigations and the U.S. Treasury Department has announced a plan to examine “these troubling developments.” Some industry experts suggest the scandal may aid in a housing recovery by forcing lenders to negotiate with distressed homeowners rather than simply evict them.
“On numerous occasions, false affidavits and fabricated documents have allegedly been presented to courts in foreclosure actions to obtain final judgments against homeowners,” stated Florida Attorney General Bill McCollum. “As Attorney General, my job is to protect the rights of all Floridian’s by investigating deceptive practices and putting a stop to unlawful activities.”
Chase had declined to address the matter until issuing the moratorium last week. But in a sworn deposition, one of the bank’s employees, Beth Ann Cottrell, admitted under oath that her team signed approximately 18,000 foreclosures affidavits a month without reviewing bank records. Both mortgage lenders are now investigating whether foreclosure cases were improperly assembled and whether their employees committed perjury for failing to review bank records prior to alleging the same in court documents.
Defense attorneys who have long reported widespread fraud in home foreclosure proceedings called the announcement from Chase and GMAC a “bombshell” in tough economic times. “The fact that JP Morgan Chase and GMAC Mortgage have halted most foreclosure proceedings is only the beginning.” said Fort Lauderdale foreclosure defense attorney Scott Kleiman of Kalis & Kleiman. “Since so many loan servicers essentially utilize the same affidavits, this is only the tip of the iceberg.”
Source: The Credit Report with Bill Lewis – Highlands Today, an edition of the Tampa Tribune (Media General Group) – http://www2.highlandstoday.com/content/2010/oct/03/lc-jp-morgan-chase-and-gmac-mortgage-halt-sales/ To review Bill Lewis’ entire consumer protection series, please visit http://www.williamlewis.us
William E. Lewis Jr., is a credit repair expert with Credit Restoration Consultants and host of “The Credit Report with Bill Lewis” on AM 1470 WWNN, a daily forum for business and financial news, politics, economic trends, and cutting edge issues.