A Slap on the Wrist for Mortgage Servicers

While negotiations continue between mortgage servicers and the Multistate Mortgage Foreclosure Group, enforcement action has been taken by the Office of the Comptroller (OCC), the Office of Thrift Supervision (OTS), and the Federal Reserve Board (FRB) against 14 U.S. bank and two third-party mortgage servicers.

Amid allegations of unsafe and unsound practices in the processing of foreclosures, enforcement action has been taken against bank servicers: Ally Financial, Aurora Bank, Bank of America, Citibank, Citigroup, EverBank, HSBC, JP Morgan Chase, MetLife Bank, OneWest Bank, PNC, Sovereign Bank, SunTrust Bank, U.S. Bank, and Wells Fargo and third-party servicers: Lender Processing Services Inc. (LPS), and MERSCORP also known as Mortgage Electronic Registration Systems Inc. (MERS).

“These comprehensive enforcement actions, coordinated among the federal banking regulators, require major reforms in mortgage servicing operations,” said acting Comptroller of the Currency John Walsh. “These reforms will not only fix the problems we found in foreclosure processing, but will also correct failures in governance and the loan modification process and address financial harm to borrowers. Our enforcement actions are intended to fix what is broken, identify and compensate borrowers who suffered financial harm, and ensure a fair and orderly mortgage servicing process going forward.”

As part of the enforcement action by the OCC, OTS and FRB, servicers must significantly improve residential mortgage loan servicing and foreclosure processing.  This includes borrower communication and “dual-tracking,” which will prohibit foreclosure during the loan modification process. 

Mortgage servicers are also required to promptly correct deficiencies in residential mortgage loan servicing that were identified by examiners in reviews conducted during the fourth quarter of 2010. 

Each mortgage servicer must, among other things, submit plans acceptable to the FRB that:

►Strengthen coordination of communications with borrowers by providing them with the name of the person who is their primary point of contact at the servicer;

►Ensure that foreclosures are not pursued once a mortgage modification has been approved, unless repayments under the modified loan are not made;

►Establish robust controls and oversight over the activities of third-party vendors that provide residential mortgage loan servicing, loss mitigation, or foreclosure-related support, including local counsel in foreclosure or bankruptcy proceedings;

►Provide remediation to borrowers who have suffered financial injury as a result of wrongful foreclosures or other deficiencies identified in their review of the foreclosure process; and

►Strengthen their programs to ensure compliance with state and federal laws regarding mortgage servicing and the processing of foreclosures.

“This settlement provides that if you’re negotiating or in the midst of a trial modification, a lender is prohibited from seizing the property,” says Carlos J. Reyes, a foreclosure defense attorney with the Reyes Law Group in Fort Lauderdale.  “Defense attorneys now have a basis to go forward to try and save a property in litigation with the additional argument that failing to modify or settle is a breach of the lender settlement with federal regulators.”

The enforcement action is based upon an OCC, OTS and FRB review of foreclosure practices that found mortgage servicers “failed to conform to state legal requirements.”  The review stopped short at robo-signing and other forms of document fraud.  It did not investigate the illegal imposition of fees, the failure to comply with loan modification requirements or other alleged servicer abuses.  In fact, federal regulators only reviewed a small sample of loan files containing key information on foreclosure practices.

Many believe that the settlement by federal regulators will undermine the investigation of foreclosure fraud by the Multistate Mortgage Foreclosure Group.  Initially, there were hopes of a “global settlement” covering state and federal regulators, but the agencies, led by the OCC, broke off and delivered their own enforcement action.  

While federal regulators and the various state attorneys general maintain this enforcement action will not affect the AG probe or ongoing negotiations, mortgage servicers can now report they have been punished for alleged violations of law.  Although an independent review is determining damages, they may reject any additional settlement since they have already been punished by their regulators.

To review Bill Lewis’ entire consumer protection series, please visit http://www.williamlewis.us.

William E. Lewis Jr. & Associates is a solutions based professional consulting firm specializing in the discriminating individual, business or governmental entity.  To learn more, tune into The Credit Report with Bill Lewis, weekdays at 9 o’clock on AM 1470 WWNN.

Foreclosure Mill Settles With Florida Attorney General

Florida Attorney General Pam Bondi announced today a first-of-its-kind settlement against attorney Marshall C. Watson and his law firm – the Law Offices of Marshall C. Watson – for alleged improprieties in the prosecution of foreclosure cases throughout Florida.  

This settlement calls for a $2 million payment and imposition of certain requirements to conduct business and is the first stemming from numerous investigations into Florida foreclosure law firms.

“We are aggressively investigating these law firms in order to protect the interests of everyone involved in foreclosure proceedings. Homeowners, lending institutions and the courts deserve to know that the law is being followed and all documentation is true and accurate,” stated Attorney General Pam Bondi. “Anything short of total assurance of complete accuracy during such serious situations is unacceptable.”

Florida led the nation in the investigation of law firms and foreclosure mills engaged in the improper production and filing of foreclosure documents. The Law Offices of Marshall C. Watson fully cooperated with the investigation since its inception.

Half of the $2 million payment from Marshall Watson’s law firm to the Attorney General’s Office will be contributed to the Florida Bar Foundation to continue the Florida Attorney General Mortgage Foreclosure Grant Program. This grant program provides for the funding of Legal Aid attorney positions throughout Florida specifically devoted to the representation of low-income individuals facing foreclosure actions.

The investigation of the Florida Attorney General into the practices of several other Florida law firms is continuing.

To access the Assurance of Voluntary Compliance, please click here: http://myfloridalegal.com/webfiles.nsf/WF/SKNS-8FAHED/$file/WatsonAVC.pdf

Court’s stance on foreclosure case could have big impact

A Palm Beach county homeowner fighting alleged foreclosure fraud has ended up before the Florida Supreme Court.

An appeals court last week requested that the high court consider the case of Greenacres homeowner Roman Pino as a matter of “great public importance.” The decision by the 4th District Court of Appeal in West Palm Beach was unusual as neither the bank nor the homeowner requested such a review.

“We conclude that this is a question of great public importance, as many, many mortgage foreclosures appear tainted with suspect documents,” the appeals court wrote in certification to the Supreme Court.

Should the case be accepted by the Florida Supreme Court and a decision rendered in favor of Pino, thousands of cases could be impacted as allegations of document fraud run rampant throughout the state.

According to land records, Pino purchased his Greenacres home in July, 2006 for $203,000 by securing a $162,400 mortgage with Silver State Financial Systems. After falling behind on the mortgage, the Bank of New York moved to foreclose in October, 2008.

In their foreclosure complaint, the Bank of New York alleged that it was the owner of Pino’s mortgage note through an assignment from another lender, but did not include said assignment as part of its original complaint.

Pino retained Thomas Ice, of Ice Legal, whose boutique litigation firm specializes in uncovering forged and fraudulent foreclosure documents. In moving to dismiss the complaint, Pino’s attorney argued that the bank needed an assignment in order to have standing to foreclose.

Attorneys from the law offices of David J. Stern in Plantation filed an amended complaint and attached an unrecorded mortgage assignment “which happened to be dated just before the original pleading was filed,” the appeals court wrote.

Stern’s firm is one of four foreclosure mills under investigation by Florida Attorney General Pam Bondi. In addition to Stern, the Florida Default Law Group, the Law Offices of Marshall C. Watson, P.A. and Shapiro & Fishman, LLP, have all denied wrong doing.

Just as Pino’s attorneys were set to take depositions of Stern employees to determine how the assignment was created, the bank dismissed its foreclosure action. Ice had wanted an opportunity to prove that Pino was the victim of fraud but was unable to do so because of the voluntary dismissal. The bank refiled the foreclosure in August 2009, and that case is pending.

In its written opinion, the Fourth District Court of Appeal agreed with the lower court’s ruling about the dismissal but because of its importance on similar foreclosure matters, sent the case to the state’s highest court in Tallahassee. One appellate judge, Gary Farmer, dissented saying he thought the trial judge could have kept the case open to litigate Pino’s claim of fraud.

“In recognizing the procedural issue at hand, the District Court of Appeal is inherently signaling that forged or fraudulent documents have been introduced into foreclosure cases,” says Carlos J. Reyes, a foreclosure defense attorney with the Reyes Law Group in Fort Lauderdale. “The Pino case illustrates an issue where banks have dismissed foreclosures when problematic documents have been discovered only to be refiled later with different documents.”

To learn more about the mortgage foreclosure crisis or to file a complaint with the Attorney General’s Office, please visit www.myfloridalegal.com or call (866) 9-NO-SCAM (866-966-7226).

To review Bill Lewis’ entire consumer protection series, visit http://www.williamlewis.us.

William E. Lewis Jr. & Associates is a solutions based professional consulting firm specializing in the discriminating individual, business or governmental entity. To learn more, tune into The Credit Report with Bill Lewis, weekdays at 9 o’clock on AM 1470 WWNN.

The Credit Report with Bill Lewis, as reported in the Highlands Today, a Media General Group publication: http://www2.highlandstoday.com/content/2011/feb/06/courts-stance-on-foreclosure-case-could-have-big-i/

Foreclosure fraud: AG releases critical report

One day after a reported settlement between Bank of America, JP Morgan Chase, Citigroup, Wells Fargo and Ally Financial with attorneys general across the U.S. in the foreclosure epidemic, Florida Attorney General Pam Bondi released a highly critical presentation detailing legal issues surrounding the crisis.

The presentation, titled “Unfair, Deceptive and Unconscionable Acts in Foreclosure Cases,” was provided by the attorney general’s economic crimes division during an early December conference of the Florida Association of Court Clerks and Comptrollers as an overview and was not representative of any specific misconduct.

The comprehensive presentation was compiled in exploration of foreclosure malpractice and condemns banks, mortgage servicers, and law firms for contributing to the crisis by cutting corners.

Although not aimed at a specific case, four of Florida’s largest foreclosure law firms are under investigation by the state. 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, all have denied wrong doing.

Sweeping evidence of mortgage fraud was outlined in the 98-page presentation complete with copies of alleged forged signatures, false notarizations, bogus witnesses and improper mortgage assignments. Examples of alleged fraud and missteps made during the securitization process by major financial institutions when they wrote, packaged, and sold mortgages during the boom years was also provided.

The “Unfair, Deceptive and Unconscionable Acts in Foreclosure Cases” presentation meticulously documents cases of questionable signatures, notarizations that could not have occurred when claimed due to expired notary commissions and foreclosures filed by banks or law firms that lacked legal standing to foreclose on a particular property.

The presentation also focused largely on assignments of mortgage, a legal document that transfers ownership of mortgages from one bank to another. Mortgage assignments became an issue after the real estate boom, when mortgages were sold and resold, packaged into securitized trusts and otherwise transferred in a fashion that made tracking difficult.

“The Attorney General’s Office has a long standing commitment to fighting mortgage fraud and is dedicated to continuing this critical effort,” said Florida Attorney General Pam Bondi. “Since 2008, our office has started over 150 formal mortgage fraud investigations, 70 which remain active, 21 that resulted in civil lawsuits, and over 50 companies in review.”

As the foreclosure crisis mounted, banks and law firms appointed people to create assignments, of which tens of thousands were executed by robo-signers who failed to properly verify the claims in which they were swearing upon.

In one example, the signature of an individual named Linda Green appears – in varying styles – on hundreds of thousands of mortgage documents from dozens of banks and mortgage companies.

In another example, the signature of Scott Anderson, an employee of West Palm Beach-based Ocwen Financial Corp., appears in four styles on mortgage assignments.

Paul Koches, executive vice president of Ocwen, has acknowledged that the signatures were not all Anderson’s, “but that doesn’t mean they were forged,” he said. “Certain employees were given authorization to sign for Anderson on mortgage assignments.” Once the robo-signing crisis was revealed, Ocwen stopped allowing other employees to sign for Anderson.

“For the sake of expediency, no one bothered to verify or otherwise validate these assignments and affidavits prior to signing them,” says Carlos J. Reyes, a foreclosure defense attorney with the Reyes Law Group in Fort Lauderdale. “In some cases, courts have found that banks did not have standing to foreclose on the property sued upon.”

To learn more about the mortgage foreclosure crisis or to file a complaint with the Attorney General’s Office, visit www.myfloridalegal.com or call (866) 9-NO-SCAM (866-966-7226). To review the scathing 98-page presentation, visit: http://scr.bi/gbSIsO

Source:  The Credit Report with Bill Lewis – Highlands Today, an edition of the Tampa Tribune – Media General Group http://www2.highlandstoday.com/content/2011/jan/09/foreclosure-fraud-ag-releases-critical-report/

To review Bill Lewis’ entire consumer protection series at the Highlands Today, visit www.williamlewis.us.

William E. Lewis Jr. & Associates is a solutions based professional consulting firm specializing in the discriminating individual, business or governmental entity. To learn more, tune into “The Credit Report with Bill Lewis,” a daily forum for business and financial news, politics, economic trends, and cutting edge issues on AM 1470 WWNN.

Florida Attorney General cracking down on foreclosure mills

Homeowners, attorneys, and Florida’s judiciary have long sounded the alarm over insufficient or fraudulent documents being used to take thousands of properties from unsuspecting homeowners in the foreclosure process. Not only has the Florida Supreme Court amended the rules of civil procedure in relation to home foreclosures, judges throughout the state have reversed foreclosure sales, dismissed cases for insufficiency, and created additional steps to ensure the proper filing and disposition of cases.


Coming on the heels of an investigation into the Florida Default Law Group, Florida Attorney General Bill McCollum announced Tuesday that his office has launched a new investigation into allegations of unfair and deceptive actions by three law firms handling residential foreclosure cases in the Sunshine State.

Handling over 35 percent of all foreclosure cases in the state of Florida, the investigation names the Law Offices of Marshall C. Watson, P.A.; the Law Offices of David J. Stern, P.A.; and Shapiro & Fishman, LLP. The Florida based law firms were hired by loan servicers to begin foreclosure proceedings when consumers were in default on their mortgages.

The Attorney General’s Economic Crimes Division is investigating whether documentation may have been fictitiously created and filed with Florida courts to speed up foreclosure processes, potentially without the knowledge or consent of the homeowners involved. Thousands of final judgments of foreclosure against Florida homeowners may have been the result of the alleged improper actions of the law firms under investigation.

Because many mortgages have been bought and sold by different institutions multiple times, key paperwork involved in the process to obtain foreclosure judgments is often missing. On numerous occasions, fabricated documents have allegedly been presented to courts in support of a final judgment against homeowners. The investigation will focus on whether these law firms created and filed improper documentation with Florida courts in an effort to deceptively strip Floridian’s of their homes.

The attorney general’s investigation will also look at whether the law firms created affiliated companies outside the United States where the alleged false documents are being prepared and then submitted to the law firms for use within the Florida court system.

“On numerous occasions, allegedly fabricated documents have been presented to the courts in foreclosure actions to obtain final judgments against homeowners,” stated Attorney General Bill McCollum. “As Attorney General, my job is to protect the rights of all Floridian’s by investigating unlawful activities and putting a stop to deceptive practices. To this end, my office will continue to investigate.”

News of the Florida Default Law Group investigation led to a number of complaints from homeowners and attorneys about the Law Offices of Marshall C. Watson, P.A.; the Law Offices of David J. Stern, P.A.; and Shapiro & Fishman, LLP. Subpoenas were served on each of the law firms demanding documents dating back to Jan. 1, 2008. The subpoenas also seek information on 18 specific foreclosure cases, in addition to general information about the law firms’ operations.

Defense attorneys who have long reported widespread fraud in home foreclosure cases called Tuesday’s announcement from the state’s chief law enforcement officer a “bombshell” for Florida’s foreclosure system.  “The fact that Bill McCollum is expanding his investigation into potentially unfair and deceptive practices should be commended” said Fort Lauderdale foreclosure defense attorney Scott Kleiman of Kalis & Kleiman. “The attorney general doesn’t spend limited state resources investigating these types of cases without reason.”

According to McCollum, 245 complaints have been filed against the Florida Default Law Group while 48 complaints have been filed against The Law Offices of David Stern. The Law Offices of Marshall C. Watson and Shapiro & Fishman each have 12 complaints pending. A number of other complaints are under review and additional subpoenas may be issued.

If you are the victim of a mortgage foreclosure fraud, file a complaint with the Attorney General’s Office by calling (866) 9-NO-SCAM (866-966-7226) or by visiting their website at http://www.myfloridalegal.com.

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.