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Wells Fargo Foreclosures Proceed After Data Queried

October 7, 2010 By Leave a Comment

Dakin Campbell and David Mildenberg, Bloomberg

Wells Fargo & Co. is standing by the accuracy of its foreclosure filings and won’t follow competitors in delaying seizures, after an employee testified he signed documents for proceedings without personally reviewing records.

The bank said yesterday it doesn’t plan to halt repossessions because its “procedures and daily auditing demonstrate that our foreclosure affidavits are accurate.”

In a May 20 deposition, a Wells Fargo Home Mortgage employee said he signed 50 to 150 documents a day, including statements describing debts and borrowers used to justify foreclosures, without personally confirming the information was correct. His testimony related to a civil claim against the bank in a Washington state court. A judge dismissed the case in June.

Mortgage firms have drawn fire from borrowers, lawyers and state officials for letting employees sign affidavits for court- monitored foreclosures without personally checking loan records. JPMorgan Chase & Co. and Bank of America Corp. last week delayed foreclosures to review the accuracy of their filings. Last month, Ally Financial Inc. said its GMAC Mortgage unit would halt evictions for a similar review.

The Wells Fargo employee said he relied on foreclosure lawyers and personnel in other departments to check files, according to a deposition transcript provided by Melissa Huelsman, the Seattle attorney representing the homeowner. The employee said he confirmed the date on the file before signing without verifying other information.

‘Out of Context’

Those comments “should not be taken out of context,” Wells Fargo said in yesterday’s statement, e-mailed by a spokeswoman, Vickee Adams. The judge “reviewed Wells Fargo’s procedures, documents and declarations and summarily dismissed the borrower’s case, confirming that the foreclosure was valid,” the bank said in the statement.

Read more here: http://www.bloomberg.com/news/2010-10-06/wells-fargo-won-t-delay-foreclosures-as-rivals-review-filings.html

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Filed Under: Connecticut, Florida, Maryland, Mortgage News, New Hampshire, New Jersey, New Mexico, New York, Pennsylvania, Virginia, Washington, D.C., Wisconsin Tagged With: , , , , , , , , , , , ,

Foreclose first, ask questions later

October 3, 2010 By 1 Comment

Ann Woolner, Bloomberg via The Miami Herald

There was a time, not long ago, when having a home of your own signaled stability. It was a stake in a community, a place for individuals to come into their own or for families to grow. It was a solemn obligation to a financial institution, a statement of the bank’s faith in you, an investment for old age.

So much for that. These days, millions of houses across the country sit empty or shelter owners who can’t or won’t make mortgage payments. The vacancies undermine the notion of home ownership as a road to stability.

As dismal as the housing market is, at least we could cling to the idea that the nation was slowly climbing out of the mortgage mess. Despite how painful and heartbreaking foreclosures and evictions are, the country was working its way toward still-distant normalcy.

DASHED HOPES

This month, hopes for a stabilized housing market took a hit, as Ally Financial Inc.’s GMAC Mortgage unit halted evictions in 23 states. Attorney generals in two more states also are demanding moratoria.

The culprit is sloppy, possibly fraudulent, paperwork by at least one manager at the division. And it looks like he was doing what lots of other foreclosure processors were doing, too.

We’ve seen this culprit before. Sloppy research and sometimes fraudulent paperwork by lenders, loan packagers, credit raters and insurers of mortgage-backed securities kicked off the mortgage disaster in the first place.

The only difference is that this time it’s occurring at the rear end of the business, foreclosures.

Did anybody working at mortgage lenders learn anything over the past two years? And shouldn’t banks be careful about taking away someone’s home?

GMAC middle manager Jeffrey Stephan said in a deposition that he signed 10,000 foreclosure packages a month. To accomplish that, he had to give up something. What he omitted was checking to see whether the named owner was really in default and whether the listed mortgage holder in fact still held the mortgage.

In other words, he had no time to check the facts contained in the papers whose accuracy he was guaranteeing. Nor did he bother to always have a notary present when he signed, as required.

Likewise, a JPMorgan Chase executive said in a deposition last May that she hadn’t personally verified information on the thousands of affidavits and other documents she signed so that her bank could foreclose on houses.

OVERWHELMED

Beth Ann Cottrell, an operation supervisor at the company’s Chase Home Finance unit, testified that she and seven other managers signed a total of about 18,000 documents a month, according to a transcript.

Between the two of them, JPMorgan and Ally service a huge chunk of the country’s home mortgages, $1.35 trillion for JPMorgan and more than $349 billion for Ally, according to newsletter Inside Mortgage Finance.

Read more: http://www.miamiherald.com/2010/10/03/1854196/foreclose-first-ask-questions.html#ixzz11L4nLPbT

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Filed Under: Connecticut, Florida, Mortgage News, New Hampshire, New Jersey, New Mexico, New York, Pennsylvania, Virginia, Washington, D.C., Wisconsin Tagged With: , , , , , , , , , , , , , , , , , , , ,

Are Ambulance Chasers Becoming Foreclosure Chasers?

September 28, 2010 By Leave a Comment

David Streitfeld, NY Times

The recent admission by a major mortgage lender that it had filed dubious foreclosure documents is likely to fuel a furor against hasty foreclosures, which have prompted complaints nationwide since housing prices collapsed.

Lawyers for distressed homeowners and law enforcement officials in several states on Friday seized on revelations by GMAC Mortgage, the country’s fourth-largest home loan lender, that it had violated legal rules in its rush to file many foreclosures as quickly as possible.

Attorneys general in Iowa and North Carolina said they were beginning separate investigations of the lender, and the attorney general in California directed the company to suspend all foreclosures in that state until it “proves that it’s following the letter of the law.”

The federal government, which became the majority owner of GMAC after supplying $17 billion to prevent the lender’s failure, said Friday that it had told the company to clean up its act.

Florida lawyers representing borrowers in default said they would start filing motions as early as next week to have hundreds of foreclosure actions dismissed.

While GMAC is the first big lender to publicly acknowledge that its practices might have been improper, defense lawyers and consumer advocates have long argued that numerous lenders have used inaccurate or incomplete documents to remove delinquent owners from their houses.

The issue has broad consequences for the millions of buyers of foreclosed homes, some of whom might not have clear title to their bargain property. And it may offer unforeseen opportunities for those who were evicted.

“You know those billboards that lawyers put up seeking divorcing or bankrupt clients?” asked Greg Clark, a Florida real estate lawyer. “It’s only a matter of time until they start putting up signs that say, ‘You might be entitled to cash payment for wrongful foreclosure.’ ”

The furor has already begun in Florida, which is one of the 23 states where foreclosures must be approved by courts. Nearly half a million foreclosures are in the Florida courts, overwhelming the system.

J. Thomas McGrady, chief judge in the foreclosure hotbed of St. Petersburg, said the problems went far beyond GMAC. Four major law firms doing foreclosures for lenders are under investigation by the Florida attorney general.

“Some of what the lenders are submitting in court is incompetent, some is just sloppy,” said Judge McGrady of the Sixth Judicial Circuit in Clearwater, Fla. “And somewhere in there could be a fraudulent element.”

In many cases, the defaulting homeowners do not hire lawyers, making problems generated by the lenders hard to detect.

Read more here: http://www.nytimes.com/2010/09/25/business/25mortgage.html?_r=2&pagewanted=all

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Filed Under: Connecticut, Florida, Maryland, Massachusetts, Michigan, Mortgage News, New Hampshire, New Jersey, New Mexico, New York, Pennsylvania, Virginia, Washington, D.C., Wisconsin Tagged With: , , , , , , , , , , ,

IRS issues loan write-down rules

March 18, 2010 By Leave a Comment

Kenneth R. Harney / Boston Herald

With the Obama administration and private lenders now actively considering mortgage-principal-reduction programs to help financially distressed homeowners, the Internal Revenue Service has issued a new advisory to taxpayers who receive – or seek to receive – such assistance if it’s offered.

The IRS gets involved in mortgage principal write-downs because the federal tax code generally treats any forgiveness of debt by a creditor in excess of $600 as ordinary taxable income to the recipient.

However, under legislation that took effect in 2007, certain home mortgage debt cancellations – such as through loan modifications, short sales or foreclosures – may be exempted from tax treatment as income.

Sheila Bair, chairman of the Federal Deposit Insurance Corp., recently confirmed that her agency is working on a new program to expand the use of mortgage-principal reductions to keep underwater borrowers out of foreclosure. Major banks and mortgage companies have preferred monthly payment reductions and other loan-modification techniques over cuts of principal balances, but a handful have made limited use of the concept.

One of the largest servicers of subprime loans, Ocwen Financial Services of West Palm Beach, Fla., has strongly advocated principal reductions to keep people out of foreclosure, and claimed broad success with them.

But what are the tax implications when your lender essentially says: OK, we recognize you’re underwater, maybe you’re thinking about walking away, and we’re going to write off some of what you owe to keep you in the house? IRS guidance issued March 4 spelled out step by step how financially troubled and underwater borrowers can qualify for tax relief when a lender agrees to lower their debt.

http://www.bostonherald.com/business/real_estate/view/20100314irs_issues_loan_write-down_rules/srvc=business&position=also

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