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A slap on the wrist for mortgage servicer

April 16, 2011 By Leave a Comment

William E. Lewis, Highlands Today via The Tampa Tribune

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;

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Another Article About The Downfall of David Stern

February 7, 2011 By Leave a Comment

The rise and fall of a foreclosure king

Michelle Conlin, AP via Palm Beach Post

During the housing crash, it was good to be a foreclosure king. David Stern was Florida’s top foreclosure lawyer, and he lived like an oil sheik. He piled up a collection of trophy properties, glided through town in a fleet of six-figure sports cars and, with his bombshell wife, partied on an ocean cruiser the size of a small hotel.

When homeowners fell behind on their mortgages, the banks flocked to “foreclosure mills” like Stern’s to push foreclosures through the courts on their behalf. To his megabank clients — Bank of America, Goldman Sachs, GMAC, Citibank and Wells Fargo — Stern was the ultimate Repo Man.

At industry gatherings, Stern bragged in his boyish voice of taking mortgages from the “cradle to the grave.” Of the federal government’s disastrous homeowner relief plan, which was supposed to keep people from getting evicted, he quipped: “Fortunately, it’s failing.”

The worse things got for homeowners, the better they got for Stern.

That is, until last fall, when the nation’s foreclosure machine blew apart and Stern’s gilded world came undone. Within a few months, Stern went from being the subject of a gushing magazine profile to being the subject of a Florida investigation, class-action lawsuits and blogger Schadenfreude that, at last long, the “foreclosure king” was dead.

“What Stern represents is an industry that was completely unrestrained, unchecked, unpunished and unsupervised,” says Florida defense attorney Matt Weidner. “This was business gone wild.”

The rise and fall of Stern, now 50, provides an inside look at how the foreclosure industry worked in the last decade — and how it fell apart. It also shows how banks, together with their law firms, built a quick-and-dirty foreclosure machine that was designed to take as many houses as fast as possible.

Not long ago, the world of back-office bank procedures was of little interest to the public. But revelations last fall about robo-signers powering through hundreds of foreclosure affidavits a day, without verifying a single sentence, changed all that. Today the banking industry’s eviction juggernaut is under intense scrutiny as allegations of systemic foreclosure fraud mount.

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Utah Homeowner Gets Free and Clear Title Due To Sloppy MERS Records

January 17, 2011 By 1 Comment

Tom Harvey, Salt Lake Tribune

A Utah court case in which the owner of a Draper townhouse got clear title to the property, even though he still owed $132,000 on it, raises new legal and financial questions about a property-records database created by mortgage bankers.

The award of a title free of liens means that whoever owns the promissory note on the Draper property — likely a group of faraway investors — no longer has the right to foreclose to collect on a delinquent loan. Indeed, the townhouse owner has sold the property and kept the money. Those who own the promissory note probably don’t even know what occurred.

Decisions such as the one 3rd District Judge Glen Iwasaki handed down in the Draper case could have a big impact as the state wends its way through hundreds of lawsuits involving foreclosures, loans on properties for more than they’re worth and predatory lending practices that led Utahns to lose their homes as the real-estate bubble burst.

Quiet title » Last year, the owner of the Draper property contacted attorney Walter T. Keane to help him deal with lenders, though Keane won’t say what the problem was and the owner declined an interview request.

Keane filed what’s called a “quiet title action,” a lawsuit in which the owner seeks clear title to a property free of liens by lenders or others.

In Utah, when you take out a mortgage loan to buy a home, you sign a promissory note held by the lender and a deed of trust that is recorded at the county recorder’s office. The promissory note gives the holder the right to collect payments on the loan. The recording of the deed of trust gives the lender the right to foreclose on the property if you default on the loan.

A trustee appointed by the lender also is recorded with the county and actually holds legal title to your property subject to the conditions of the trust deed.

The lawsuit over the title to the townhouse named Garbett Mortgage and Citibank FSB as the holders of promissory notes as recorded on trust deeds filed with the recorder’s office. Integrated Title Services was listed as trustee of the Garbett Mortgage trust deed, while First American Title was the trustee of the CitiBank trust deed.

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N.J. top judge pushes for measures to target bad foreclosure practices

December 21, 2010 By Leave a Comment

Sarah Portlock, Star-Ledger

Citing a staggering increase in filings and voicing fears of incorrect applications, New Jersey’s top judge announced a series of initiatives yesterday designed to combat rogue foreclosure filings.

“It’s our hope that these three steps will provide greater confidence” in the foreclosure process, Chief Justice Stuart Rabner said in a conference call with reporters. “It is important the judiciary ensures that judges are not rubber-stamping questionable documents that may not be reliable.”

This practice of quickly pushing through documents is known as “robo-signing,” and refers to mortgage lenders and servicer employees who sign hundreds, if not thousands, of affidavits that are submitted in support of foreclosure claims but without any personal knowledge of the information included in the application.

This year, there were more than 65,000 applications filed statewide, up from nearly 22,000 four years ago. And the vast majority of foreclosure actions — 94 percent — are uncontested, Rabner said.

The judge ordered six mortgage lenders, including Bank of America, JP Morgan Chase and Citibank, to file to the court by Jan. 19 documents proving their internal foreclosure application processes are up to standards, or the applications will be suspended. The other companies are the mortgage divisions of Wells Fargo, OneWest Bank and Ally Financial. These six companies account for more than 40 percent of all mortgage applications filed with the state.

Rabner appointed General Equity Judge Mary Jacobson, who sits in Trenton, to oversee foreclosure matters in the state.

In addition, 24 lenders and service providers who have filed more than 200 residential mortgage foreclosure actions this year are required to document within 45 days that there are no irregularities in those processes. Those reports must outline how the companies handle, review and verify foreclosure applications to demonstrate the reliability and accuracy of what is submitted to the courts, according to the administrative order.

Retired Superior Court Judge Walter Barisonek has been recalled to temporary judicial service and assigned as a special master for these cases, according to the announcement.

Rabner also sent a letter to the New Jersey Bar Association, reminding lawyers their signatures on foreclosure filings certifies they know what is listed in the paperwork. Filings going forward must include an affidavit the bank’s attorney has communicated with an employee who personally reviewed the foreclosure documents and confirmed its accuracy.

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