The news reports on GMAC Mortgage’s decision to halt evictions and foreclosure sales in 23 states, as originally reported by Bloomberg News, has generated keen interest in the mortgage and securitizaion communities. One reason is the oddly abrupt and broad nature of GMAC Mortgage’s action. GMAC Mortgage subsequently issued a rebuttal of sorts to the article. Not only did it fail to clairify matters, it is inconsistent with the actual notice it sent last week.
Various accounts have described how one officer of GMAC Mortgage’s servicing unit has admitted during testimony that, while he signs thousands of affidavits each month in order to affect steps in the foreclosure process, he does not have personal knowledge of certain critical facts in the affidavit which he asserts to be true. Reader Stupendous Man provided the text of Federal Rule 56 on affidavits (although the cases in question are in state courts, the same principles no doubt apply). Boldface ours:
A supporting or opposing affidavit must be made on personal knowledge, set out facts that would be admissible in evidence, and show that the affiant is competent to testify on the matters stated.
The key here is you can’t delegate creating affidavits to parties who weren’t close to relevant matter out of administrative convenience; you need to find people who were directly involved. And evidence in a number of foreclosure suits indicates that this problem not only extends well beyond GMAC, and is not a matter of matter of officers providing affidavits based on a review of copies of the paperwork in a transaction. As one attorney wrote:
It is beyond people signing things when they don’t see the “originals” These people don’t see shit. We have depositions from these folks, the only thing they are able to verify on the documents is what title they are supposed to use, from the particular servicer they are working for – Executive Secretary, Executive Vice President, Asst. Sec., etc…..
So there is evidence to support the notion GMAC was not alone in providing cooked up affidavits. The only question is how widespread this practice was at other servicers.
What are the implications of the GMAC Mortgage actions and how serious are the problems? GMAC Mortgage and similarly situated parties contend that there is nothing fundamentally wrong with their foreclosure process and this is simply a procedural issue which is readily curable. In contrast, advocates for borrowers in foreclosure have indicated that the questionable affidavits are only the “tip of the iceberg” and represent the beginning of the end for the foreclosure mills and the banks, servicers and trustees who have been seeking to exercise foreclosure under false pretenses. The heightened scrutiny and increasing interest by state attorneys general means we may finally get to the bottom of a long-running “he said-she said” dispute.
Let’s review the current state of play:
1. What is the problem with evictions and foreclosure sales that GMAC Mortgage is worried about?
Based on GMAC Mortgage’s press release, the action is limited to evictions and foreclosure sales in certain states, but its new foreclosures are not affected. It isn’t clear exactly what distinction they are making . Presumably, their concern relates to the affidavits they used to initiate the evictions in their foreclosure cases. If the affidavit is flawed, they want to get a new improved one in place before they take title to the property. Similarly, for properties where they have already taken title, if the affidavits which enabled the evictions were flawed, they may need to prepare a new affidavit that would allow them to demonstrate that they have good title prior to selling the property to third parties.
2. Is this problem curable? On the surface, concerns about flawed affidavits used in the eviction process of a foreclosure, seems a technical, legalistic issue. Certainly, GMAC Mortgage’s statements seem to give the impression that the issue is curable and will, in fact, soon be cured. Did GMAC Mortgage prepare the affidavits improperly due to weak procedural controls or economic expediency? If so, then it would seem like they would have to incur some additional cost and take some additional time to have the affidavits properly prepared and then the problem would not be fatal from a legal standpoint. The added expenses and longer time will cost the certificate holders in the MBS more money. Remember, securitizations have come to be modeled and price assuming a streamlined foreclosure process. Actually finding and involving the proper parties in the affidavit process will at a minimum be cumbersome, and could add meaningful costs.
Moroever, it is possible the affidavits were prepared improperly to remedy other problems in the related mortgage loan. If, for the purpose of the foreclosure, the servicer did not have the proper information but stated that they did anyway in the affidavit, this would be a far more serious problem. For instance, if the courts for a foreclosure required a particular party to be pursuing the foreclosure, but GMAC Mortgage did not have documentation supporting such ownership or right, was GMAC Mortgage misrepresenting the facts in the affidavit?
3. Is the problem limited to judicial foreclosure states? That does not seem credible, although GMAC may believe it needs only to remedy it in those states. GMAC Mortgage indicated that the action was only for states that use judicial foreclosure, or similar procedures.
In general, if the issue is limited to improperly documented affidavits, GMAC may be able to limit its response to the 23 states on its list. However, if the underlying documentation for its mortgages have problems in the chain of title, then the improper affidavits are just a manifestation of a deeper issue. By happenstance, I know of cases in a non-judicial foreclosure state not on GMAC’s list where GMAC took similar short cuts. Tom Adams and I have been in touch with a number of attorneys in the foreclosure world who have uncovered problems in non-judicial foreclosure states with inaccurate affidavits, including mis-statements about the parties to the foreclosure, the time of mortgage transfers, the status of the loan file and related issues. There is not good grounds to believe that GMAC had sufficiently different procedures in judicial versus non-judicial foreclosure states to believe their flawed procedures were limited to only judicial foreclosure states.
4. is the problem limited to GMAC Mortgage? GMAC Mortgage and other banks may hope to sell the story line that its problem is limited to a lone “rogue servicing officer.” Unfortunately, the servicing officer in question indicated in his testimony that he prepared 10,000 or more affidavits per month, so it strains credulity to think that GMAC management was ignorant of his actions.
So far, mainstream press accounts have been limited to issues at GMAC Mortgage, which is a large servicer, but only a modest portion of the overall market. However, it is possible, that the root of the problem lies not with the servicer, but started with the sellers and the trustees in the mortgage securitization process. If the mortgage loans were conveyed in the securitization process in a way that clouded the title, the problem could be widespread, and borrower attorneys can provide a large body of evidence from cases in many states. Although GMAC appears to be the party ultimately responsible, it also works very closely with the foreclosure outsourcing firm, Loan Processing Services, so they or the foreclosure mills they retain may also bear some responsibility.
5. Are foreclosure problems limited to this sort of technical issue? The conveyance of real estate has a long legal history and is governed by state law. Numerous checks and balances are written into both the sale and the foreclosure process to ensure that the transfers are conducted properly and disputes over ownership are minimized. Part of the appeal of mortgage loans as an asset, back before the financial crisis, was that the procedures and laws for mortgage loans was well establishes, so owners or investors could take comfort that their interests were well protected.
Unfortunately, there is increasing evidence that the mortgage loan industry went off the rails during the bubble years. And if the issues underlying GMAC Mortgage action are a result of bad origination and closing procedures, rather than poor servicing, the problems may be much larger than inaccurate affidavits.
We will be watching on the GMAC Mortgage situation and related issues. GMAC Mortgage’s remarks today did not clarify matters, and their failure to come clean, and the obvious conflict between the claims in their press release and their own memo suggests other shoes have yet to drop. If these issues extend beyond GMAC Mortgage and inaccurate affidavits, the mortgage industry will be facing some deep and difficult problems.
Progressive Rep. Bob Filner Risks Arrest To Save Cancer Victim’s Home From Foreclosure
As ThinkProgress has noted, there are currently two competing visions of governance in the United States. One, the conservative version, believes in the on-your-own society, and sides with powerful corporations and other privileged sectors of America. The other vision, the progressive one, believes in an American Dream that works for all people, regardless of their racial, religious, or economic background.
This progressive vision was on full display yesterday during a vigil led by Rep. Bob Filner (D-CA) that halted, for now, the foreclosure of a cancer victim’s home. For months, Bonita, California resident Luz Maria Villanueva had been facing impending foreclosure on her home by Union Bank. Villanueva’s situation was especially dire due to the fact that her son has a kidney disease as well as cancer. As medical bills began to pile up, Villanueva had to choose between the life of her son and her home, and she chose her son.
As Union Bank began to close in on Villanueva’s home, Rep. Bob Filner (D-CA), who represents the woman and her son in Congress, took note of her situation. Comparing the struggle of families trying to keep their homes to the civil rights struggles of the 1960s which landed him in a Mississippi jail for two months, Filner announced that he’d be holding a community vigil on the steps of Villanueva’s house on the day a local sheriff was scheduled to come foreclose on her. He warned that doing so “may result” in his arrest, but that was willing to risk it to help her save her home. Thanks to the publicity Filner and the surrounding community brought to the case, Union Bank decided to call off the foreclosure, for now:
“Thank you, thank you!” Luz Maria Villanueva’s voice was choked with emotion at a rally on her front lawn organized by Congressman Bob Filner (D-San Diego). Nearly 100 people turned out at 5:30 a.m. for a candlelight vigil to protest Union Bank’s announced plan to have the Sheriff’s department take Villanueva’s Bonita home. She has pleaded for a reprieve at least until her young son, who has cancer, completes chemotherapy treatments.
“We’re going to stand together to change America,” said Rep. Filner. “We have a president who talked about hope. We have to give him strength. The banks have taken over both parties.” He called for changes in the law to protect those victimized by predatory lending practices. The rally drew widespread media attention; at least three major TV stations as well as print and online media reporters were on hand to cover the event. Although Villanueva attained a temporary stay when Union Bank called off the Sheriff today, the order could be reissued, Filner warned those present. “We got them to back down, but we need you to be on call.”
Local news station San Diego 6 covered the event. Filner told the station that he gets “hundreds of calls” every day from other constituents facing foreclosure on their homes. He also reiterated his commitment to passing cramdown legislation — which was defeated in Congress last year — to help people stay in their homes. Watch San Diego 6’s report:
The fate of Villanueva’s home is still up in the air, as Union Bank has promised to continue negotiations with her and Filner. For his part, the congressman hopes that other communities and their legislators fight to help their neighbors keep their homes. “I hope this spreads across America,” he said at the vigil yesterday.
Wednesday <b>News</b> « The Confluence
In news related to Michelle raising more money, the GOP seems to be short of it. Gosh, other than 8 years of a failed presidency, and then attacking the popular candidates and their supporters just as the Dems are doing, I can't imagine ...
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Wednesday <b>News</b> « The Confluence
In news related to Michelle raising more money, the GOP seems to be short of it. Gosh, other than 8 years of a failed presidency, and then attacking the popular candidates and their supporters just as the Dems are doing, I can't imagine ...
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The news reports on GMAC Mortgage’s decision to halt evictions and foreclosure sales in 23 states, as originally reported by Bloomberg News, has generated keen interest in the mortgage and securitizaion communities. One reason is the oddly abrupt and broad nature of GMAC Mortgage’s action. GMAC Mortgage subsequently issued a rebuttal of sorts to the article. Not only did it fail to clairify matters, it is inconsistent with the actual notice it sent last week.
Various accounts have described how one officer of GMAC Mortgage’s servicing unit has admitted during testimony that, while he signs thousands of affidavits each month in order to affect steps in the foreclosure process, he does not have personal knowledge of certain critical facts in the affidavit which he asserts to be true. Reader Stupendous Man provided the text of Federal Rule 56 on affidavits (although the cases in question are in state courts, the same principles no doubt apply). Boldface ours:
A supporting or opposing affidavit must be made on personal knowledge, set out facts that would be admissible in evidence, and show that the affiant is competent to testify on the matters stated.
The key here is you can’t delegate creating affidavits to parties who weren’t close to relevant matter out of administrative convenience; you need to find people who were directly involved. And evidence in a number of foreclosure suits indicates that this problem not only extends well beyond GMAC, and is not a matter of matter of officers providing affidavits based on a review of copies of the paperwork in a transaction. As one attorney wrote:
It is beyond people signing things when they don’t see the “originals” These people don’t see shit. We have depositions from these folks, the only thing they are able to verify on the documents is what title they are supposed to use, from the particular servicer they are working for – Executive Secretary, Executive Vice President, Asst. Sec., etc…..
So there is evidence to support the notion GMAC was not alone in providing cooked up affidavits. The only question is how widespread this practice was at other servicers.
What are the implications of the GMAC Mortgage actions and how serious are the problems? GMAC Mortgage and similarly situated parties contend that there is nothing fundamentally wrong with their foreclosure process and this is simply a procedural issue which is readily curable. In contrast, advocates for borrowers in foreclosure have indicated that the questionable affidavits are only the “tip of the iceberg” and represent the beginning of the end for the foreclosure mills and the banks, servicers and trustees who have been seeking to exercise foreclosure under false pretenses. The heightened scrutiny and increasing interest by state attorneys general means we may finally get to the bottom of a long-running “he said-she said” dispute.
Let’s review the current state of play:
1. What is the problem with evictions and foreclosure sales that GMAC Mortgage is worried about?
Based on GMAC Mortgage’s press release, the action is limited to evictions and foreclosure sales in certain states, but its new foreclosures are not affected. It isn’t clear exactly what distinction they are making . Presumably, their concern relates to the affidavits they used to initiate the evictions in their foreclosure cases. If the affidavit is flawed, they want to get a new improved one in place before they take title to the property. Similarly, for properties where they have already taken title, if the affidavits which enabled the evictions were flawed, they may need to prepare a new affidavit that would allow them to demonstrate that they have good title prior to selling the property to third parties.
2. Is this problem curable? On the surface, concerns about flawed affidavits used in the eviction process of a foreclosure, seems a technical, legalistic issue. Certainly, GMAC Mortgage’s statements seem to give the impression that the issue is curable and will, in fact, soon be cured. Did GMAC Mortgage prepare the affidavits improperly due to weak procedural controls or economic expediency? If so, then it would seem like they would have to incur some additional cost and take some additional time to have the affidavits properly prepared and then the problem would not be fatal from a legal standpoint. The added expenses and longer time will cost the certificate holders in the MBS more money. Remember, securitizations have come to be modeled and price assuming a streamlined foreclosure process. Actually finding and involving the proper parties in the affidavit process will at a minimum be cumbersome, and could add meaningful costs.
Moroever, it is possible the affidavits were prepared improperly to remedy other problems in the related mortgage loan. If, for the purpose of the foreclosure, the servicer did not have the proper information but stated that they did anyway in the affidavit, this would be a far more serious problem. For instance, if the courts for a foreclosure required a particular party to be pursuing the foreclosure, but GMAC Mortgage did not have documentation supporting such ownership or right, was GMAC Mortgage misrepresenting the facts in the affidavit?
3. Is the problem limited to judicial foreclosure states? That does not seem credible, although GMAC may believe it needs only to remedy it in those states. GMAC Mortgage indicated that the action was only for states that use judicial foreclosure, or similar procedures.
In general, if the issue is limited to improperly documented affidavits, GMAC may be able to limit its response to the 23 states on its list. However, if the underlying documentation for its mortgages have problems in the chain of title, then the improper affidavits are just a manifestation of a deeper issue. By happenstance, I know of cases in a non-judicial foreclosure state not on GMAC’s list where GMAC took similar short cuts. Tom Adams and I have been in touch with a number of attorneys in the foreclosure world who have uncovered problems in non-judicial foreclosure states with inaccurate affidavits, including mis-statements about the parties to the foreclosure, the time of mortgage transfers, the status of the loan file and related issues. There is not good grounds to believe that GMAC had sufficiently different procedures in judicial versus non-judicial foreclosure states to believe their flawed procedures were limited to only judicial foreclosure states.
4. is the problem limited to GMAC Mortgage? GMAC Mortgage and other banks may hope to sell the story line that its problem is limited to a lone “rogue servicing officer.” Unfortunately, the servicing officer in question indicated in his testimony that he prepared 10,000 or more affidavits per month, so it strains credulity to think that GMAC management was ignorant of his actions.
So far, mainstream press accounts have been limited to issues at GMAC Mortgage, which is a large servicer, but only a modest portion of the overall market. However, it is possible, that the root of the problem lies not with the servicer, but started with the sellers and the trustees in the mortgage securitization process. If the mortgage loans were conveyed in the securitization process in a way that clouded the title, the problem could be widespread, and borrower attorneys can provide a large body of evidence from cases in many states. Although GMAC appears to be the party ultimately responsible, it also works very closely with the foreclosure outsourcing firm, Loan Processing Services, so they or the foreclosure mills they retain may also bear some responsibility.
5. Are foreclosure problems limited to this sort of technical issue? The conveyance of real estate has a long legal history and is governed by state law. Numerous checks and balances are written into both the sale and the foreclosure process to ensure that the transfers are conducted properly and disputes over ownership are minimized. Part of the appeal of mortgage loans as an asset, back before the financial crisis, was that the procedures and laws for mortgage loans was well establishes, so owners or investors could take comfort that their interests were well protected.
Unfortunately, there is increasing evidence that the mortgage loan industry went off the rails during the bubble years. And if the issues underlying GMAC Mortgage action are a result of bad origination and closing procedures, rather than poor servicing, the problems may be much larger than inaccurate affidavits.
We will be watching on the GMAC Mortgage situation and related issues. GMAC Mortgage’s remarks today did not clarify matters, and their failure to come clean, and the obvious conflict between the claims in their press release and their own memo suggests other shoes have yet to drop. If these issues extend beyond GMAC Mortgage and inaccurate affidavits, the mortgage industry will be facing some deep and difficult problems.
Progressive Rep. Bob Filner Risks Arrest To Save Cancer Victim’s Home From Foreclosure
As ThinkProgress has noted, there are currently two competing visions of governance in the United States. One, the conservative version, believes in the on-your-own society, and sides with powerful corporations and other privileged sectors of America. The other vision, the progressive one, believes in an American Dream that works for all people, regardless of their racial, religious, or economic background.
This progressive vision was on full display yesterday during a vigil led by Rep. Bob Filner (D-CA) that halted, for now, the foreclosure of a cancer victim’s home. For months, Bonita, California resident Luz Maria Villanueva had been facing impending foreclosure on her home by Union Bank. Villanueva’s situation was especially dire due to the fact that her son has a kidney disease as well as cancer. As medical bills began to pile up, Villanueva had to choose between the life of her son and her home, and she chose her son.
As Union Bank began to close in on Villanueva’s home, Rep. Bob Filner (D-CA), who represents the woman and her son in Congress, took note of her situation. Comparing the struggle of families trying to keep their homes to the civil rights struggles of the 1960s which landed him in a Mississippi jail for two months, Filner announced that he’d be holding a community vigil on the steps of Villanueva’s house on the day a local sheriff was scheduled to come foreclose on her. He warned that doing so “may result” in his arrest, but that was willing to risk it to help her save her home. Thanks to the publicity Filner and the surrounding community brought to the case, Union Bank decided to call off the foreclosure, for now:
“Thank you, thank you!” Luz Maria Villanueva’s voice was choked with emotion at a rally on her front lawn organized by Congressman Bob Filner (D-San Diego). Nearly 100 people turned out at 5:30 a.m. for a candlelight vigil to protest Union Bank’s announced plan to have the Sheriff’s department take Villanueva’s Bonita home. She has pleaded for a reprieve at least until her young son, who has cancer, completes chemotherapy treatments.
“We’re going to stand together to change America,” said Rep. Filner. “We have a president who talked about hope. We have to give him strength. The banks have taken over both parties.” He called for changes in the law to protect those victimized by predatory lending practices. The rally drew widespread media attention; at least three major TV stations as well as print and online media reporters were on hand to cover the event. Although Villanueva attained a temporary stay when Union Bank called off the Sheriff today, the order could be reissued, Filner warned those present. “We got them to back down, but we need you to be on call.”
Local news station San Diego 6 covered the event. Filner told the station that he gets “hundreds of calls” every day from other constituents facing foreclosure on their homes. He also reiterated his commitment to passing cramdown legislation — which was defeated in Congress last year — to help people stay in their homes. Watch San Diego 6’s report:
The fate of Villanueva’s home is still up in the air, as Union Bank has promised to continue negotiations with her and Filner. For his part, the congressman hopes that other communities and their legislators fight to help their neighbors keep their homes. “I hope this spreads across America,” he said at the vigil yesterday.
robert shumake
Wednesday <b>News</b> « The Confluence
In news related to Michelle raising more money, the GOP seems to be short of it. Gosh, other than 8 years of a failed presidency, and then attacking the popular candidates and their supporters just as the Dems are doing, I can't imagine ...
Facebook claims 200 million gamers <b>News</b> - Page 1 | Eurogamer.net
Read our news of Facebook claims 200 million gamers.
Cave Story DS on the way? DS <b>News</b> - Page 1 | Eurogamer.net
Read our DS news of Cave Story DS on the way?. ... Email news@eurogamer.net. Related Games. Cave Story WII. Latest Features. Cave Story Review . Cave Story Hands On . Latest News. Upcoming DSiWare/WiiWare titles listed ...
robert shumake
Wednesday <b>News</b> « The Confluence
In news related to Michelle raising more money, the GOP seems to be short of it. Gosh, other than 8 years of a failed presidency, and then attacking the popular candidates and their supporters just as the Dems are doing, I can't imagine ...
Facebook claims 200 million gamers <b>News</b> - Page 1 | Eurogamer.net
Read our news of Facebook claims 200 million gamers.
Cave Story DS on the way? DS <b>News</b> - Page 1 | Eurogamer.net
Read our DS news of Cave Story DS on the way?. ... Email news@eurogamer.net. Related Games. Cave Story WII. Latest Features. Cave Story Review . Cave Story Hands On . Latest News. Upcoming DSiWare/WiiWare titles listed ...
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