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Some Justice Happening (photo: mjecker, flickr)
A while back, the Chief Judge in the State of New York issued an order that was a commonsense approach to robo-signing. He ordered each lawyer representing a foreclosing bank to submit an affidavit about their own investigation of their own case and the reliability of the documents they were presenting to the court. He ordered that no case could proceed until this affidavit, which would make the lawyer liable for sanctions and perjury if falsely issued, was filed with the court.
It was a great idea, though bank lawyers have resisted doing it and lower court judges have, self destructively in my opinion, been lax about enforcing it. Had they been strict in enforcement their clogged docket would be much emptier, I assure you.
Now in the wake of the sellout 49 state AG settlement, Judge Lippman has once again leapt into the breach caused by the utter failure of prosecutors to do their jobs on foreclosure fraud, and has set up a program that may actually help keep homeowners in, you know, their homes. What a concept.
The NYTimes is reporting that Judge Lippman has set up a plan whereby the banks will supply an actual executive, one with authority to modify mortgages, to court where judges will preside over settlement negotiations between the banks and the homeowners. Not exactly cramdown, but a hell of a lot more than the AG’s got.
The New York plan includes an unusual agreement by four banks to send representatives to court who can approve loan modifications. Mortgage settlement conferences have often been paralyzed by repeated requests for information and the absence of anyone with authority.
The Plan is set to begin in Queens County in the spring, and if successful, will expand to the rest of the NYC and the surrounding counties and eventually the rest of the state. The four participating banks are Bank of America, Wells Fargo, Chase and CitiBank. Settlement conferences currently are presided over by court attorneys who lack the power to punish banks who refuse to bargain in good faith or who show up unprepared. The new system will put these conferences in front of judges who have the power to punish the bank, the individual sent by the bank, and/or the lawyer representing the bank.
All of these powers existed before, but the system was not set up to use them. This reorganization, and Lippman’s coup in getting the banks to agree to send someone with settlement authority, should empower lower court judges to get meaningful settlements done.
As with the previous innovation by Judge Lippman, a big factor in its effectiveness will be whether the lower court judges are wise enough to follow his lead and enforce these rules and policies with vigor and gusto.
28 Comments
Not to be a dunce about this plan, but depending on how far a judge might find an attorney liable for misrepresenting ‘the reliability of documents’, why would any of them take on the job? Or has some new low bar for ‘reliability of documents’ been established, or at least one they think they can prove?
Or is the whole point that they can’t, thus will be ‘willing’ to make modifications?
Tweeted. Recommended. Thanks Cynthia.
Thanks, Cynthia.
You’re doing a great job reporting on Forfeiture Gate.
It’s encouraging to see a judge willing to exercise initiative and power to pressure the banks and assist homeowners.
I hesitate to use the word courage because Judge Lippman is only doing what all judges should be doing, which is assuring due process and fair equitable results. That is, after all, their job. I think it’s extremely unfortunate that he stands out for doing his job. That says a lot about our judicial system, doesn’t it?
I don’t want to forget to mention United States District Court Judge Rakoff in the Southern District of New York. He’s another judge with the ‘right stuff.’
Recommended and tweeted.
That’s the meaning I took (your last question). If banks can’t prove the authenticity and legality of the documents to any attorney, they can’t sue for foreclosure. Homeowner gets to stay put, forces the bank to modify if they want any money.
At least I hope that’s the eventual outcome here.
Agreed we have crossed the rubicon when a judge doing his job is now applauded.
Applauds for the Judge!
I wish they would require the banks to provide the time, date, book, and page number where their ownership of the mortgage was recorded. If not in the corresponding county Registrar of Deeds, then in the MERS system.
In my opinion, instead of working out lowered priniciple for the buyer/owner, banks should be made to pay them for suffering and false representation of due process.
Re the robosigning affadavit, I presume it’s evidentiary; it’s not the lawyer’s fault if the documents are robosigned, only if s/he fails to ‘investigate’ and report. Sure, the foreclosure might be dismissed or postponed, but the lawyer get’s paid anyway. Only liable for falsely representing.
And as with the new procedure for settlement conferences, I would have to agree, the point is to get actual modifications expedited. Seems like a simple enough punch list for the lawyers to follow to avoid sanction.
Judges don’t have to rely on fellating corporations and the wealthy for their jobs. They, unlike the craven AG’s and that whore in the White House, are truly the only (slim) hope for any economic justice in the foreclosure catastrophe.
Geithner and his puppet Obama think that mortgage relief causes moral hazard. Banks and the theft of 13 trillion apparently doesn’t cause moral hazard.
MF Global showed that to be a lie. And Subprimes are back on the Casino floor. The Volcker Rule will be suitably de-fanged as were the AG’s in their rank capitulation.
My experience with a half dozen cases is that “Homeowner gets to stay put” is never anything the court will allow even a discussion of – so there is no such threat hanging over the Bank that will force a modification.
What happens is the Bank is forced to go through the process of proving ownership and producing valid documents, easily done but taking up to 18-24 months and $40,000 to $50,000 in legal costs.
It is the legal cost avoidance that in the Settlement should be included in the NPV that determines if a principal reduction is available (as DDay has noted when the NPV indicates a win for the Bank via principal reduction it should be mandatory – but that is not the way the Settlement is set up).
I agree.
Thank you again, Cynthia. If you are around, and I may have missed this from a prior thread where I posed the question, but my mortgage is in MERS b/c I refinanced in 2007, I think it was.
I am not in foreclosure nor expect to be, but I am concerned about my chain of title. Would I have any standing in court to pursue this line of attack on the banks? Could there be a class action on this point?
The Four Horsemen of the Collapse will wait out the storm until Obama LLC intercedes claiming a Federal settlement voids(? INL) any State action. Citizens will be had, once again.
Thanks, DonS. Looks like we have an answer. ;o)
Geithner’s comment about moral hazard was a true head-banger, wasn’t it? 10,000 Better Angels mustta crashed to the floor and turned to dust once it was outta his mouth.
Not sure about the laws in your state, but here in Illinois we can file a “Quiet Title” action:
“An action to quiet title is a lawsuit filed to establish ownership of real property (land and buildings affixed to land). The plaintiff in a quiet title action seeks a court order that prevents the respondent from making any subsequent claim to the property. Quiet title actions are necessary because real estate may change hands often, and it is not always easy to determine who has title to the property.”
http://legal-dictionary.thefreedictionary.com/Quiet+Title+Action
I’m certainly not an expert on this, but it’s probably worth some research on your part if you’re worried about it.
Now if someone could just make the servicers enforce things like the new forbearance plan for the unemployed being offered by Fannie and Freddie! I called mine and asked for it a couple of days ago and they claim they’ve never heard of the program and have nothing from Freddie on how to apply it – even though Freddie’s plan started on February 1st.
It pains me to say I agree with you. I’m beginning to think that the new (domestic) “axis if evil” consists of Obama, Geithner, and Holder.
(Formerly Boehner, McConnell, and Cantor)
What’s your take on whether those lower court judges will be “wise enough”?
Judge Rakoff has a huge fan in me.
Standing on chair clapping for your great idea.
I cannot and will not give legal advice over the internet. That being said, yeah, common sense tells you to be worried about your chain of title and to be worried that when you pay off your mortgage and get your “Sat”, that it’s from the right entity.
To me, the systemic corruption of our courts and our torrens system is the biggest part of this story. It won’t be repaired by ANY of the bandaides they keep plastering over the festering wound
Well, a lot of judges seem to not care if the affidivit is not filed, which makes me nuts, b/c it’s grounds to not allow the foreclosure to go forward and could form the beginnings of grounds to dismiss the foreclosure –for wantonly dillatory conduct, there are a few hoops to jump through.
But the payoffs for the judges are clearing out the docket backlogue.
Strangely there is even one judge out in Suffolk who ruled that Lippman could not impose this requirement and refuse a motion based upon the lack of an affidavit.
I think that case is being appealed.
For a first-time home buyer, if one were to go to the County Clerk’s office to ask whether or not a deed had been registered there:
A) would a MERS-robo-signed one be registered at all, and
B) *if* it had been MERS-(sorta) authenticated, would there be any differentiation noted?
My daughter’s husband is keen to purchase a house, and is succumbing to background advice from friends and relatives. She is actually trying to advise caution, and we’ve spoken at length about the risks of MERS titles, AND the gloomy projections for a systematic meltdown, and the possible dire consequences to working people. He works at Target, and IMO can no way afford a $135,000 house. Anyway, I did dig up some sites with calculators and sent them, but this one on ‘rent v. purchase’ and hidden costs seems like a good start for the mechanics of purchases and the forgotten costs.
I did remind her NOT to trust the realtors or the bankers…hubby is a whole ‘nother kettle of fish. ;o)
http://www.dinkytown.net/java/MortgageRentvsBuy.html
http://www.dinkytown.net/java/MortgageRentvsBuy.html
basically, the only case you can be truly sure of is a house you by from some little old lady who has not pruchased or refinanced since 1988.
And she only drove it to church on Sundays! ;o)
Thanks Cynthia! I didn’t mean to sound like I was giving legal advice, just giving some direction for more research.
I believe this is a right track. But without a forensic audit how does one know who the true owners are! Banks are breaking the rules every day! They don’t follow even the very basic PSA agreements of the Trust they have placed loans into. Really why do you think FMNA, GNMA and other major players trust have turned into garbage! 50 dollars a share to penny stock. Their own PSA was violated and the true owners aren’t there. The short cuts and greed takers got and will get what they deserve. America wake up Scott Pelley from 60 minutes said it all, if your loan has been securitized “do you owe it”. Find out today from a forensic loan auditor in your local community or call me Mark Freedman 518-580-9052 I’d be more than happy to educate and teach anyone wanting to know more!
Lets save America one house at a time! Together we can make a difference!
There are a growing number of bankruptcy judges, economists and lawyers who think that some of those trusts are actually empty bags of nothing. Because after the cut off date in the PSA, the trust no longer has the ability to accept any late mortgages into it.