GMAC Halts Foreclosures in 23 States for Review  - New York Times

Ally Says GMAC Mortgage Mishandled Affidavits on Foreclosures - Bloomberg  

A Crack In Wall Street's Foreclosure Pipeline? - Mother Jones

"Fallout From Jeffrey Stephan Fiasco Could Be Enormous" - Attorney Matt Weidner's Blog

GMAC Drew `False Testimony' Sanction Years Before Eviction Halt - Bloomberg

Amid mountain of paperwork, shortcuts and forgeries mar foreclosure process - Washington Post  

Congress' letter to Fannie Mae "Why is Fannie Mae using lawyers that are accused of regularly engaging in fraud to kick people out of their homes?"  

Ally Said to Tell Freddie Mac of Faulty Foreclosures Weeks Ago - Bloomberg

Texas, Iowa Attorneys General Probe Foreclosure Actions by Ally's GMAC - Bloomberg

Improper GMAC Affidavits Leading to Charges of Document Fabrication to Change Title - naked capitalism

GMAC’s Errors Leave Foreclosures in Question- New York Times

Judge ponders jurists' role in Ally Financial foreclosure cases - Palm Beach Post

Ally Financial Asked to Halt Evictions in Colorado - Bloomberg

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GMAC HALTS FORECLOSURES - ADMIT FALSE AFFIDAVITS FILED

Posted on September 21, 2010 by Neil Garfield 

KEEP IN MIND that these admitted facts are the same facts treated with incredulity and derision from the bench and opposing counsel.  The Judges were wrong.  Opposing counsels were wrong.  The foreclosures were wrong.  Now what?  How will homeowners and counsel be treated in court now?  Will the Judge still think the homeowner is trying to get out of a legitimate debt, or will the Courts start to allow these cases to be heard on their MERITS instead of improper PRESUMPTIONS?  Will the courts start following rules of evidence, or will they continue to give the “benefit of the doubt” (i.e., and improper presumption) to the foreclosure mill that fabricated documents with false affidavits? 

The tide is turning from defending borrowers to prosecuting damage claims for slander of title, fraud, appraisal fraud, and criminal prosecutions by state, local and federal law enforcement. GMAC is only the first of the pretender lenders to admit the false representations contained in pleadings and affidavits. The methods used to obtain foreclosure sales were common throughout the industry. The law firms and fabrication mills will provide precious little cover for the culprits whose interests they served. AND now that millions of homes were foreclosed, their position is set and fixed — they can no longer “fix” the problem by manipulating the documents. 

The bottom line is that GMAC mortgagors who “lost” their homes still own them, as I have repeatedly opined on these pages. The damages are obvious and the punitive damages available are virtually inevitable. Maybe Judges will change their minds about applying TILA and RESPA, both of which amply cover this situation. Maybe those teeth in those statutes do NOT lead to windfall gains for homeowners but only set things right. 

These people can move back into their homes in my opinion and even taken possession from those who allegedly purchased them, since the title was based upon a fatal defect in the chain. Whether these people will end up owing any money and whether they might still be subject to foreclosure from SOMEBODY is not yet known, but we know that GMAC-sponsored foreclosures are now admitted to be defective. There is no reason to suppose that GMAC was any different from any of the other pretender lenders who initiated foreclosure sales either on false pleading or false instructions using the power of sale in non-judicial states. 

Those hundreds of millions of dollars earned by the foreclosure mills, those tens of billions of wealth stolen from homeowners are all up for grabs as lawyers start to circle the kill, having discovered that there is more money here than any personal injury or malpractice suit, and that anyone can do it with the right information on title and securitization. 

With subpoenas coming in from law enforcement agencies around the country, GMAC is the first to crumble, aware that the choice was to either take a massive commercial hit for damages or face criminal charges. Finger pointing will start in earnest as the big boys claim plausible deniability in a scheme they hatched and directed. The little guys will flip on them like pancakes as they testify under oath about the instructions they received which they knew were contrary to law and the rules governing their licenses and charters. Real Estate Brokers, licensed appraisers, licensed mortgage brokers, notaries, witnesses, title agents and their collective title and liability insurance carriers will soon discover that their licenses, livelihood and reputations are not only at risk but almost certainly headed for a major hit. 

There can be no doubt that all GMAC cases will be affected by this action although GMAC has thus far limited the instruction to judicial states. In non-judicial states, most of the foreclosures were done without affidavits because they were uncontested. GMAC will now find small comfort that they didn’t use affidavits but merely false instructions to “Trustees” whose status was acquired through the filing of “Substitution of Trustee” documents executed by the same folks who falsified the affidavits in the judicial states. But the fact is that GMAC was not the creditor and obtained title through a “credit bid.” THEY CAN’T FIX THIS! Thus the transfer of title was void, in my opinion, or certainly voidable. 

The denial that the affidavit contained false information is patently false — and, as usual, not under oath (see below). GMAC takes the position that the affidavits were “inadvertently” signed (tens of thousands of them) by persons without knowledge of their truth or falsity and that the action is taken only to assure that the mortgage holder is actually known. So the fight isn’t over and don’t kid yourself. They are not all going to roll over and play dead. Just take this as another large step toward the ultimate remedy — reinstatement of people in their homes, damage awards to people who were defrauded, and thus restoration of hundreds of billions of dollars of wealth back into the economic sector where money is spent and the economy actually works for people who don’t trade false papers at the expense of pensioners and homeowners around the world. 

Ally Says GMAC Mortgage Mishandled Affidavits on Foreclosures

Stupendous Man//Sep 22, 2010 at 2:05 PM

 This issue has thus far centered on the “affidavit of merit” submitted on behalf of Plaintiffs in foreclosure cases. Without question many/most of these affidavits are not legitimate and fail for several reasons.<  We have been informed the affidavits do not comply with Federal Rule of Civil Procedure 56(e)(1) because the individual executing the affidavit lacks personal knowledge. They also fail for another reason: certified copies of documents referred to in the affidavit are rarely, if ever, attached. The full text of 56(e)(1) is below:   “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. If a paper or part of a paper is referred to in an affidavit, a sworn or certified copy must be attached to or served with the affidavit. The court may permit an affidavit to be supplemented or opposed by depositions, answers to interrogatories, or additional affidavits. ”

In addition to the above it is common for Plaintiffs to submit affidavits untimely. This does not comply with Rule 6(c)(2), which states: “Any affidavit supporting a motion must be served with the motion. Except as Rule 59(c) provides otherwise, any opposing affidavit must be served at least 7 days before the hearing, unless the court permits service at another time.”

Submitting, or having to submit, new evidence is self defeating in a summary proceeding. Summary is appropriate only when it is clear “… the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law” (Fed. Rule 56(c)(2). The standard for summary is such that the record must be viewed in a light most favorable to the party opposing the motion for summary judgment and all doubts are to be resolved in his favor. If prevailing on a motion for summary requires the movant to submit new evidence in support of its motion then clearly there is a dispute of material fact and any grant of summary IS NOT PROPER. Submission of new evidence may also violative of Rule 6(c)(2).

While the current bruhaha is centered on the affidavits of merit I am well aware that other documents submitted to courts are not genuine. The same untrustworthy individuals, the robo-signers, are baldly fabricating “assignments of mortgage” (AOM). An AOM is needed to prove, or trick the court into believing, that Plaintiff has a security interest in the subject property and is therefore entitled to trigger the acceleration and/or foreclosure clause in the mortgage.

The defects in these AOM’s are numerous. Most common is an immediate and fatal defect in the chain of assignments, or chain of title. In securitized transactions there are typically 4 arms length sales. This is done to limit liability of the parties involved, most specifically the originating lender. It is also done to create the favorable tax status of a trust as a Real Estate Mortgage Investment Conduit (REMIC) trust. This required series of transactions is delineated in the Pooling and Servicing Agreement (PSA), which governs the actions of the parties involved. The series of arms length sales or conveyances typically is delineated as an A to B, a B to C, and a C to D series of true sales.

I have reviewed numerous AOM’s of properties involved in foreclosure. In almost every instance the AOM falsely expresses a sale/conveyance that could not have happened, and did not happen. These fabricated AOM’s usually express an A to D conveyance. In accordance with the PSA A can only convey to B. In accordance with the PSA D can only acquire any intersts in the instruments, if any, from C.

O. Max Gardener wrote a brief, accurate and eloquent piece on this in August of 2009. http://www.creditslips.org/creditslips/2009/08/the-alphabet-problem-and-the-pooling-and-servicing-agreements.html

There is another problem with these baldly fabricated AOM’s and this relates to the dates of the alleged conveyances. PSA’s almost universally contain language that binds the parties to New York law. New York Trust Law states that assets of a trust must be deposited into the trust within 90 days of the closing date of the trust. For example, ABC Trust has a closing date expressed in the PSA of April 1, 2005. All assets must be deposited into ABC Trust by June 29, 2005. After that date, pursuant to New York Trust Law, the trust cannot accept additional assets (which in this case are promissory notes and mortgages).

Of the AOM’s I have reviewed of properties involved in foreclosure that have also been securitized (which is in excess of 90% of them), the chain of title alleged in the AOM is from A to D. The date on which this impossible conveyance is alleged to have occurred is well beyond the 90 day limit. In fact most of these fabricated AOM’s aren’t even fabricated until AFTER the foreclosure suit has been initiated.

To exemplify the “date”problem I offer the following.

Exorbitant Rate Mortgage (A) issues a mortgage to Johnson to purchase Green Acres on March 10, 2005.

Exorbitant Rate Mortgage conveys its interest in the instruments, and Green Acres, (p-note and mortgage) to Facade Sponsor (B).
Facade Sponsor conveys its interest in the instruments, and Green Acres, to Big Pile of Instruments as Depositor (C).

Big Pile of Instruments as Depositor conveys its interests in the instruments, and Green Acres, to ABC Trust (D).

ABC Trust has a closing date of April 1, 2005.

On September 1, 2009, ABC Trust initiates a foreclosure against Johnson and Green Acres. There is no AOM on record with the county recorders office. This is typically required by the statute of frauds which requires all contracts for real estate to be in writing. Recording statutes typically require the aforementioned contracts to also be recorded.

On September 19, 2009 ABC Trust causes an AOM to be “created” that alleges to memorialize a transaction between Exorbitant Rate Mortgage (A) and ABC Trust (D). This AOM is then recoded with the county on October 2, 2009.

The important dates here are the closing date of ABC Trust, April 1, 2005, and the execution date of the AOM of September 19, 2009. The difference between these dates is 1632 days (give or take a leap year or simple miscalculation on my part). Giving ABC Trust the benefit of the 90 window, in accordance with New York Trust Law, renders 1542 days.

The instruments in this example could not have been deposited into ABC Trust at this late date as it is beyond the 90 window. Neither could the instruments have been conveyed from Exorbitant Rate Mortgage (A) directly to ABC Trust (D).

I am continuously amazed that courts are disregarding information and evidence of this nature, and in contradiction the facts, rules and laws are granting foreclosures to plaintiffs. Even the simplest of inspections of evidence being submitted causes the complaints and arguments to fall flat.

I am thankful to any and all media for continuing to make the public aware of the shenanigans involved on the part of Plaintiffs, and Plaintiffs Counsel, and the unwillingness of our courts to offer due process of law and equal protection under the law to Defendants in foreclosure, as well as the courts improper application of the Rules of Procedure and Evidence and courts apparent refusal to rule in accordance with the facts, rules and law.

GMAC Drew `False Testimony' Sanction Years Before Eviction Halt

Amid mountain of paperwork, shortcuts and forgeries mar foreclosure process

By Ariana Eunjung Cha and Brady Dennis
Washington Post Staff Writers
Thursday, September 23, 2010; 2:36 AM 

The nation's overburdened foreclosure system is riddled with faked documents, forged signatures and lenders who take shortcuts reviewing borrower's files, according to court documents and interviews with attorneys, housing advocates and company officials.

The problems, which are so widespread that some judges approving the foreclosures ignore them, are coming to light after Ally Financial, the country's fourth-biggest mortgage lender, halted home evictions in 23 states this week.

During the housing boom, millions of homeowners got easy access to mortgages while providing virtually no proof of their income or background. Now, as millions of Americans are being pushed out of the homes they can no longer afford, the foreclosure process is producing far more paperwork than anyone can read and making it vulnerable to fraud.

Ally Financial is now double-checking to make sure all documents are in order after lawsuits uncovered that a single employee of the company's GMAC mortgage unit, a 41-year-old named Jeffrey Stephan, signed off on 10,000 foreclosure papers a month without checking whether the information justified an eviction.

Many of the homeowners in fact might have been in default. Some might have been unfairly targeted. But the flawed process is creating an opening for borrowers to contest some of the more than 2 million foreclosures that have taken place since the real estate crisis began.

The company sought to play down the impact of Stephan's actions, saying this week that what he did amounted to a "technical" error but that the documents themselves were "factually accurate." Ally said it had no further comment Wednesday.

Forgeries

Ally wasn't the only major lender that had a foreclosure process dependent on a few corporate bureaucrats.

Beth Ann Cottrell said in a sworn deposition in May that she signed off on thousands of foreclosures a month for JPMorgan Chase even though she did not verify the accuracy of the information.

In one instance in Palm Beach, Fla., Cottrell signed off on two documents that stated conflicting amounts of mortgage, the court testimony states. Cottrell claimed that both were signed by the borrower at closing. But the homeowner recognized that her signature had been forged, her attorney Christopher Immel said. The attorney added that such forgeries are common among the cases he's seen. JPMorgan Chase declined to comment.

In Georgia, an employee of a document processing company, Linda Green, for years claimed to be executives of Bank of America, Wells Fargo, U.S. Bank and dozens of other lenders while signing off on tens of thousands of foreclosure affidavits. In many cases, her signature appeared to be forged by different employees.

Green worked for a foreclosure document company owned by Lender Processing Services. The company is being investigated by a U.S. attorney in Florida for allegedly using improper documentation to speed foreclosures.

Lenders have already started to withdraw foreclosures that had Green's name on them.

Green also submitted to courts documents that listed "Bogus Assignee" as the owner of a mortgage instead of the real name. In another case, she signed as the vice president of "Bad Bene," a made-up company.

Michelle Kersch, a senior vice president for Lender Processing Services, said in an e-mailed statement Wednesday that the names were just "placeholders."

"Unfortunately, on occasion, incomplete documents were inadvertently recorded before the missing information was obtained," she said. "LPS regrets these errors and the use of this particular placeholder phrasing."

The company declined to comment further, citing the pending criminal investigation.

A large chunk of the nation's foreclosures are being initiated by three companies owned by the federal government: Ally, Fannie Mae and Freddie Mac. Fannie and Freddie have said they are looking at the matter but refuse to reveal the numbers of affected homeowners.

The Obama administration has repeatedly said it would try to help homeowners facing foreclosure. But its principal mortgage-relief effort is faltering. More than half of those who enrolled in the program are have now fallen out of it, the Treasury Department said Wednesday.

This week, Treasury Secretary Timothy F. Geithner and the Obama administration's newly appointed consumer protection adviser, Elizabeth Warren, also vowed to simplify the process for getting a mortgage.

But when asked to respond to problems plaguing foreclosures at the companies controlled by the Treasury, a spokesman repeatedly declined to respond to questions, saying only that the agency does not involve itself in the companies' day-to-day affairs.

Judges' oversight

Some of the problems in foreclosure paperwork are being created because mortgage loans were repackaged and resold to investors so often that the physical documents become lost. It's the job of a document processor to present and vouch for the authenticity and accuracy of these papers, but attorneys for homeowners have unearthed examples where critical records are forged.

In theory, a judge should review the files one more time. But after the crisis produced massive numbers of delinquent homeowners, judges in many cases became overwhelmed.

Some simply took at face value the documents handed over to them by the lenders - who in many cases were not checking the files, either, according to interviews with judges, attorneys and consumer groups.

In some Florida courts, for instance, many judges automatically approve a foreclosure unless a borrower can point to a specific problem. Homeowners are given five minutes for a presentation. Often, they do not bother to show up.

Arthur M. Schack, a Kings County Supreme Court judge in Brooklyn, said it's clear those involved in the foreclosure process are taking the legal requirements too lightly. They forget, he said, that there's a bigger picture to think about: People are losing their homes.

"There are ramifications on society and neighborhoods," he said.

Schack has become infamous among some of the nation's most powerful banks for rejecting foreclosure motions that come across his courtroom - about half of the hundreds of files that he has reviewed over nearly three years. He said Ally's document-processing violations shouldn't be dismissed lightly.

"There are procedures to be followed in order to get a foreclosure, and you either get it right or not. Either you're pregnant or not. There's no in-between," he said.

But Judge Isaac Garb, a retired trial judge in Bucks County, Pa., who has heard many foreclosure cases and still oversees mortgage mediations, had a different view.

He said that because foreclosure files contain standard language, document processors such as Stephan do not need to review every page. He added that the signers are verifying only that the information in the file is "true and correct to the best of his/her knowledge, information and belief."

Often, homeowners are using minor problems in the documents simply to stall the foreclosure process as long as possible, Garb said.

David Berenbaum, chief program officer for the nonprofit National Community Reinvestment Coalition, said companies eager to get bad loans off their books quickly have given rise to a foreclosure system that is as faulty as the excessive lending that created the problem in the first place.

"What's happened here is that there are these foreclosure machines that don't do due diligence and that are profiting at the expense of consumers," he said.

Dennis reported from Doylestown, Pa. Staff researchers Julie Tate and Magda Jean-Louis contributed to this report.

Ally Said to Tell Freddie Mac of Faulty Foreclosures Weeks Ago

Texas, Iowa Attorneys General Probe Foreclosure Actions by Ally's GMAC

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Congress of the United States

Washington, DC 20515

Michael J. Williams

President and Chief Executive Officer

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Ally Financial Asked to Halt Evictions in Colorado

Ally Financial Inc., the lender that stopped evictions in 23 states amid concern that its foreclosure process may be illegal, was asked by Colorado’s attorney general to extend the freeze by its GMAC Mortgage unit to his state. 

In a letter dated yesterday, Attorney General John W. Suthers said he wanted to hear what new procedures GMAC has put in place to “ensure that fair and accurate representations are made when it pursues foreclosure actions.” He asked for a meeting between GMAC and members of his consumer protection staff.

GMAC Mortgage notified agents and brokers on Sept. 17 that it had suspended evictions in 23 states. Last week, Ally, the Detroit-based auto and home lender, said it found a “technical” deficiency in its foreclosure process allowing employees to sign documents without a notary present or with information they didn’t personally know was true. Colorado wasn’t one of the 23 states.

Attorneys general in at least five states including Texas and Florida are investigating GMAC mortgage practices and California has ordered the company to prove its foreclosures are legal or halt them. In North Carolina, the attorney general’s office has asked for a meeting with a GMAC Mortgage representative and more information from the company about its foreclosure practices.

Colorado Foreclosures

GMAC initiated more than 1,000 foreclosure actions in Colorado since January 1, Suthers, the attorney general, said in his letter. In most, if not all of these foreclosures, “local attorneys for GMAC represent in various required documents that GMAC Mortgage LLC is the ‘holder of the evidence of debt’ under Colorado law,” he said.

These lawyers made further representations about the unpaid loan balance, its delinquency and the validity of the note and deed of trust, he said. “While these are not sworn affidavits of the kind at issue in other states, the accuracy of these documents is essential for preserving the integrity of the foreclosure process in Colorado.”

North Carolina sent a similar letter to Ally yesterday. “The use of unverified affidavits to obtain judicial relief could constitute a fraud upon the court,” North Carolina Assistant Attorney General Philip Lehman wrote in a Sept. 27 letter to Ally General Counsel William B. Solomon Jr.

“A willful corporate pattern and practice of generating affidavits from employees who have no personal knowledge of the facts asserted could constitute unfair and deceptive practices,” he wrote. Lehman said he wants confirmation of the company’s moratorium on foreclosure-related evictions.

To contact the editors responsible for this story: Lawrence Roberts at lroberts13@bloomberg.net; David E. Rovella at drovella@bloomberg.net