Archive for January, 2011

Maryland Class Action stops 10,000 GMAC foreclosures

Thursday, January 20th, 2011
by David Dayen posted on DinsFla site

In a major ruling Friday, a coalition of nonprofit defense lawyers and consumer protection advocates in Maryland successfully got over 10,000 foreclosure cases managed by GMAC Mortgage tossed out, because affidavits in the cases were signed by Jeffrey Stephan, the infamous GMAC “robo-signer” who attested to the authenticity of foreclosure documents without any knowledge about them, as well as signing other false statements.

The University of Maryland Consumer Protection Clinic and Civil Justice, Inc., a nonprofit, filed the class action lawsuit, arguing that any case using Jeffrey Stephan as a signer was illegitimate and must be dismissed. In court Friday, GMAC agreed to dismiss every case in Maryland relying on a Stephan affidavit. They can refile foreclosure actions on the close to 10,000 homes, but only at their own expense, and subject to new Maryland regulations which require mandatory mediation between borrower and lender before moving to foreclosure. Civil Justice and the Consumer Protection Clinic also want any cases with affidavits from Xee Moua of Wells Fargo, who has also admitted to robo-signing, thrown out, but that case has not yet been settled.

This was not the plan of GMAC and other banks caught using robo-signers last year. They hoped to undergo a pause in proceedings, run a quick “double-check” and then issue substitute documents in the same cases. That would have been a much more rapid solution for the banks and would have resulted in many more foreclosures. Now GMAC has to go back and basically file the entire case all over again, meaning they have to give notice of foreclosure to the borrower, engage the borrower in modification options, and basically run through the whole process from the beginning. They cannot use the shortcut solution, thanks to the class action suit filed. GMAC’s dismissal of every foreclosure in Maryland shows their doubts they would have won the class action.

My questions are pretty simple, if one robo signer in one state caused 10,000 foreclosures to stop dead in their tracks what happens when exposing all robo signers (we know of at least 430) are used in all states to stop illegal foreclosures?  Or used to have the foreclosures unwound?   What happens to those who have already been foreclosed upon using an illegal robo signed substitution of trustees or assignments to foreclosure.   What title insurance companies are about to eat a huge pile of predatory lender seasoned crapola?

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Ibanez Massachusetts Decision Fallout Starting

Monday, January 3rd, 2011
Great Article from Bloomberg..

Massachusetts Foreclosure Class Action to Resume Manson v GMAC

By Thom Weidlich – Jan 10, 2011 4:56 PM ET

A statewide class action in which Massachusetts homeowners accuse U.S. Bancorp and Ally Financial Inc. of faulty foreclosures will resume now that the state’s high court ruled in a similar case last week.

The litigation was on hold while the Supreme Judicial Court decided whether state law required foreclosures to be conducted by the mortgage owner. The high court ruled Jan. 7 in U.S. Bank v. Ibanez that an industry practice allowing post-foreclosure assignments violated state law.

“This is a statewide class action and it’s going to bring relief to all of the people who are dispossessed homeowners in many instances,” Kevin Costello, a lawyer for the borrowers, said in a telephone interview today. Costello today filed a motion to restart evidence gathering in the case.

Claims of wrongdoing by banks and loan servicers triggered a 50-state investigation last year into whether hundreds of thousands of foreclosures were properly documented as the housing market collapsed.

Unwinding of foreclosures may lead to loan workouts with homeowners or force originators to buy back loans that ended up in mortgage-backed securities.

Teri Charest, a U.S. Bancorp spokeswoman, didn’t have an immediate comment. The Minneapolis-based company was sued as overseer of a mortgage-backed trust.

Gina Proia, a spokeswoman for Detroit-based Ally Financial, didn’t have an immediate comment.

Halt RequestIn July, U.S. District Judge Richard G. Stearns in Boston granted the defendants’ request to halt the class action until the high court ruled in Ibanez.  Banks and law firms had been conducting foreclosures in the state before mortgages were transferred to them under a 1995 “title standard” by the Real Estate Bar Association for Massachusetts, a group of closing attorneys, that condoned the practice.

“It was basically created by the real-estate bar without adequate foundation,” said Costello of Roddy Klein & Ryan in Boston. “It became an enabler for people who wanted to do business the way they wanted to do business.”

The homeowners in the class-action, or group, lawsuit said their foreclosures were also brought by the wrong party, often because of the process of securitization — bundling mortgages into trusts that issue bonds.

‘Clearly Establishes’  The Ibanez ruling “pretty clearly establishes that our theory of the case is correct,” Costello said. “The securitization machinery didn’t allow for individualized treatment of these kinds of loans and so the sort of standard industry practice was foreclose first and assign later.”

The case has two classes of borrowers, he said: those whose foreclosures were started though not completed and those with completed foreclosures.

The homeowners sued Ally unit GMAC Mortgage and U.S. Bancorp unit U.S. Bank. Other defendants include EMC Mortgage, now owned by JPMorgan Chase & Co., and two foreclosure law firms, Harmon Law Offices PC in Newton and Ablitt Scofield PC in Woburn.  Lawrence Scofield of Ablitt Scofield said his firm worked on only one of the foreclosure cases involved and it didn’t concern a late mortgage assignment, as in Ibanez.“These are all naked allegations and as far as I know we followed standard, normal foreclosure practice,” he said.Tom Kelly, a spokesman for JPMorgan, declined to comment.   Andrew Harmon of the Harmon firm didn’t immediately return a call for comment.

The case is Manson v. GMAC Mortgage LLC, 08-cv-12166, U.S. District Court, District of Massachusetts (Boston).  To contact the reporter on this story: Thom Weidlich in BrooklynNew York, federal court attweidlich@bloomberg.net.