Sunday, September 26, 2010

Ally Says GMAC Mortgage Mishandled Affidavits on Foreclosures

Ally Financial Inc., whose GMAC Mortgage unit halted evictions in 23 states amid allegations of mishandled affidavits, said its filings contained no false claims about home loans.

The “defect” in affidavits used to support evictions was “technical” and was discovered by the company, Gina Proia, an Ally spokeswoman, said in an e-mailed statement. Employees submitted affidavits containing information they didn’t personally know was true and sometimes signed without a notary present, according to the statement.

Most cases will be resolved in the next few weeks and those that can’t be fixed will “require court intervention,” Proia said. “The entire situation is unfortunate and regrettable and GMAC Mortgage is diligently working to resolve the situation,” Proia said. “There was never any intent on the part of GMAC Mortgage to bypass court rules or procedures. Nor do these failures reflect any disrespect for our courts or the judicial processes.”

State officials are investigating allegations of fraudulent foreclosures at the nation’s largest home lenders and loan servicers. Lawyers defending mortgage borrowers have accused GMAC and other lenders of foreclosing on homeowners without verifying that they own the loans. In foreclosure cases, companies commonly file affidavits to start court proceedings.

“All the banks are the same, GMAC is the only one who’s gotten caught,” said Patricia Parker, an attorney at Jacksonville, Florida-based law firm, Parker & DuFresne. “This could be huge.”

No Misstatements

Aside from signing the affidavits without knowledge or a notary, “the sum and substance of the affidavits and all content were factually accurate,” Proia wrote in the e-mail. “Our internal review has revealed no evidence of any factual misstatements or inaccuracies concerning the details typically contained in these affidavits such as the loan balance, its delinquency, and the accuracy of the note and mortgage on the underlying transaction.”

Affidavits are statements written and sworn to in the presence of someone authorized to administer an oath, such as a notary public. GMAC told brokers and agents to halt evictions tied to foreclosures on homeowners in 23 states including Florida, Connecticut and New York and said it may have to take “corrective action” on other foreclosures, according to a Sept. 17 memo. Foreclosures won’t be suspended and will continue with “no interruption,” Proia said in a statement

10,000 a Week

In December 2009, a GMAC Mortgage employee said in a deposition that his team of 13 people signed “a round number of 10,000” affidavits and other foreclosure documents a month without verifying their accuracy. The employee said he relied on law firms sending him the affidavits to verify their accuracy instead of checking them
with GMAC’s records as required. The affidavits were then used to complete the process of repossessing homes and evicting residents.

Florida Attorney General William McCollum is investigating three law firms that represent loan servicers in foreclosures, and are alleged to have submitted fraudulent documents to the courts, according to an Aug. 10 statement. The firms handled about 80 percent of foreclosure cases in the state, according to a letter from Representative Alan Grayson, a Florida Democrat.

“It appears that the actions we have taken and the attention we’ve paid to this issue could have had some impact on the actions that GMAC took today, but we can’t take full credit,” Ryan Wiggins, a spokeswoman for McCollum, said yesterday in a telephone interview.

‘Committed Fraud’

In August, Florida Circuit Court Judge Jean Johnson blocked a Jacksonville foreclosure brought by Washington Mutual Bank N.A. and JPMorgan Chase Bank, which had purchased the failed bank’s assets, and Shapiro & Fishman, the companies’ law firm. Documents eventually showed that the mortgage on the house was in fact owned
by Washington-based Fannie Mae.

WaMu and the law firm “committed fraud on this court,” Johnson wrote. JPMorgan had presented a document prepared by Shapiro showing the mortgage was sold directly to WaMu in April 2008.

Tom Ice, founding partner of Ice Legal PA in Royal Palm Beach, Florida, said a fourth law firm representing GMAC in recent weeks has begun withdrawing affidavits signed by the GMAC employee. “The banks are sitting up and taking notice that they can’t use falsified documents in the courtroom,” Ice said. “There may be others doing the same thing. They’re going to come back and say, ‘We’d better withdraw these,’”Ice said in a telephone interview.

Alejandra Arroyave, a lawyer with Lapin & Leichtling, a law firm in Coral Gables, Florida, who represented the employee at his December 2009 deposition, didn’t respond to a request for comment. A phone call to the employee wasn’t returned.

Mortgage Market

GMAC ranked fourth among U.S. home-loan originators in the first six months of this year, with $26 billion of mortgages, according to Inside Mortgage Finance, an industry newsletter. Wells Fargo & Co. ranked first, with $160 billion, and Citigroup Inc. was fifth, with $25 billion.

Iowa Assistant Attorney General Patrick Madigan said the implications of Ally’s internal review and the GMAC employee’s deposition could be “enormous.”
“It would call into question whether other servicers have engaged in similar practices,” Madigan said in a telephone interview. “It would be a major disruption to the foreclosure pipeline.”

2.3 Million Homes Foreclosed Since 2007: Will the Housing Market Recover Soon?

An Update on Warren Buffet's Housing Forecast

A few years ago an acquaintance handed me his new business card. As soon as I read it, I sensed the housing market was ready for a fall.

What prompted my reaction?
The attractive print on the card included my acquaintance's name: underneath was the title, "real estate agent."

He attended college to train in the sciences, and had worked as a professional in that field. But he decided to give it up to become a real estate agent -- at the worst possible time. He made his career move when countless pricey subdivisions were being built all across metropolitan Atlanta. This was around 2005, about a
year before the residential real estate bubble burst.

That was then. Today, the fallout from the housing crash persists. Here are the facts: Prices of U.S. single-family homes fell for a second straight month in July (Federal Housing Finance Agency, Sept. 22)

U.S. mortgage applications filed last week dropped 1.4% from the prior week (Mortgage Bankers Association, Sept. 22)

More than 2.3 million homes have been repossessed since December 2007. (RealtyTrac, Sept. 16)

Banks repossessed 95,364 properties in August, which is up 25% from last August. (RealtyTrac, Sept. 16)

With the data above in mind -- and considering that 2011 is only about three months away -- read what Warren Buffet forecasted earlier this year for residential real estate: "Billionaire Warren Buffett said the U.S. will recover from the residential real estate slump by 2011 as demand for houses catches up with the supply that accumulated during the bubble. 'Within a year or so, residential housing problems should largely be behind us," Buffett wrote..."Indeed, many families that couldn't afford to buy an appropriate home a few years ago now find it well within their means.'"
-- USA Today Money, March 1, 2010

But despite lower prices and a near record low 30-year mortgage rate (4.44%), many of those families are not buying.

Have we reached a bottom in residential real estate? Well, you might think so after reading this recent quote

from Fortune magazine (9/17): "Despite continued discouraging data from the real estate sector, a few bullish arguments are beginning to emerge. One MIT economist even believes that demand for new homes exceeds residential construction." Then again, read what EWI's Robert Prechter writes in the current (September) Elliott Wave Theorist: "You can bet that at the bottom in real estate prices and activity, newspapers will be unable to find anyone willing to issue a bullish comment."
Prechter wrote this regarding the high number of vacancies in Atlanta's skyscrapers. But the quote applies equally to residential real estate.

Saturday, September 18, 2010

No-Help Desk

Cook County has the help desk on the 13th floor. I ran into a couple that used the services of the help desk to accelerate their foreclosure. They actually sped up the process by using their services. What a help!