Even though the much ballyhooed foreclosure fraud settlement has been a
bit of a letdown, it has not stopped federal regulators from suggesting
that fines be levied against eight more mortgage lenders/servicers. The
Federal Reserve has recommended fining HSBC Bank, SunTrust, MetLife, U.S. Bancorp, PNC Financial Services,
Everbank, One West, and Goldman Sachs for their "unsafe and unsound
practices in their loan servicing and foreclosure processing."
This is unsurprising to any foreclosure defense attorney currently practicing
in the United States. Quite simply, banks have not stopped robosigning
documents, nor have they quit using previously robosigned documents in
the pursuit of a judgment of foreclosure and sale.
The New York Times reports that some judges are holding servicers and their attorneys accountable
for facially flimsy or fraudulent documents. Unfortunately, the example
of Judge Schack (a New York state Supreme Court judge in Brooklyn) remains
the exception, not the rule.
On a daily basis, I handle cases where affidavits, assignments of mortgages,
and promissory notes are signed by a cast of familiar names. In some situations,
the same individual signs as an officer of both the mortgage servicer
and Mortgage Electronic Registration Systems, Inc. This is a tell-tale
sign of robosigned foreclosure documents. Even if the foreclosure backlog
was magically cleared overnight, it is doubtful that these practices would
stop. So long as the mortgage servicing industry's underlying infrastructure
remains, the chain of title for real property nationwide will always be
Let's face it.
When servicers have difficulty identifying whether a first mortgage was
modified via HAMP (a pre-requisite for modifying a second mortgage under the federal Making
Home Affordable guidelines), we have a problem. It's not that modern
database software cannot handle the flow of information. The problem is
that it is less expensive for mortgage servicers to occasionally pay out
damages to an injured homeowner than it is to fix the unreliable software.
If the days of borrowing from a local bank, where you know each person
involved in the loan underwriting process, are over, then we need to re-evaluate
how the industry does business. The only way to force change is to make
it more expensive to have bad software than it is to fix the software.
No amount of slap-on-the-wrist fines levied by the federal government
will change this behavior. Individual homeowners need to hold their mortgage
servicers accountable and pursue them in court. When damage awards pile
on top of fines levied by federal regulators, servicers may quickly find
themselves nibbled to death by ducks.
Consumers have rights. Defending those rights is essential to changing
the system for the better. A well-planned foreclosure defense or bankrutpcy
can help you protect your rights and hold less-than-scrupulous lenders
accountable. If yo'ure interested in learning more, contact us or
download our new book.