Hat tip to SM, from the WaPo:
Attorneys general in Connecticut and California ordered Ally Financial’s GMAC mortgage unit to freeze all foreclosures within their borders, joining a growing list of states investigating whether the firm and other lenders improperly kicked people out of their homes.
Connecticut Attorney General Richard Blumenthal on Monday accused Ally of using “defective foreclosure documents” in its filings and said he ordered the moratorium “to forestall horrendous, illegal harm against homeowners.” California Attorney General Edmund G. Brown Jr. on Friday called Ally’s document review process a “sham.”
In Illinois, Attorney General Lisa Madigan said she “wants to see Ally stop the filing of foreclosures in Illinois as well until this situation can be remedied,” a spokeswoman said.
The actions taken by state officials are illuminating an overburdened foreclosure system that relied on shoddy or fabricated paperwork to deal with the massive pile of cases. Now criminal and civil inquires are widening to other major companies who might have engaged in similar conduct.
“This has the potential to be an industry-wide issue,” said Patrick Madigan, an assistant attorney general in Iowa who is chairman of a national foreclosure prevention group that includes law enforcement officials and bank regulators, among others.
Great… Another free pass for deadbeats.
How are they “improperly” foreclosing? Are they filing notices against people who are current on their payments, or is it just that they’re forgetting to dot their i’s?
Yes, because the way to fix paperwork is to give everyone a free house. Why not unlock all the prisons and give a pony to every girl while we’re at it.
This is exactly why I say the banks are nothing compared to the politicians. And the people who keep voting for free money, aka deadbeats and RB.
@2 GeneK – Ally apparently had a guy who was supposed to review all the paperwork to make sure they were accurate before they foreclosed… Apparently the guy didn’t look at many of the docs. So it’s a dotting the i’s kind of thing but it is a necessary step.
See the article linked here for why it’s important…
http://www.sun-sentinel.com/business/fl-wrongful-foreclosure-0922-20100921,0,36776.story
So nice to see that the finance industry is just as sleazy and incompetent on the way down as they were on the way up.
Just goes to show – they have learned nothing and we continue to lack major regulation of the real estate industry.
Thanks for the shoutout, sdbri, even though you clearly have no idea what you are talking about.
I’ve never said people are entitled to free houses. I said people are entitled to their process, which includes proper documentation on foreclosures. And, just because you stop the foreclosure doesn’t mean the house is free. The title still has a lein on it until it is removed. That’s a separate fight and the burden of proof changes.
You say politicians are worse than banks. I say we need politicians to protect us from crap like this that is indicative of our “lowest cost” and “piece work” approach to everything. Banks off load the actual work of servicing loans to these companies who are motivateed to do as little work as possible as opposed to doing things correctly.
GMAC is at fault here for not keeping a clean and clear paper trail. While doubtless many of their foreclosure actions are legit, enough are questionable (like attempting to foreclose on someone who had no mortgage with them) that you really have to wonder how deep the rot goes.
If this is true, it is a serious problem for the courts.
http://www.washingtonpost.com/wp-dyn/content/article/2010/09/22/AR2010092206132.html
You can’t submit false documents and can be severely sanctioned for doing so. Throwing the proverbial “book” would be considered by any judge.
It is amazing how sloppy in general the mortgage industry was and is. Clearly the cost cutters ran amok in the industry and cut all the expertise away, but left the fat. Not bothering to order 1040s for NINJA loans, and not keeping the paper trail intact are pure sloppiness. Of course the question on the notes if you got a certified copy of the original from the court house, and did the chain would that be ok. Or does it have to be the actual piece of paper in question?
The paperwork was a lot sloppier than anyone who has commented so far realizes. See the posts on “Naked Capitalism”. Perjury,notarial fraud and affidavit fraud are considered frauds on the court and are serious violations of the law. There were hundreds of thousands of these violations committed as a matter of policy by the agents of the banks and servicers. According to the Articles posted on Naked Capitalism large numbers of original notes were destroyed after converting them to electronic form as a cost saving measure and Countrywide apparently kept ALL of the ORIGINAL notes which they originated which means millions of notes were never properly transferred into mortgage pools. A BIG problem,it threatens the tax exempt status of the bonds and was a violation of fiduciary duty by the securitizers. And if those millions of notes ARE still owned by CountryWide, did BofA get a windfall or a nightmare. They were not legally transferred,who owns them??? oops.
I bought my first trustee sale house from GMAC/Executive. This whole fiasco started with this guy who signed docs for judicial foreclosure states (didn’t even deal with CA from what I understand). I honestly don’t see any other trustees being more thorough. And Executive still foreclosed on some houses on Tuesday.
RB,
I’m just ribbing you for being illiterate before. I’ve always agreed people are entitled to their process. You would have seen that if you read my comments rather that injected assumptions into them. I’m not shadash you know lol.
If you stop or repeatedly extend the foreclosure process, that’s certainly free rent. My comment about free houses is comical and sarcastic. Here let me try again so you can catch it: “Free houses for everyone is a great idea!” See that? Sarcastic. Now you know, if you didn’t before.
Maybe you’ve forgotten, but for years the politicians have repeatedly voted overwhelmingly to delay foreclosures by several, both temporary and permanently. It’s now permanently a much longer process than before, and that’s on top of all these short term roadblocks and handouts.
If they had done literally nothing the last 10 or 20 years the foreclosure process would not only be a lot more efficient, but less necessary.
If the end result is someone getting foreclosed on when they don’t even have a mortgage, I’d say that’s a much larger problem than just not dotting the i’s.