Judge Shelley C. Chapman, of the U.S. Bankruptcy Court for the Southern District of New York, has ordered HSBC and Litton Loan Servicing (a Goldman Sachs subsidiary) to send officers with some juice — and not low-level types — to her Manhattan courtroom on Feb. 10 to explain themselves. More specifically, to explain their failure to provide adequate documentation about a mortgage they claim to own and service. Judge Chapman also ordered the Texas attorney who signed the documents to show up.
At issue is the fact that HSBC (HBC) hasn’t come close to proving it owns the loan, and the documents it has submitted look funny. It also doesn’t appear to have been acting in good faith when it comes to trying to modify the loan (also known as “loss mitigation”). So, the judge wants to talk to people who actually know things and can make decisions. How Did HSBC Get the Note?
By RICHARD WILNER Last Updated: 1:36 AM, July 6, 2010 Posted: 1:31 AM, July 6, 2010
A Bronx homeowner is scheduled for a courtroom battle royale later this month — facing off in Manhattan bankruptcy court against the largest foreclosure mill in the state to see if the firm’s client, GMAC Mortgage, has the right to toss her from her Pelham Gardens home.
Also at issue is whether the law firm, Steven J. Baum PC, may have a conflict of interest problem.
The lawyer for the homeowner, David Shaev, claims in recently filed court papers that a Baum lawyer allegedly represented GMAC without disclosing she worked for Baum.
The thorny issue is of growing interest to New York judges — who last year faced more than 50,350 foreclosure actions, according to RealtyTrac, many of which were brought by banks that have sold or securitized the loans. Such actions make proving which entity owns the loan difficult.
DAVID SHAEV Fighting foreclosure.
That issue is key — banks that can’t prove they own a loan can’t legally foreclose. At times, lenders and law firms have been chastised for taking short cuts to gloss over the ownership issue.
Complicating matters is that most delinquent homeowners battle foreclosure actions without a lawyer and get steamrolled.
But that may be changing.
On June 3, Bankruptcy Judge Allan Gropper denied a bank’s attempt to move against a homeowner because it couldn’t prove it owned a mortgage.
Five days later, Brooklyn state court Judge Wayne P. Saitta, citing a bank’s “egregious” misrepresentation, awarded a homeowner $10,000 in sanctions when the bank tried to evict knowing it didn’t own the mortgage.
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