On Monday, former New York governors Mario Cuomo and George Pataki wrote an unusual joint opinion piece in The Wall Street Journal, calling on New York Attorney General Eric Schneiderman to drop threats that he will continue to seek injunctive relief against former AIG chief Hank Greenberg, even though the AG has already had to abandon damages claims because Greenberg reached a private settlement with investors in a securities class action. As my Reuters colleague Karen Freifeld explained in a really smart analysis last Friday, Schneiderman is constrained by a 2008 ruling that limits the AG’s right to recovery in the name of investors who have already settled a federal-court class action. Freifeld said that the same holding, Spitzer v. Applied Card, may ultimately force the AG to drop claims for money damages against Bank of America in connection with its merger with Merrill Lynch and against Ernst & Young for its audit of Lehman Brothers, even though both suits were brought under New York’s powerful Martin Act, which permits the state to bring securities claims on behalf of supposedly defrauded investors.
I’ve written a lot about the tension between class action lawyers and state regulators with parallel claims. The battle to recover damages on behalf of misled investors (and the right to claim credit for the recovery) is part of that interplay: In New York, whoever makes a deal first wins.
A handful of foreclosure defense attorneys are raising issues with the foreclosure reduction plan recommended by the Foreclosure Initiative Workgroup.
Some said they were unaware the workgroup of judges and court administrators had even been assembled and are concerned they weren’t given a chance to have input about the report.
Find the report here.
Royal Palm Beach-based foreclosure defense attorney Tom Ice said there were a few items in the report that struck him as “wrong-minded,” including an assertion that dismissing a foreclosure that isn’t ready for a hearing is only a temporary fix.
Mortgage servicing company Lender Processing Services Inc has agreed to pay $14 million to settle claims the company misled investors about improper practices underlying its business model, including the “robo-signing” documents, in connection with foreclosures.
The company’s settlement, disclosed in papers filed last week in U.S. District Court in Jacksonville, Florida, marked the latest securities class action settlement to spill out of the U.S. housing market crash and subsequent financial crisis.
Filed in 2010, the lawsuit accused Lender Processing and several executives of making false or misleading statements related to an alleged practice of improper “fee splitting” and of engaging in illegal document-filing practices related to foreclosures.
Following a series of disclosures about its allegedly improper business practice, Lender Processing’s stock fell 18 percent from April 2009 to October 2010.
In re: LEONOR HILDA JIMENEZ, Chapter 13, Debtor. Case No. 12-26282 HRT. United States Bankruptcy Court, D. Colorado.
February 1, 2013.
ORDER ON OBJECTION TO PROOF OF CLAIM
HOWARD R. TALLMAN, Bankruptcy Judge.
This case comes before the Court on Debtor’s Objection to Proof of Claim #4-1 Filed by FirstBank (docket #14) (the “Objection”). FirstBank (the “Bank”) filed its Response to Objection to Proof of Claim #4-1 Filed by FirstBank (docket #24) (the “Response”). The Court set the matter for hearing. In anticipation the hearing, Debtor filed her Objection (docket #38), which is, in substance, a motion in limine seeking to exclude evidence of the Bank’s attorney fees and costs alleging the Bank’s failure to properly itemize the pre-petition interest, fees, expenses and other charges included in the amount of its claim as required under FED. R. BANKR. P. 3001(c)(2)(A).
The Court conducted a hearing on January 10, 2013, and heard evidence and argument of the parties. This matter raises two issues — one substantive and one procedural. The Debtor has objected to the amount of the Bank’s pre-petition attorney fees incurred with respect to its three aborted pre-petition foreclosure proceedings commenced against the Debtor’s home. Debtor’s Objection thus raises the substantive issue of the reasonableness of the pre-petition attorney fees incurred by the Bank in order to pursue those three foreclosure proceedings. The procedural issue concerns whether the Bank complied with Rule 3001 and the appropriate penalty to be imposed if the Bank’s proof of claim was not filed in compliance with the rule. At the close of the Debtor’s evidence, the Bank made an oral motion for directed verdict on the basis that the Debtor has not met her burden to present sufficient evidence to negate the prima facie validity of the Bank’s proof of claim.
I. FACTUAL BACKGROUND Debtor executed a promissory note to the Bank on June 29, 2001, in the principal amount of $140,000.00, payable at 7% per annum interest over a term of 30 years (the “Note”). The proceeds of the Note were used to purchase the Debtor’s residence at 920 Winona Court, Denver, Colorado (the “Property”), and the Note is secured with a deed of trust granting the Bank a security interest in the Property (the “Deed of Trust”) (collectively the Note and the Deed of Trust are the “Loan Documents”).
Debtor has fallen behind on her Note payments several times. Three pre-petition proceedings to foreclose on the Deed of Trust were initiated as a result of those delinquencies. Those proceedings were initiated in 2004; in 2008; and in 2011. Each time, the Debtor cured the delinquency and the Bank dismissed its foreclosure. However, the attorney fees and expenses incurred by the Bank in each of those foreclosure proceeding are collectable from the Debtor under the Note and Deed of Trust and they remain outstanding obligations of the Debtor.
The Debtor’s obligations under the Note and Deed of Trust again became delinquent in 2012. The Debtor anticipated that the Bank would again seek to foreclose its Deed of Trust and, lacking the wherewithal to cure the delinquency, the Debtor filed this bankruptcy case under chapter 13 on August 2, 2012.
The Bank filed its proof of claim #4-1 on September 4, 2012 (the “Claim”). The Bank’s Claim reflects a total secured debt of $132,945.08, including a delinquent arrearage amount of $17,515.61. As reflected in the Bank’s Claim, that arrearage consists of three delinquent payments in the total amount of $3,188.01 and $14,327.60 of pre-petition fees, expenses and charges. The Bank’s Claim itemizes the pre-petition fees, expenses and charges as late charges amounting to $2,231.93 and attorney fees of $12,095.67.1
The evidence showed that the true amount of pre-petition attorney fees incurred by the Bank is $7,868.90. In addition to attorney fees, the Bank incurred appraisal fees of $970.00. The Bank also incurred expenses such as public trustee fees, title fees, filing fees, fax costs and photocopy costs amounting to $3,208.67.
II. DISCUSSION The Bank has not complied with Rule 3001(c)(2)(A). The Rule provides in relevant part that If, in addition to its principal amount, a claim includes interest, fees, expenses, or other charges incurred before the petition was filed, an itemized statement of the interest, fees, expenses, or charges shall be filed with the proof of claim.
FED. R. BANKR. P. 3001(c)(2)(A). The Bank’s Claim includes the standard Mortgage Proof of Claim Attachment (Form B 10 (Attachment A)). That attachment contains numerous categories of typical fees and expenses to assist a claimant in itemizing its fees and expenses in order to comply with Rule 3001(c)(2)(A)’s itemization requirement. But all of the appraisal costs; title fees; public trustee fees; and filing fees were simply included as attorney fees of $12,095.67. In fact, as the Bank’s Exhibit 12-A shows, that figure includes over $4,000.00 of appraisal costs and other expenses that Rule 3001(c)(2)(A) requires to be itemized on a proof of claim whenever interest, fees and other charges are part of the claim being filed in an individual case such as this one.
Two consequences flow from the Bank’s non-compliance with Rule 3001(c)(2)(A). First, the Bank does not enjoy the Rule 3001(f) evidentiary effect of a claim that is filed in accordance with the Rules. Rule 3001(f) provides that a proof of claim that is in compliance with the Rules shall constitute prima facie evidence of the amount and validity of the claim. Because the Bank’s Claim is not entitled to that evidentiary presumption, the Bank bore the full burden of proof to support its Claim. Therefore, the Court will deny the Bank’s motion for directed verdict. The second consequence is that a proof of claim that does not comply with the itemization requirement of Rule 3001(c)(2)(A) is subject to sanctions under Rule 3001(c)(2)(D).
A. Reasonableness of the Bank’s Claimed Attorney Fees The Bank presented evidence that the total amount of fees, expenses and appraisal costs due to the Bank in connection with its Claim is $12,047.57.2 The portion of this figure that reflects the Bank’s attorney fee expense is $7,868.90. The Debtor contests the reasonableness of the amount of the Bank’s attorney fees.
The Court heard expert testimony presented by the Debtor on the reasonableness of the attorney fees incurred by the Bank with respect to the pre-petition foreclosure actions that it initiated. Defendant’s expert has extensive experience in legal practice, filing and conducting deed of trust foreclosures in the state of Colorado, and is a partner in a law firm specializing in deed of trust foreclosures. Her experience is in high-volume foreclosure firms. Those firms use paralegal personnel to do the bulk of the routine processing of the foreclosure actions and use technology to great advantage. They tend to serve the market created by high volume servicers of mortgage loans that are held or guaranteed by governmental or quasi-governmental entities. Those high-volume foreclosure firms operate within schedules of flat-rate fees under the contracts that they enter into with the high-volume loan servicers.
By contrast, the Bank holds and services the Debtor’s mortgage loan. It has formed a relationship with the Denver law firm of Rothgerber, Johnson & Lyons LLP (“Rothgerber”) and Rothgerber does the Bank’s legal work. Rothgerber is a full-service law firm and primarily bills for its services according to the hourly billing rates of its attorneys and paralegal personnel. Stephen Johnson is the partner at the Rothgerber firm who is reflected on invoices as having performed legal services in connection with the Bank’s Claim. A paralegal designated on the invoices as P. Lord also performed services for the Bank. As of December of 2011, the invoices in evidence show Mr. Johnson’s billing rate to be $425.00 per hour and Ms. Lord’s billing rate to be $185.00 per hour. The earliest invoices in evidence show Mr. Johnson billing $340.00 per hour and Ms. Lord billing $160.00 per hour.
The expert testimony presented by the Debtor was not helpful to the Court in analyzing the reasonableness of attorney fees in connection with the Bank’s Claim. The specialized legal environment within which Debtor’s expert has operated is quite different from the type of full-service firm employed by the Bank. In fact, she candidly acknowledged that her experience has been exclusively with high-volume foreclosure firms working on a flat-rate basis and that she has no experience with hourly billing.
The fact that foreclosure services provided by a specialized high-volume mortgage foreclosure firm are dramatically lower than the cost of similar services provided at an hourly rate by a full-service firm does not, in and of itself, demonstrate unreasonableness of the higher fees. The Bank has a long-standing relationship with the Rothgerber firm and has made a business decision to employ that firm to do its legal work — even the foreclosure work they could have done much more inexpensively at a specialized foreclosure firm.
The Court will deny the Debtor’s objection to the reasonableness of the attorney fee portion of the Bank’s Claim. Because Debtor’s evidence went to a type of high volume legal practice, compensated through negotiated flat fees, which is unlike the Rothgerber full-service practice that charges hourly rates, that evidence failed to shed light on the reasonableness of the Rothgerber fees. Moreover, Rothgerber’s invoices show an exercise of billing judgment and a delegation of work to a paralegal with a lower billing rate. Based on the Court’s experience, Rothgerber’s rates are within the reasonable range of fees that the Court sees charged in bankruptcy matters. The Court will not fault the Bank for choosing a full-service firm to do its legal work.
B. Sanctions under Rule 3001(c)(2)(D). This case illustrates the purpose of the requiring claimants to itemize fees and expenses in the proof of claim. The Bank’s Claim reflects attorney fees in the amount of $12,0957.67 when, in reality, the evidence establishes that the total attorney fees were $7,868.90. Under the rules, the Debtor had the right to expect that she would have been properly informed of the actual amount of attorney fees and the nature and amount of other expenses that were improperly lumped in with the attorney fees on the Bank’s Claim. The Court cannot speculate what difference the correct information would have made to the Debtor. It is clear from her objection that she viewed attorney fees in excess of $12,000.00 to be excessive. Whether a proof of claim that reflected the correct attorney fee figure would have been acceptable to her or would have prompted the same objection cannot be known. Nonetheless, she had a right to have correct information provided in the Bank’s Claim and Rule 3001(c)(2)(D) provides that the Court may invoke an appropriate sanction on account of the Bank’s failure to comply.
The Rule permits the Court to exclude information omitted from the Bank’s Claim as evidence at trial. FED. R. BANKR. P. 3001(c)(2)(D)(i). Accordingly, the Court will deny admission of the omitted information. The Bank’s proof of claim does not itemize any of the appraisal fees of $970.00 nor does it itemize any of the other expenses of $3,208.67. The only fees that the Bank shows on its proof of claim are the attorney fees and properly itemized late charges, therefore, the Court will only admit evidence of the attorney fees which the Court finds total $7,868.90 and the uncontested late charges of $2,231.93.
In mitigation of its failure to comply with Rule 3001(c)(2)(A), the Bank’s counsel provided detailed invoices of all legal services reflected in the Bank’s Claim to Debtor’s counsel in time for Debtor’s counsel and her retained expert to fully review those in preparation for the hearing on Debtor’s Objection. In addition, nothing in the evidence persuades the Court that there is any element of intention or willfulness involved in the Bank’s failure to comply. Under the circumstances, the Court finds that exclusion of all of the Bank’s evidence, as requested by the Debtor, would be an unnecessarily harsh sanction.
In addition to authorizing the Court to exclude the Bank’s evidence at hearing, it allows the Court to “award other appropriate relief, including reasonable expenses and attorney’s fees caused by the failure.” FED. R. BANKR. P. 3001(c)(2)(D)(ii). In addition to excluding the Bank’s evidence with respect to the non-itemized expenses, under Rule 3001(c)(2)(D)(ii), the Court will order: 1) payment by the Bank of the attorney fees and expenses incurred by the Debtor in connection with her Objection to the Bank’s Claim; and 2) denial of the Bank’s ability to charge its fees and expenses incurred in defense of the Debtor’s Objection to the Debtor under the Loan Documents.
C. Allowance of the Bank’s Proof of Claim In accordance with the above discussion, the Bank’s Claim will be allowed as follows:
1. Total Claim
a. Principal $116,723.41 b. Interest $2,111.10 c. Late Charges $2,231.93 d. Appraisal Costs $0.00 Disallowed; Rule 3001(c)(2)(D)(i) e. Expenses $0.00 Disallowed; Rule 3001(c)(2)(D)(i) f. Attorney Fees $7,868.90 ___________ g. Claim Total $128,935.34
2. Arrearage Claim
a. Installments $3,188.01 (3 pmts. principal, interest & escrow) b. Fees and expenses $10,100.83 (late charges and attorney fees only) ___________ c. Arrearage Total $13,288.84
III. CONCLUSION The Bank has demonstrated that it did incur and pay the attorney fees reflected in the Bank’s Exhibit 12-A and the Debtor’s evidence failed to raise an issue as to the reasonableness of those fees. Nonetheless, the Bank’s failure to itemize is precisely the issue that Rule 3001(c)(2)(A) is intended to address so that debtors have complete information with respect to fees and other charges included in a mortgage creditor’s claim. With more complete information, debtors are better able to determine whether a claim objection is appropriate. For that reason, a substantial penalty is appropriate even though the Bank’s failure appears to be a matter of inadvertence. Payment of the Debtor’s fees and costs will be made directly to Debtor’s counsel. The Court will determine the amount of attorney fees and expenses to be paid upon the submission of a bill of costs by Debtor’s counsel.
Therefore, in accordance with the above discussion, it is ORDERED that the Bank’s oral motion for directed verdict is DENIED. It is further
ORDERED that Debtor’s Objection to Proof of Claim #4-1 Filed by FirstBank (docket #14) is GRANTED IN PART. The Court hereby determines that the allowed amount of the Bank’s Claim is $128,935.34 and the amount necessary to cure the mortgage arrearage is $13,288.84. It is further
ORDERED that the Debtor’s Objection (to the Bank’s exhibits under Rule 3001) is GRANTED IN PART. Under Rule 3001(c)(2)(D)(i), as a sanction for FirstBank’s failure to fully itemize its fees and expenses, the Court has not considered the Bank’s evidence of appraisal costs and expenses not itemized on its proof of claim and the disallowance of those expenses is reflected in the Bank’s allowed claim above. It is further
ORDERED that as an additional sanction, under Rule 3001(c)(2)(D)(ii), the Bank will pay to Debtor’s counsel an amount to be determined by the Court for attorney fees and expenses incurred in connection with the Debtor’s Objection. Debtor’s counsel shall file a bill of costs reflecting attorney fees and expenses incurred in connection with Debtor’s Objection to Proof of Claim #4-1 Filed by FirstBank and the hearing held in connection with that Objection no later than February 15, 2013, and FirstBank shall have until March 1, 2013, to file any objection it may have to the bill of costs. Thereafter, by separate order, the Court will determine the amount of the fees and expenses to be levied against FirstBank. It is further
ORDERED that FirstBank is hereby prohibited from adding attorney fees, charges and expenses incurred in order to defend against Debtor’s Objection as expenses to be charged to the Debtor under the mortgage Loan Documents.
Footnotes 1. During the presentation of evidence, counsel for the Bank brought to the Court’s attention a duplication on an invoice. The total of the submitted invoices should be $12,047.57 which is the total of fees, expenses and appraisals listed on the Bank’s summary Exhibit 12-A.
2. These are broken down as reflected on the Bank’s Exhibit 12-A as: 1) attorney fees of $7,868.90; 2) expenses of $3,208.67; and 3) appraisal fees of $970.00.
If you’ve ever owned property, you know how it’s supposed to work.You pay for it, you get the title. And you would think that property’s yours, right? Not so fast. Four In Your Corner’s Liza Fernandez introduces us to a couple who bought a lot in Lehigh Acres that’s now in legal limbo.
This Lehigh Acres house was supposed to be a dream retirement home for Kathy and Gerry Powers.
“All the paperwork and everything came through, and we basically had the the two half-acre lots and the house,” Kathy tells us by phone.
Snagged at a great price in a 2009 foreclosure, the Indiana couple then decided to sell when their retirement plans changed a few years later. They felt lucky to find a buyer.
“Then we got a call. Their title insurance company discovered an error that the half acre that was supposed to accompany our home did not actually legally belong to us. And it could not be sold,” Kathy explains.
JPMorgan Chase & Co Chairman and CEO Jamie Dimon said he may consider leaving the bank where he has held the top post since 2005, if shareholders vote to split his duties, the Wall Street Journal reported on Saturday.
Shareholders will vote later this month at an annual meeting in Tampa, Florida, on a non-binding proposal to separate the chairman and chief executive roles after a more than $6 billion trading loss last year raised questions about risk oversight.
At first, Dimon said he would not comment publicly on what he would do if the vote went against him, but when pressed he added that the worst-case scenario would be to leave the bank, the newspaper said, citing sources that attended a private meeting at the company’s New York headquarters.
Results of the vote will be announced on May 21, but it remains unclear what the board will do if the proposal passes.
The Legislature finally has passed a bill to ease Florida’s foreclosure crisis. The problem is, it’s a bad bill that Gov. Scott should veto.
Rep. Kathleen Passidomo, R-Naples, sponsor of House Bill 87, believes that giving banks the right to seek a quicker hearing would get the state’s 350,000 foreclosure cases resolved faster. Her approach might make sense if the banks weren’t causing the backlog by not acting on the cases they file.
Though some homeowners employ attorneys who are responsible for delays, the vast majority are at the mercy of lenders who set the timetable for how quickly cases move, or don’t move. It takes an average of two years to dispose of foreclosure lawsuits in Florida because too often lenders and servicers don’t want to assume the taxes, association dues and expenses to list a house for sale that they incur after taking possession. They also don’t want a glut of foreclosures depressing prices and furthering their losses. So they let cases languish. On Friday, the backlog prompted the Florida Supreme Court to order that trial courts hire magistrates, to move more cases.
HB 87 would let lenders seek a “show cause” hearing, forcing homeowners into court quickly to prove that they shouldn’t be foreclosed on. That would not light a fire under the banks.
Attorney General Martha Coakley is announcing a new initiative to help Massachusetts cities and towns with high rates of distressed and vacant properties cope with the recent foreclosure crisis.
Coakley says her office is now accepting applications for a $1 million grant program designed to identify and return bank-owned properties to productive residential use.
NY AG Eric Schneiderman’s suit to bring meaning to the servicing standards of the National Mortgage Enforcement Fraud rises and falls on how the D.C. Circuit interprets two provisions of the Consent Judgment.
In my last post, I explained that one provision–the one sentence section II–seems to require that the banks comply to the letter of the servicing standards in Exhibit A, notwithstanding the elaborate metrics/monitoring process that institutionalizes banks’ right to violate the standards so long as they don’t do it too often. If it doesn’t Schneiderman has no suit.
But even if it does require perfect compliance, the AG has one more argument he has to win. I didn’t explain that properly last post. Here’s the key part:
“3. Enforcement Action. In the event of an action to enforce the obligations of Servicer and to seek remedies for an uncured Potential Violation for which Servicer’s time to cure has expired, the sole relief available in such an action will be:
(a) Equitable Relief….
(b) Civil Penalties….”
NY AG Schneiderman’s right to sue hinges on how the bolded language is read. If “enforce the obligations of Servicer” means the same thing as “seek remedies for an uncured Potential Violation”, then there’s no right to sue until the metrics process really plays out. Bank of America would then be right. (See the end of its letter to A.G. Schneiderman.)
Michigan Attorney General Bill Schuette sent a letter to Joseph Smith, head of the Office of Mortgage Settlement Oversight, identifying areas where banks are still falling short of meeting terms of the National Mortgage Settlement.
The $25 billion settlement required the nation’s largest mortgage servicers to pay for foreclosure relief efforts, compensate borrowers and follow a series of servicing guidelines that banned certain practices, including dual-tracking.
US Bank on Friday backed down from its efforts to foreclose on an Aurora woman whose federal court battle against it has taken on the constitutionality of Colorado’s foreclosure laws.
Just days after lawyers for the bank told a federal judge they’ve always had the original documents necessary to foreclose on Lisa Kay Brumfiel’s tri-level house legally — and U.S. District Judge William J. Martínez said to produce them — the bank rescinded the whole thing.
Despite the move to make a nearly two-year nightmare to save her house go away, Brumfiel on Friday insisted she’s pressing on.
“I would rather risk losing my house again than to selfishly watch this corrupt process continue for others,” said Brumfiel, a 43-year-old part-time saleswoman who took on the court battles without a lawyer. “I know too much, and I don’t want the blood of it on my hands.”
What does the AG or any other AG for the matter expect…they continue to allow them to conduct business after being caught a million times committing fraud. I can assure you a small business WOULD NOT have a second shot at these frauds. IMO, these AG’s do not serve the public at all.
Bank of America is pushing back against New York Attorney General Eric Schneiderman, who threatened to sue the bank over alleged violations of last year’s $25 billion mortgage settlement.
In a letter to Schneiderman this week, lawyers for the bank said the attorney general can’t sue until the bank has been given time to cure any of the alleged violations.
“Bank of America has not committed any potential violations…let alone failed to cure those potential violations,” wrote Meyer G. Koplow and Theodore N. Mirvis, attorneys from the New York law firm Wachtell, Lipton, Rosen & Katz.
IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA
ADRIAN LUPU Plaintiff
v.
LOAN CITY, LLC, et al. Defendants
ORDER
excerpt: Claims Alleging Violation of Pennsylvania Statues Requiring Recording of Mortgages Plaintiff alleges that the title to the Plaintiff’s property has been clouded through the use of MERS instead of the Chester County office of the Recorder of Deeds, which means that there is no public record of the mortgage assignments. Plaintiff seeks to quiet title to the property.
Under Pennsylvania law, as is relevant here, an action to quiet title “may be brought…to determine any right, lien, title or interest in the land or determine the validity or discharge of any document, obligation or deed affecting any right, lien, title or interest in land; [or] to compel an adverse party to file, record, cancel, surrender or satisfy of record, or admit the validity, invalidity or discharge of, any document, obligation or deed affecting any right, lien, title or interest in land….” In Montgomery County v MERSCORP, Inc., the County alleged that use of MERS and the resulting failure to record mortgage assignments with the County and to pay the required fee violates Pennsylvania’s recording statue. In denying a motion to dismiss, Chief Judge Joyner held that “Pennsylvania law permits any person in any manner interested in a conveyance, such as a mortgage assignment, to bring a quiet title action…to compel the person with this analysis and holds that Plaintiff here stated a claim under Pennsylvania law to the extent he seeks an action to quiet title, through the Counts alleging “Violation of Local Statues” (Count Five); and “MERS Not Mortgagee” (Count Six).
During the protracted negotiations over what was to become the 49 state/Federal mortgage settlement, New York attorney general Eric Schneiderman was hailed as a progressive leader and California’s Kamala Harris was characterized as an opportunist.
Turns out the opportunist cut a much better deal for her constituents than the supposed true believer. Admittedly, Schneiderman laid the groundwork by forming a group seeking tougher terms from the banks than the Administration and the putative leader of the AGs, Iowa’s Tom Miller. But as readers know all too well, Schneiderman torpedoed his group by taking a deal with the Administration to be a co-chair of an obviously toothless mortgage task force. Harris insisted on cutting her own deal for California, which included having her own settlement monitor, and installed the able and knowledgeable Professor Katie Porter.
Harris then further stymied one of the key aims of the deal, which was to institutionalize lax mortgage servicing standards (they include “drive a truck through them” permitted error rates and laughably low penalties) by pushing for, and getting passed, a Homeowner Bill of Rights.
President Obama has finally moved to replace a little-known but powerful Washington bureaucrat who has stood in the way of important efforts to end America’s foreclosure crisis. The President’s decision is welcome — but further action is needed, right away, to provide the swift and fair relief homeowners need.
Since 2009, Edward DeMarco has served as acting director of the Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac. He should have been a critical figure in setting policy to get us out of the foreclosure crisis. Instead, DeMarco’s most notable achievement has been blocking programs to help struggling homeowners.
It has been more than five years since the housing bubble burst, but millions of Americans are still fighting to keep their homes. In the fourth quarter of 2012, 10.4 million properties — 21.5% of all homes with mortgages — had “negative equity,” owing more on their mortgages than their properties were worth. Right now, these homeowners are trapped under a $628 billion mountain of negative equity.
Watch how fast this gets out of control on these idiots!
With the bankers most likely behind this scheme, the non-judges are going from driving Pinto’s to driving Bugatti’s in less than 60!
Sound familiar? It should!
SFGate-
With tens of thousands of foreclosure cases clogged in the state’s courts, the Florida Supreme Court is signing off on a plan to use lawyers — and not judges — to handle them.
The court on Thursday issued an order that will allow chief judges across the state to use “general magistrates” to process foreclosure cases.
The order, which was approved by all seven justices, called the move a “vehicle to provide additional judicial resources to efficiently process those cases.”
But it was quickly criticized by lawyers who represent homeowners battling foreclosures.
LOS ANGELES — Attorney General Kamala D. Harris today filed an enforcement action against JPMorgan Chase & Co. (Chase) alleging that the bank engaged in fraudulent and unlawful debt-collection practices against tens of thousands of Californians.
The suit alleges that Chase engaged in widespread, illegal robo-signing, among other unlawful practices, to commit debt-collection abuses against approximately 100,000 California credit card borrowers over at least a three-year period.
“Chase abused the judicial process and engaged in serious misconduct against California credit card borrowers,” Attorney General Harris said. “This enforcement action seeks to hold Chase accountable for systematically using illegal tactics to flood California’s courts with specious lawsuits against consumers. My office will demand a permanent halt to these practices and redress for borrowers who have been harmed.”
From January 2008 through April 2011, Chase filed thousands of debt collection lawsuits every month in the State of California. On one day alone, Chase filed 469 such lawsuits in California. The Attorney General’s complaint against Chase alleges that, to maintain this pace, Chase employed unlawful practices as shortcuts to obtain judgments against California consumers with speed and ease that could not have been possible if Chase had adhered to the minimum substantive and procedural protections required by law.
“At nearly every stage of the collection process, Defendants cut corners in the name of speed, cost savings, and their own convenience, providing only the thinnest veneer of legitimacy to their lawsuits,” the complaint states.
Chase used California’s judicial system as a mill to obtain default judgments, the suit alleges, using illegal tactics to flood the state’s court system in order to secure default judgments and garnish wages from Californians.
The alleged misconduct includes:
Robo-signing: Chase illegally robo-signed various litigation filings, including sworn documents, declarations, and verified complaints, without reviewing the relevant files or bank records or even reading the documents before signing.
“Sewer Service”: Chase failed to properly serve notice of debt collection lawsuits against consumers while claiming they had been served as required by law. This practice, known as “sewer service,” deprives the consumer of any notice of the lawsuit.
Filing Irregularities: Chase haphazardly assembled its official legal filings. For example, Chase failed to redact consumers’ personal information in attachments to filings, potentially exposing them to identity theft and in violation of California law. In addition, when asking courts to enter default judgments against consumers, Chase consistently swore under penalty of perjury that the consumers were not on active military duty. In fact, Chase never checked. This deprived servicemembers of important legal protections to which they are entitled while on active duty.
The suit was filed in Los Angeles Superior Court and a copy of the complaint is attached to the online version of this release at http://oag.ca.gov.
Consumers who believe they have been victims of this misconduct may submit a complaint online at http://oag.ca.gov/consumers.
A sprawling securities fraud class action against Fannie Mae and its former auditor, KPMG LLP, is coming to a close. The parties filed notice with a Washington federal judge late yesterday that they had reached a settlement in the case.
Fannie Mae and KPMG agreed to pay $153 million to class members—former Fannie Mae shareholders from 2001 to 2004—according to a motion filed yesterday for preliminary court approval of the deal.
Fannie was accused of violating established accounting principles and publishing misleading financial reports and statements. The settlement comes on the heels of a string of losses for the plaintiffs, in which the judge dismissed several former Fannie executives as individual defendants in the case. U.S. District Judge Richard Leon had yet to rule on the defendants’ joint motion for summary judgment.
“The Settlement is the culmination of more than eight years of litigation, and was reached at a time when the Parties to the Stipulation understood the strengths and weaknesses of their respective positions,” the plaintiffs said in their motion for approval of the settlement.
A federal judge ruled on Wednesday that the United States can pursue parts of a civil lawsuit against Bank of America Corp over its sale of toxic mortgages to Fannie Mae and Freddie Mac , boosting a largely untested legal theory the government used in the case.
Bank of America had sought to dismiss the lawsuit, which seeks penalties under two laws. One is the False Claims Act, which is often used to target fraud against the government, and the other is the 1989 FIRREA law.
FIRREA does not yet have much of a track record in court, but the government turned to in the wake of the financial crisis as a potential means to target civil fraud involving financial institutions.
When homeowners discovered that an account that was supposed to compensate them for foreclosure abuses lacked sufficient money to cash their checks, the consulting firm at the center of the mishap promised that the problem was fixed and that the checks were valid.
But three weeks later, that promise fell short.
This time, according to officials briefed on the matter, the consulting firm issued a raft of checks with wrong amounts. The mistake by the firm, Rust Consulting, cheated struggling homeowners out of thousands of dollars.
Residential Evil–
The Mortgage Electronic Registration System is like a key party, but instead of f**king your wife, they lose track of the deed to your house.
Washington, D.C. (May 7, 2013)—Today, Reps. Elijah E Cummings, Mike Michaud, Adam Smith, Susan Davis, Mark Takano, and John Tierney, the Ranking Members of the Committee on Oversight and Government Reform, the Committee on Veterans’ Affairs, the Committee on Armed Services, the Subcommittee on Military Personnel, the Subcommittee on Economic Opportunity, and the Subcommittee on National Security, introduced H.R. 1842, the Military Family Home Protection Act, to strengthen foreclosure protections for U.S. military servicemembers and their families.
Similar legislation passed overwhelmingly in the House of Representative during the last Congress by a vote of 394 to 27. Similar legislation was passed by the Senate Veterans Affairs Committee, but was never considered on the Senate floor.
“This legislation extends critical protections to our nation’s servicemembers, veterans with disabilities, and the surviving spouses of fallen heroes who have made the ultimate sacrifice to protect our nation,” said Rep. Cummings. “The bill ensures that the homes of servicemembers are protected when they are most vulnerable—when they are placing their lives at risk overseas or recovering from service-related injuries here at home.”
“This bill holds banks accountable and provides much-needed protections to those who’ve served our country,” said Rep. Michaud. “This is a win-win for all members of our military and so many veterans, surviving spouses and their families. It should receive strong bipartisan support because it’s good policy and because it’s the right thing to do.”
“The men and women of our Armed Services and their families make a tremendous sacrifice to keep our country safe, and we must ensure that their financial security is protected here at home,” said Rep. Smith. “Our servicemembers are often asked to move or be deployed on very short notice, which can present unpredictable financial difficulties. This bill takes critical steps toward protecting deployed servicemembers and their families from those potential financial challenges.”
“One can only imagine what it must be like to learn that you are about to lose your home while you are deployed to protect America and our freedoms,” said Rep. Davis. “Our servicemembers face unique challenges that warrant flexibility in issues of foreclosure that this legislation provides. They should be honored for the sacrifices they make, not penalized. I commend Congressman Cummings for his efforts to protect our military families.”
“As the Ranking Member of the Veterans’ Affairs Economic Opportunity Subcommittee, I’m proud to support the Military Family Home Protection Act,” said Rep. Takano. “This much needed legislation provides essential foreclosure protections for our heroes, who should not have to worry about losing their home while deployed overseas. Providing the flexibility laid out in this legislation is the least we can do for the brave men and women who put their lives on the line day in and day out.”
“It is unacceptable for our service members to be subjected to abusive penalties and practices when they are deployed. That is why I am pleased to join Congressman Cummings and my other colleagues today in introducing this bill today that will strengthen service members’ legal rights and protect them against unfair foreclosures,” said Rep. Tierney.
The Servicemembers Civil Relief Act (SCRA), which was originally passed in 1940, does not currently protect all servicemembers and their families from foreclosure because its protections apply only to those who purchased homes prior to activation. The Military Family Home Protection Act expands foreclosure protection to all servicemembers regardless of when they purchased their home. Specifically, the bill would:
Stay a home foreclosure action when servicemembers are receiving hostile fire or imminent danger pay;
Stay a home foreclosure action for a 12-month period for servicemembers placed on convalescent status, for veterans who are medically discharged, and for surviving spouses of servicemembers whose deaths are service-connected;
Double civil penalties for mortgage-related violations;
Prohibit banks from discriminating against servicemembers, veterans, and surviving spouses who are eligible for these protections; and
Eliminate the primary residence requirement for servicemembers that receive a military order to relocate to another duty station in order to qualify for mortgage refinancing.
For the last two years, Cummings has aggressively investigated illegal foreclosures, inflated fees, and other abuses by banks against servicemembers, veterans, and their families. Although federal banking regulators have refused to provide Congress with detailed information on such cases, more than 1,600 individuals are receiving compensation for violations of SCRA under amended consent orders announced in February between the Board of Governors of the Federal Reserve, the Office of the Comptroller of the Currency, and 13 of our largest banks. Since SCRA protections are limited to homes purchased before an individual enters active duty service, these violations likely represent only a subset of the number of military families subjected to abusive foreclosure and servicing practices.
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