If the AG’s think they can settle the greatest theft in history, let them read this story…it’s not only people who are in default.
HuffPO-
In July 2009, Roy and Sheila Bowers refinanced the mortgage on their suburban ranch home in Topeka, Kansas. The couple wanted to take advantage of the low interest rates that were all the rage at the time.
Roy, a truck driver, and Sheila, a former hotel housekeeping supervisor, knew their new loan from Wells Fargo would enable them to save $198.86 a month – a nice chunk to help with gas and groceries.
But what the Bowers never imagined was that their old loan, the one Wells Fargo told them was paid off, would resurrect itself, trashing their credit report, scotching their son’s student loans and throwing the whole family into foreclosure. All, they say, even though they didn’t miss a single mortgage payment.
Christopher Marconi was in the shower when he heard a loud banging on his door. By the time he grabbed a towel and hustled to his front step, a U.S. marshal’s sedan was peeling out of his driveway. Nailed to Marconi’s front door was a foreclosure summons from Wells Fargo, naming him as a defendant. But the notice was for a house Marconi had never seen — on a mortgage he never had.
Tom Williams was in his kitchen thumbing through the mail when he opened a letter from GMAC. It informed him that the bank would confiscate his house unless he immediately paid off his mortgage balance of $276,000. But Williams had never missed a mortgage payment. And his loan wasn’t due to mature until 2032.
Warren Nyerges opened his front door to find a scraggly haired summons server standing on his stoop. He plopped a foreclosure notice from Bank of America in Nyerges’ hands. But Nyerges had paid for his house in cash. And he’d never had a checking account, much less a mortgage, with Bank of America.
By now, you may have heard the stories of bank robo-signers powering through hundreds of foreclosure affidavits a day without verifying a single fact. But most of those involved homeowners who had stopped paying their mortgage. They were genuine defaulters. Now a new species of homeowner is getting pushed into foreclosure hell.
People have always loved to complain about their banks. The push-button circus that passes for customer service. The larding on of fees. But the false foreclosure cases are hardly the usual complaints. These homeowners paid their mortgages — or loan modifications — on time. Some even paid off their loans. Worse, those on the receiving end of a bad foreclosure claim tell similar stories of getting bounced from one bank official to the next with no resolution while the foreclosure process continues apace.
Many have to resort to paying a lawyer, even after presenting documentation. They say they have to sue not only to stop the wrongful foreclosure but also to attempt to win back their costs.
There are no official statistics for these homeowners, but lawyers, real estate agents and consumer advocates say their ranks are growing. In November, during foreclosure hearings on Capitol Hill, senator after senator scolded the banks about wrongful foreclosures. They said their offices were deluged with complaints from people who had done everything right but were being treated by banks as if they had done everything wrong. And the Florida attorney general’s office is also investigating the issue as part of its foreclosure probe.
“This is the worst I’ve ever seen it,” says Ira Rheingold, an attorney and executive director of the National Association of Consumer Advocates. Diane Thompson, a lawyer with the National Consumer Law Center, has defended hundreds of foreclosure cases. “In virtually every case, I believe the homeowner was not in default when you looked at the surrounding facts. It is a widespread problem throughout the country.”
I was impressed with Mrs. Thompson and her knowledge. Excellent read with Mr. Levitin’s testimony.
Excerpts:
What robo-signing reveals is the contempt that servicers have long exhibited for rules, whether
the rules of court procedure flouted in the robo-signing scandal or the contract rules breached in
the common misapplication of payments or the rules for HAMP modifications, honored more
often in the breach than in reality. Servicers do not believe that the rules that apply to everyone
else apply to them. This lawless attitude, supported by financial incentives and too-often
tolerated by regulators, is the root cause of the robo-signing scandal, the failure of HAMP, and
the wrongful foreclosure of countless American families.
The falsification of judicial foreclosure documents is closely and directly tied to widespread
errors and maladministration of HAMP and non-HAMP modification programs, and the forcedplaced
insurance and escrow issues. Homeowners for decades have complained about servicer
abuses that pushed them into foreclosure without cause, stripped equity, and resulted, all too
often, in wrongful foreclosure. In recent months, investors have come to realize that servicers’
abuses strip wealth from investors as well.3 Unless and until servicers are held to account for
their behavior, we will continue to see fundamental flaws in mortgage servicing, with cascading
costs throughout our society. The lack of restraint on servicer abuses has created a moral hazard
juggernaut that at best prolongs and deepens the current foreclosure crisis and at worst threatens
our global economic security.
The current robo-signing scandal is a symptom of the flagrant disregard adopted by servicers as
to the basic legal and business conventions that govern most transactions. This flagrant
disregard has been carried through every aspect of servicer’s business model. Servicers rely on
extracting payments from borrowers as quickly and cheaply as possible; this model is at odds
with notions of due process, judicial integrity, or transparent financial accounting. The current
foreclosure crisis has exposed these inherent contradictions, but the failures and abuses are
neither new nor isolated. Solutions must include but go beyond addressing the affidavit and
ownership issues raised most recently. Those issues are merely symptoms of the core problem:
servicers’ failure to service loans, account for payments, limit fees to reasonable and necessary
ones, and provide loan modifications where appropriate and necessary to restore loans to
performing status.
Diane E. Thompson has represented low-income homeowners since 1994. She currently works of counsel for the National Consumer Law Center. From 1994 to 2007, Ms. Thompson represented individual low-income homeowners in East St. Louis at Land of Lincoln Legal Assistance Foundation. While at Land of Lincoln Legal Assistance, Ms. Thompson served as the Homeownership Specialist, providing assistance to casehandlers representing homeowners in 65 counties in downstate Illinois, and the Supervising Attorney of the Housing and Consumer unit of the East St. Louis office. She has served on the boards of the National Community Reinvestment Coalition and the Metropolitan St. Louis Equal Housing Opportunity Council. She was a member of the Consumer Advisory Council of the Federal Reserve Board from 2003-2005. Between 1995 and 2001, Ms. Thompson served as corporate counsel to the largest private nonprofit affordable housing provider in the East St. Louis metropolitan area. She received her B.A. from Cornell University and her J.D. from New York University.
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