Freddie Mac has ordered all evictions involving foreclosed occupied single family and 2-4 unit properties that had Freddie Mac mortgages to be suspended from December 19, 2011 to January 2, 2012.
“If the property is occupied, our foreclosure attorneys will suspend the eviction to provide families a greater measure of certainty during the holidays,” said Tracy Mooney, Senior Vice President of Servicing and REO at Freddie Mac.
The suspension will apply only to eviction lockouts related to Freddie Mac-owned REO properties and will not affect other pre- or post-foreclosure processes.
HSBC Bank USA and HSBC Finance Corp. have stopped all home foreclosures until further notice and may face unspecified regulatory actions or fines, after regulators found “certain deficiencies” in servicing and foreclosure procedures, HSBC said in government filings Monday.
The disclosure by HSBC, buried deep within its annual financial report to the Securities and Exchange Commission, marks the first time HSBC has admitted to a foreclosure moratorium in the wake of a legal and paperwork crisis that swept the industry.
That’s a dramatic reversal from its stance just a few months ago, when it said publicly that it would not suspend home seizures because it didn’t feel its procedures were compromised by so-called “robo-signers” and faulty court affidavits.
“Robo-signing” refers to bank or law firm employees signing off on foreclosures without actually being familiar with the cases or reading paperwork.
RE: Emergent Amendments to Rules 1:5-6, 4:64-1 and 4:64-2
In light of irregularities in the residential foreclosure practice as reported in sworn deposition testimony in New Jersey and other states, the Court has adopted, on an emergent basis, amendments to Rules 1:5-6, 4:64-1 and 4:64-2. These amendments are effective December 20, 2010. The new rule and the amendments, along with the Order adopting them, appear with this notice. The Court’s Order also contains directions for counsel in pending uncontested residential foreclosure cases.
Ally Financial/GMAC Bank of America Citibank JP Morgan Chase OneWest Bank Wells Fargo Bank
Action Date: December 20, 2010 Location: Mercer County, NJ
New Jersey State Supreme Court Chief Justice Stuart Rabner entered an order To Show Cause “In The Matter of Residential Mortgage Foreclosure Pleadings and Document Irregularities” in Civil Action No. F-059553-10, Superior Court of New Jersey, Chancery Division, General Equity Part, Mercer County on December 20, 2010. Six mortgage servicing companies and their bank-owners were ordered to show cause why the Court should not suspend their rights to foreclose.
First on the list was Ally Financial, formerly known as GMAC. Ally/GMAC is the employer of Jeffrey Stephan who was exposed as one of many “robo-signers” – a phrase indicating that an employee signed thousands of documents used in foreclosure cases with no idea of the truth of the matters asserted in the documents, and more often than not, without even having read what was signed.
Stephan signed thousands of Affidavits, but he signed tens of thousands of Mortgage Assignments – the documents used by mortgage-backed trusts to show that the trusts acquired the mortgages at issue and have the right to foreclose.
Stephan signed these Mortgage Assignments for many different mortgage-backed trusts. Over 50 RALI (Residential Accredit Loans, Inc.) Trusts relied almost exclusively on Mortgage Assignments signed by Stephan. Over 44 RAMP (Residential Asset Mortgage Products) Trusts also used Assignments churned out by Stephan. At least 20 RASC (Residential Asset Securities Corp.) Trusts used Stephan assignments almost exclusively in foreclosures. At least 40 other mortgage-backed trusts, including certain Aames Mortgage Investment Trusts, certain Bear Stearns Trusts and certain Harborview Trusts all relied on Ally/GMAC’s Stephan for proof of their right to foreclose.
These trusts needed the Stephan-made assignments because the trusts’ depositors, sponsors, trustees and document custodians failed to obtain the critical documents, including notes and assignments, at the inception of the trust – despite promises to investors and regulators that these documents had been obtained and were being safeguarded.
In Florida, Stephan’s name appears on thousands of Mortgage Assignments, most often on documents prepared by the Law Offices of David Stern, who is under investigation by the Florida Attorney General. In almost every case, Stephans signed as a Vice President of Mortgage Electronic Registration Systems.
According to the Stephan documents, the trusts almost always acquired these mortgages AFTER they were already in default, and often AFTER foreclosure proceedings had been initiated.
Many different banks, in their capacity as Trustees for mortgage-backed trusts, used Stephan Assignments, but Stephan documents were most often used by Deutsche Bank Trust Company Americas, Bank of NY Mellon and U.S. Bank.
Assuming that each trust has mortgage loans with a face value of one billion dollars – and that over 200 trusts are involved, the amount in controversy is staggering.
Also disturbing is the number of Assignments on Stephan/Stern documents where the assignee trust is unidentified. The Stephan/Stern team repeatedly prepared and filed Assignments where only the Trustees – and not the trusts themselves – were identified as the new owners of the mortgages. “U.S. Bank as Trustee” and “Deutsche Bank Trust Company Americas as Trustee” are the new owners of thousands of mortgages.
Stephan often wrongly stated his own job title, the date the assignment to the trusts took place, and the identity of the trusts. Stephan’s conduct – and the documents he produced – will not stand up to the most superficial examination. Chief Justice Rabner seems determined to dig much deeper.
The other five companies named by Chief Justice Rabner have the very same problems, having produced hundreds of thousands of flawed loan documents for mortgage-backed trusts, signed by individuals with very limited knowledge or authority. Their role was to sign their names without questioning or understanding what they signed.
According to Chief Justice Rabner, the next step may be the Appointment of a Special Master “to inquire into and report to the court on the extent of irregularities concerning affidavits, certifications, assignments and other documents from time to time filed with the court in residential mortgage foreclosure actions…” Past and present business practices would be examined and the Master could also consider whether sanctions should be imposed…and a suggested formula to determine an appropriate sanction.”
By his Order, Chief Justice Rabner gave hope to hundreds of thousands of victims of fraud by securities companies, banks, mortgage companies and mortgage servicing companies.
The nature of the problem calls for a balancing of the court’s supervisory and adjudicatory roles and responsibilities. The court has therefore established the procedure in this Order to address the pressing needs of the Office of Foreclosure while providing due process to affected parties. The court will direct that the six Foreclosure Plaintiff’s named on this order show cause at a hearing scheduled for January 19, 2011, why the court should not suspend the processing of all foreclosures matters involving the six Foreclosure Plaintiffs and appoint Special Masters to review their past and proposed foreclosure practices.
Washington Post Staff Writers
Friday, October 8, 2010; 2:16 PM
Senate Majority Leader Harry Reid (D-Nev.) called on major lenders to halt foreclosures across the country Friday following Bank of America‘s announcement that it will suspend all such proceedings until a review of possible paperwork problems is completed.
Reid, who had sent a letter to major banks asking them to suspend foreclosures in Nevada, extended his concern to include all 50 states.
“I thank Bank of America for doing the right thing by suspending actions on foreclosures while this investigation runs its course,” he said. “I urge other major mortgage servicers to consider expanding the area where they have halted foreclosures to all 50 states as well.”
Reid is the latest Democratic leader to join a growing chorus of lawmakers and state attorneys general who have called for greater scrutiny of the foreclosure process and a nationwide moratorium. Homeowner advocates say that lenders have used dubious paperwork to expedite the eviction of homeowners who are behind on their payments.
Pressure on the banks continues to grow on Capitol Hill, where Sen. Christopher J. Dodd (D-Conn.) said Friday that the banking committee he chairs will hold hearings Nov. 16 to investigate the foreclosure paperwork morass.
Bank of America Corp., the nation’s largest bank, said Friday it would stop sales of foreclosed homes in all 50 states as it reviews potential flaws in foreclosure documents.
A week earlier, the company had said it would only stop such sales in the 23 states where foreclosures must be approved by a judge.
The move comes amid evidence that mortgage company employees or their lawyers signed documents in foreclosure cases without verifying the information in them.
“We will stop foreclosure sales until our assessment has been satisfactorily completed,” company spokesman Dan Frahm said in a statement. “Our ongoing assessment shows the basis for our past foreclosure decisions is accurate.”
Concern is growing that mortgage lenders have been evicting homeowners using flawed court papers. State and federal officials have been ramping up pressure on the mortgage industry over worries about potential legal violations.
On Thursday, Senate Majority Leader Harry Reid, D-Nev., urged five large mortgage lenders to suspend foreclosures in Nevada until they have set up systems to make sure homeowners aren’t “improperly directed into foreclosure proceedings.” Nevada is not among the states where banks had suspended foreclosures.
Also Friday, PNC Financial Services Group Inc. said it is halting most foreclosures and evictions in 23 states for a month so it can review whether documents it submitted to courts complied with state laws. An official at the Pittsburgh-based bank confirmed the decision on Friday, which was reported earlier by the New York Times. The official requested anonymity because the decision hasn’t been publicly announced.
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