October 12, 2010

The owner of a Harvey’s Lake settlement company pleaded guilty in federal court Tuesday to stealing nearly $2 million from 92 victims over a three-year period.

Elizabeth Sichler, 58, owner of Priority Search Inc., failed to pay various obligations associated with real estate transactions that her company handled as a title agent between 2005 and 2008.

According to court documents, Sichler failed to pay sellers’ first and second mortgages, sellers’ cash proceeds, utility bills, property taxes, real estate transfer taxes, filing fees and title insurance premiums.

Instead, she used the funds dedicated for those purposes for personal gain and to cover operating expenses for her business, including employee salaries and benefits.

Sichler, who was charged in June, entered her guilty plea on wire fraud charges Tuesday before United States District Court Magistrate Judge Malachy E. Mannion.

She faces a maximum sentence of 20 years in prison, a $250,000 fine and a maximum of three years supervised release.

As many as 9 million U.S. mortgages in the foreclosure pipeline or already through the process may face legal challenges because of questions about the validity of documents, according to Morgan Stanley.

About 2.5 million homes have been repossessed since 2005 and another 6.5 million mortgages are in foreclosure or may be soon, Morgan Stanley’s Oliver Chang, Vishwanath Tirupattur and James Egan wrote in a note today. The validity of documents used to verify ownership and payment obligations may be in question for each of those loans, Chang said.

“We are talking about some pretty big numbers,” Chang, a San Francisco-based housing strategist, said in a telephone interview today. “There’s a lot of developing aspects” to determine the actual impact, he said.

Lawmakers, state attorneys general and consumer groups have pressed mortgage firms to follow Bank of America Corp., which last week suspended all foreclosures to check whether faulty documents were used to confiscate homes. A worst-case scenario, in which questions of legitimacy arise beyond procedural issues and a freeze extends to all states and servicers, would lead to “a torrent” of eventual foreclosures, retroactive litigation on home seizures and a delay in the housing recovery, Morgan Stanley said.

In addition to Bank of America’s halt, JPMorgan Chase & Co. and Ally Financial Inc.’s GMAC Mortgage unit froze seizures or evictions in 23 states. There are about 3.3 million mortgages in foreclosure or more than 60 days past due in those states, according to New York-based Morgan Stanley.

via bloomberg.com

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“FORECLOSURE MESS” COULD LAST FOR YEARS SAYS REPORT | BREAKING NEWS | Sky Valley Chronicle Washington State News

October 14, 2010 admin

(NATIONAL) — The scope of what is being called in some circles “Foreclosuregate” keeps expanding and lenders and loan servicers including JPMorgan Chase and Ally Financial are facing an explosion in homeowner lawsuits and state attorney general investigations over claims of falsified mortgage documents, according to a report by Bloomberg Buisnessweek.

In addition lawmakers in both houses of Congress have called for investigations

Adding to the mess is that “procedural mistakes” in the handling of mortgage documents have clouded titles establishing ownership of the homes, a problem that could plague both buyers and sellers of those homes for years.

In December 2009, a GMAC employee said in a deposition that a team of 13 people signed about 10,000 documents a month without verifying their accuracy.

In lawsuits across the country, homeowners claim lenders and servicers have used falsified documents to foreclose on homes, sometimes when the banks didn’t even hold titles to the properties.

THE MERS PROBLEM

The Mortgage Electronic Registration Systems (MERS) based in Reston, Virginia faces its own mounting legal challenges.

MERS was created by the mortgage banking industry to handle “mortgage transfers” between member banks but a lawsuit filed on Sept. 28 in federal court in Louisville on behalf of all Kentucky homeowners claims that MERS was much more than “transfer” house. It claims MERS was part of a conspiracy to create false promissory notes, affidavits, and mortgage assignments to be used in illegal mortgage foreclosures.

Similar class actions have been filed on behalf of homeowners in Florida and New York.

Adding to the confusion and complexity of the case is that title insurers may also end up in court bringing and defending lawsuits because they could be held responsible if foreclosures are reopened.

In that case, title insurers might be going after the banks or whoever assured them there was a clear title.

And individuals who purchased homes in foreclosure sales face their own worries, as paperwork errors raise questions about the validity of the titles needed to prove ownership.

The problem? Defective documentation has created millions of “blighted titles” that may plague the nation for the next decade, according to one attorney, Richard Kessler of Sarasota, Fla., who conducted a study that he says found errors in about three-fourths of court filings related to home repossessions.

WHO REALLY DOES OWN THAT HOUSE?