(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?
Posted via email from Title Insurance Washington Post Staff Writer Amid growing furor over the legitimacy of foreclosure proceedings, White House officials said Thursday that President Obama will not sign a two-page bill passed by lawmakers without public debate after critics said the legislation could loosen standards for foreclosure documents. The bill, named the Interstate Recognition of Notarizations Act, would require courts to accept document notarizations made out of state. Its sponsors intended the effort to promote interstate commerce. But homeowner advocates warn the new law could allow lenders to cut even more corners as they seek to evict homeowners. White House press secretary Robert Gibbs said the president did not believe Congress meant to undermine consumer protections regarding foreclosure challenges. Still, Obama will use a “pocket veto,” which will effectively kill the legislation. Democratic leaders on the Hill were scrambling to figure out how the bill managed to sail through both chambers of Congress without any objection. The episode may prove embarrassing for Democrats who in recent weeks have been calling for federal investigations into flawed paperwork, forged documents and other kinds of misconduct in foreclosure proceedings initiated by big lenders. Posted via email from Title Insurance A friend showed me the mortgage rate section of the Tribune Review last weekend and pointed to a mortgage company listing that had asterisks next to a few interest rates. These asterisks pointed to a note that the rates were only available if the transaction was a purchase and the borrower used a particular title provider. Clearly the mortgage broker sought to avoid Pennsylvania’s discounted refinance title premiums as part of this package deal. Only purchases transactions are eligible so there’s enough cash in the pot to subsidize the rates. The consumer appears to be getting a deal with the package. What do you think about this offer? Is it a problem under RESPA or PA lending or insurance law? I’ve pondered on it and I’m really not sure. It’s very much like the deals offered to buyers in construction transactions. You get the good price if you use the affiliate. If you don’t use the affiliate, you pay higher than market. As far as I could tell these interest rates weren’t especially low. What’s also interesting is that I did some checking around and found that the mortgage broker is an attorney who is operating the title services business through the law firm and not as a title agent. He’s working under the approved attorney program. That means that TIRBOP r via Title Insurance Talk: mortgage broker advertises interest rates tied to affiliated title insurance.
Continuing Ed for Title Agents
Obama won’t sign bill that would affect foreclosure proceedings
Thursday, October 7, 2010; 2:34 PM
Continuing Ed for Title Agents
Title Insurance Talk: mortgage broker advertises interest rates tied to affiliated title insurance