AG asks for halt to foreclosures
Coakley wants banks to prove they comply
By Megan Woolhouse, Globe Staff | October 6, 2010
Attorney General Martha Coakley called for a moratorium on Massachusetts home foreclosures today in a letter to four major lenders, saying she wanted proof that each is properly reviewing homeowner foreclosure documentation as required under state law.
Coakley said she wanted Bank of America, JPMorgan Chase & Co., Wells Fargo, and GMAC Mortgage, a part of Ally Financial, to suspend foreclosures and sales of foreclosed properties after revelations that some lenders had signed off on foreclosures for thousands of homeowners in other states without reading or verifying the documents, a process nicknamed “robo-signing.’’
“If they’re not complying with the law, it doesn’t give consumers enough time or opportunity to modify the loan or do anything short of foreclosure,’’ Coakley said in an interview. “If that’s what’s happening, it’s pretty outrageous.’’
Officials at Wells Fargo and Bank of America did not return phone calls by deadline yesterday. A spokesman at JPMorgan Chase declined to comment. GMAC/Ally declined to comment on specifics in Massachusetts.
“As we have previously stated, we are confident that the processing errors did not result in any inappropriate foreclosures,’’ GMAC/Ally spokesman Jim Olecki wrote in an e-mail. He said the company “takes this matter very seriously and are acting with urgency to resolve the issue in the affected states.’’
Several large banks have halted foreclosures in 23 states that require judicial review of foreclosures, after evidence surfaced last week that employees were signing and notarizing foreclosure documents without reading or reviewing them. The banks, however, did not halt foreclosures in states that do not require judicial review, drawing the ire of public officials in Massachusetts and elsewhere.
In one of the strongest pushes so far for federal intervention into the problem, more than 30 House members from California have called on federal regulators to investigate whether mortgage companies broke the law by using paperwork that may have contained errors. Led by Representative Zoe Lofgren and House Speaker Nancy Pelosi, the lawmakers have urged bank regulators and the Justice Department to initiate a probe into how borrowers’ requests for assistance have been handled.
Senator Robert Menendez, a New Jersey Democrat, has also asked more than 100 mortgage companies to determine whether foreclosure documents they approved contained errors, and to reveal their findings. Attorneys general in Delaware and Texas called on lenders to suspend foreclosures until banks can ensure they have followed proper procedures. Connecticut Attorney General Richard Blumenthal last week asked a state court to freeze all home foreclosures for 60 days.
Menendez and Democratic Senator Al Franken of Minnesota, have also requested that Congress’s investigative arm, the Government Accountability Office, examine whether federal regulators overlooked the problems.
In Massachusetts alone, there were 2,713 foreclosure petitions in August, a 13.2 percent increase from August 2009, according to Warren Group, a Boston-based real estate tracking firm.
Coakley has asked the banks to respond by Oct. 15.
Lewis Finfer, executive director of the Massachusetts Communities Action Network, a housing advocacy group in Boston, said he applauded Coakley’s leadership, because it could help struggling homeowners.
The banks’ actions “were instrumental in the foreclosure crisis and their hands have not been clean in this,’’ he said. “This is very serious. These are people’s homes at stake.’’
Material from the Associated Press is included in this report. Megan Woolhouse can be reached at firstname.lastname@example.org.
Wells Fargo Foreclosures Proceed After Data Queried
Wells Fargo & Co. is standing by the accuracy of its foreclosure filings and won’t follow competitors in delaying seizures, after an employee testified he signed documents for proceedings without personally reviewing records.
The bank said yesterday it doesn’t plan to halt repossessions because its “procedures and daily auditing demonstrate that our foreclosure affidavits are accurate.”
In a May 20 deposition, a Wells Fargo Home Mortgage employee said he signed 50 to 150 documents a day, including statements describing debts and borrowers used to justify foreclosures, without personally confirming the information was correct. His testimony related to a civil claim against the bank in a Washington state court. A judge dismissed the case in June.
Mortgage firms have drawn fire from borrowers, lawyers and state officials for letting employees sign affidavits for court- monitored foreclosures without personally checking loan records. JPMorgan Chase & Co. and Bank of America Corp. last week delayed foreclosures to review the accuracy of their filings. Last month, Ally Financial Inc. said its GMAC Mortgage unit would halt evictions for a similar review.
The Wells Fargo employee said he relied on foreclosure lawyers and personnel in other departments to check files, according to a deposition transcript provided by Melissa Huelsman, the Seattle attorney representing the homeowner. The employee said he confirmed the date on the file before signing without verifying other information.
‘Out of Context’
Those comments “should not be taken out of context,” Wells Fargo said in yesterday’s statement, e-mailed by a spokeswoman, Vickee Adams. The judge “reviewed Wells Fargo’s procedures, documents and declarations and summarily dismissed the borrower’s case, confirming that the foreclosure was valid,” the bank said in the statement.
Such a dismissal doesn’t necessarily invalidate testimony, said Peter Henning, a professor at Wayne State University Law School in Detroit and a former federal prosecutor.
“It’s not that the judge rejected the deposition, or found that the deposition was incorrect,” he said. “The firm probably went back into court and said ‘Here you go, you can inspect all the documents.’ Maybe that was enough.”
Wells Fargo is the second-largest servicer of U.S. home loans, according to industry newsletter Inside Mortgage Finance. The San Francisco-based bank handles about $1.8 trillion of residential mortgages, according to company filings. Bank of America, JPMorgan, Citigroup Inc. and Ally round out the top five. Through June, 92 percent of Wells Fargo’s mortgages were current, according to the statement.
‘How Do You Know?’
Andrew Yates, a Seattle-based lawyer representing the employee, didn’t return calls for comment. Adams declined to comment beyond the statement.
During questioning from Huelsman, the bank employee described his efforts before signing filings.
“So you’re simply signing the document that’s presented to you and you’re just making sure the date is correct?” Huelsman asked during the deposition.
“Correct,” the employee said.
“So how do you know when you’re signing this document that it’s true and correct?” Huelsman said.
“There are people that are responsible for” maintaining the paperwork, the employee said.
States Take a Stance
The employee said he oversaw 53 full-time staff and 15 contract workers, and that other supervisors within the department signed the same amount of paperwork. That would amount to each supervisor signing 1,000 to 3,000 documents during 20 business days each month.
In a separate case in Florida, an employee at New York- based JPMorgan said in May that her team of managers signed about 18,000 documents a month. In a December deposition, an employee at Detroit-based Ally said he signed about 10,000 documents a month. Attorneys general in at least seven states including Texas, Illinois and Ohio are investigating practices at Ally’s GMAC Mortgage unit.
In Wells Fargo’s home state, California Attorney General Jerry Brown asked JPMorgan to prove its foreclosures are legal or else freeze them, and made a similar request to Ally in September.
“This goes to the internal processes and oversight at these institutions with respect to the conduct of their employees,” said Jacob Frenkel, a partner at Potomac, Maryland- based law firm Shulman Rogers Gandal Pordy & Ecker, which isn’t representing any lenders in foreclosure proceedings. “It’s not in the banks’ interest for the records not to be right. As a lawyer I want to go into court with papers that are solid.”
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