REO

More Law Firm Affiliated Title Companies Charged with Foreclosure Fraud

On December 22nd, two more title companies, affiliated with law firms, have been charged with over-inflating fees in foreclosure cases in Colorado. National Title and City Park Title are being targeted along with their related Robert J. Hopp & Assoc. and the Vaden Law Firms. The suits continue in Colorado’s investigation into what became a distinct industry after the 2008 mortgage debacle – the foreclosure mills, under a state program called StopFraudColorado.gov   See the press release here.

These Title Companies continue to be part of the ongoing investigations. In July, the Colorado AG sued RE Records Research and Colorado American Title, in conjunction with their related  foreclosure Law firms, Castle Law Group and Aronowitz & Mechlenberg., settling at least one case for $10 million. It was claimed that the foreclosures handled by these firms could have collected in excess of $97 million in illegal  profits.  See  the JD Journal Article here.

 

$7 Billion being Paid to Settle Mortgage Claims

Citigroup will pay a total of $7 billion, including a record $4 billion fine to the Department of Justice (DOJ) for charges related to the packaging, marketing, sale, and issuance of residential mortgage-backed securities (RMBS.) The deal was reached after months of negotiations – between Citigroup and a division of the Financial Fraud Enforcement Task Force consisting of state and federal authorities, and financial regulators.

Why it matters: The settlement arguably is the product of a hard-line approach taken by the Department of Justice, providing the largest civil penalty ever. U.S.

Attorney General Eric Holder characterized Citi’s conduct as “egregious,” adding that “the bank’s activities contributed mightily to the financial crisis that devastated our economy in 2008.” Holder also stated that the deal does not absolve Citi or its employees of possible criminal charges.

Read more at Lexology and Citibank

State of Delaware Sues MERS

In a new twist, the State of Delaware is suing MERS under the Unlawful and Deceptive Trade Practices Act (UDTPA.) The suit claims that MERS has left for borrowers “no public trail by which anyone can identify the principals or verify the propriety of the (mortgage) transfer.” The private and obscure nature of their database makes it difficult for consumers “to know of or challenge inaccuracies in the MERS System”  i.e. – who the heck holds the mortgage and who the heck has the right to foreclose?  Read more at Delaware Online

Banks Pursue Deficiency Judgments

The American Bar Journal has a good article on banks going after borrowers for the shortages between mortgage dollars borrowed and what the homes can be sold for. Under the terms of mortgage notes, the borrower promises to repay the entire debt borrowed. But with so many houses under water, the lenders are losing money, and so they are are looking to the borrowers for the difference. Forty-one states in the US allow this.  So we need to watch name searches for deficiency judgments.  But will this just force more people into bankruptcy – or will they really recoup some money?

FNMA Mae has specific rules pertaining to the right to file deficiency judgments. Will they follow up?

Huge Loss for MERS in NY Court

An important state case – NY court holds that the appointment of MERS  “as nominee for the lender and its successors” is insufficient to allow MERS as an agent with legal ability to assign mortgages.

UNITED STATES BANKRUPTCY COURT EASTERN DISTRICT OF NEW YORK
In re: Case No. 810-77338-reg
FERREL L. AGARD, Chapter 7 Debtor

MEMORANDUM DECISION
The Debtor’s argument raises a fundamental question as to whether MERS had the legal authority to assign a valid and enforceable interest in the subject mortgage. Because U.S. Bank’s rights can be no greater than the rights as transferred by its assignor – MERS – the Debtor argues that the Movant, acting on behalf of U.S. Bank, has failed to establish that it holds an enforceable right against the Property.

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“The Court recognizes that an adverse ruling regarding MERS’s authority to assign mortgages or act on behalf of its member/lenders could have a significant impact on MERS and upon the lenders which do business with MERS throughout the United States.  However, the Court must resolve the instant matter by applying the laws as they exist today.  It is up to the legislative branch, if it chooses, to amend the current statutes to confer upon MERS the requisite authority to assign mortgages under its current business practices.  MERS and its partners made the decision to create and operate under a business model that was designed in large part to avoid the requirements of the traditional mortgage recording process.  This Court does not accept the argument that because MERS may be involved with 50% of all residential mortgages in the country, that is reason enough for this Court to turn a blind eye to the fact that this process does not comply with the law.”

Foreclosure Mill Sold to China

Read more at  Bloomberg News

Attorney David Stern made about $146 million when he sold his non-legal foreclosure business to a company originally formed to do business in China, according to a regulatory filing. The non-legal foreclosure businesses are paid fixed fees for work, such as $400 for title searches, according to the regulatory filing and Stern’s remarks at the investor conference, as quoted in the securities lawsuit. Profit, of course, depends on cutting costs and boosting volume. The business is also reported to be supported by an operation in the Philippines that provides data entry and document preparation, according to the filing. The company was renamed DJSP Enterprises.

Excellent Primer on Foreclosure and Mortgage Assignments and Ownership

Here is an outstanding article from NBC, explaining in very clear terms, the problems with Judicial Foreclosure vs. Foreclosure by Advertisement, real problems with Robo-signers, etc.   A good read for those of us in the Title Insurance and Abstracting Industries. Followit  here at NBC News

Forclosure Firm Lays Off Perhaps 100

From ABAJournal

Following news from Bloomberg that a major lender has stopped sending new cases to a South Florida law firm known for its foreclosure work, a lawyer for its chief attorney, David Stern, confirms that it has made layoffs.

There were “probably less than 100” workers let go from Stern’s law firm in Plantation and, possibly, his related foreclosure processing company, DJSP Enterprises, writes the Heard Along the Coast blog of the South Florida Business Journal. The article attributes the information to Jeffrey Tew, a lawyer for Stern.

Several sources had said hundreds were laid off, but that has not been confirmed, according to the article. It doesn’t say whether the 100 or so confirmed layoffs included attorneys.

The Law Offices of David Stern and DJSP have been handling about 70,000 cases a year, reports the Miami Herald (reg. req.).

However, adjusted net income for the first half of 2010 at DJSP plummeted to $7.8 million in 2010, a drop of 50 percent from the $15.8 million it earned during the first half of 2009, filings for the public company state.

Related earlier coverage:

ABAJournal.com: “Fla. AG Probe: Did 3 Law Firms Get 1,000s of Foreclosure Judgments By Possible Wrongdoing?”

ABAJournal.com: “‘Like Hamsters in a Cage’: Foreclosure Firm Cut Corners to Make Money, Story Says”

ABAJournal.com: “Freeze Foreclosures in All 50 States, Lawmaker Urges Big Banks, as 40 State AGs Plan Joint Probe”

Stewart Title Clamps Down on Foreclosures

In an internal memo obtained by The Associated Press, Houston-based Stewart is issuing guidelines to its agents that make it difficult to write policies on property foreclosed upon by four banks whose processes are in question. Those banks are JP Morgan Chase, Bank of America, OneWest Bank or Ally Financial’s GMAC Mortgage unit. See AP article here.

New York Times Article on Foreclosures and Title Insurance

The New York Times has an excellent article on foreclosure issues and the predicament that both the Public and title insurers find themselves in. They clearly understand the problems and clearly state some of the “What if’s” This is a must read article for all dealing with foreclosures. See NY Times article.

Info On Home Closing

Home Closing 101: An Educational Initiative of the American Land Title Association