There is a pending lawsuit in Ohio that may have huge ramifications on the outcome of the ongoing foreclosure crisis in the United States. Ohio Attorney General Richard Cordray, who has been on the forefront of the foreclosure fiasco, has filed an amicus brief in the case US Bank v Renfro. The case centers on an attempt by US Bank to foreclose upon the house of an Ohio man, James Renfro. The servicer of the mortgage, Ally Financial/GMAC is alleged to have illegally foreclosed upon the home through the use of a robo-signer.
At issue is whether or not a GMAC employee named Jeffrey Stephan properly handled paperwork that is vital to the foreclosure process. In court depositions, Stephan claimed that he had not read thousands of affidavits he signed and was tasked with reviewing. Similar allegations have been made against other major lenders and servicers, many of whom enacted full or partial moratoria on foreclosures until such issues could be sorted out. Upon discovering that “verification irregularities may have occurred”, GMAC stopped the auction of Renfro’s home so paperwork could be reviewed and fixed.
The servicers and lenders generally claim that these paperwork oversights are merely technical matters, and have attempted to substitute new paperwork for the flawed documentation. Cordray is asking Judge Nancy Russo to disallow the substitution of new documents for old ones without imposing penalties on the lenders and servicers. Cordray believes that some of the paperwork issues constitute “egregious conduct” and fraud against homeowners and the courts of Ohio:
“Filing hundreds of false affidavits in Ohio courts certainly constitutes such egregious conduct and are frauds on the courts, in addition to frauds on the borrowers who are or were defendants in the foreclosure cases.
The damage caused to the court system by Defendant’s mass filing of false affidavits cannot be easily calculated. Judges rely upon the accuracy of affidavits to grant judgments and ensure that the integrity of the judicial system can be trusted. False affidavits are a threat to our legal system, further damage must be prevented”.
According to Cordray, judges can submit “sanctions, penalties, fines and even defaults” on banks who have taken illegal shortcuts in the foreclosure process. The case is important because it could set a precedent that could force major lenders to come to the bargaining table to seek a solution to the foreclosure crisis. The attorneys general of all 50 states are conducting a joint investigation into foreclosure procedures, and have made no secret that they wish to “institute widespread, systemic loan modifications”. I will be keeping a close eye on the outcome of this lawsuit and will update this space as further developments occur.
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ED LOWITZKI
November 8, 2010 @ 12:50 pm
IF OBAMA WOULD JUST STAND UP TOO THE BANKERS IN FIRST PLACE AND SIGN AN EXECUTIVE ORDER STOPPING ALL FORCLOSURES AND DEMANDING THE LENDERS GRANT THE LOAN MODIFICATIONS,ALSO ALLOWING THE BANKRUPCTY JUDGES TOO MODIFY THE MORTGAGES THIS WOULD NOT BE HAPPENING.All this is going too do is make POLITIC HEADLINES AND RESLUT IN FINES TOO THE LENDERS THAT WERE GIVEN GOVT MONEY SO IT IS ALL A WASTE
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