Ohio Judges Require Attorneys to Certify Foreclosure Documentation

An interesting phenomena has been somewhat quietly developing over the past several months.  Members of state judiciaries are increasingly scrutinizing foreclosures and foreclosure documents, sometimes invalidating foreclosures and ruling against lenders.  I think that it is somewhat telling that it is the judicial, rather than legislative or executive branches of our government taking these steps.

According to an article in today’s Columbus Dispatch (which I learned of due to a post on NakedCapitalism), some Ohio judges are requiring attorneys to sign and verify all foreclosure documents to attest to their validity.  The lawyers have filed a writ of prohibition asking the Ohio Supreme Court to reverse this order, as they claim it represents a violation of attorney-client privilege. This is not the first state to issue such a requirement.  Attorneys have been required to sign similar certifications in New York State since last October.  One of the judges in question commented:

“Before we sign off on foreclosures, we want to make sure we are diligent in confirming the accuracy of those filings.  It’s a life-changing event.”

This story is not so interesting in and of itself, but is more interesting to me in that it continues a trend increased foreclosure scrutiny that is building in this country.

Recently we have seen:

• The Massachusetts Supreme Court rule against lenders in the Ibanez case.
• Another Massachusetts case could invalidate the sale of some foreclosed homes in that state.
• The validity of mortgages transferred through MERS is being litigated in Utah and several foreclosures have been invalidated there.
• Judge Arthur Schack in Brooklyn has dismissed many foreclosure cases with prejudice due to bad or missing paperwork.
• Ally Financial withdrew hundreds of robo-signed foreclosures in Maryland.
• Vermont and New Jersey are both in the process of changing their foreclosure laws to afford greater protection to homeowners.
• The Chief Justice of the Supreme Court of New Jersey threatened to suspend foreclosures by major banks statewide unless they can definitively show in court that they are in compliance with state law.
• FDIC Chairman Sheila Bair proposed a Foreclosure Claims Commission to compensate those who were foreclosed upon wrongfully.
• Judges in Nevada froze almost 9,000 foreclosures last week.  Bank of America is appealing the order.

I am very interested to see if pressure on major lenders eventually leads them to make some sort of widespread concessions toward homeowners in order to avoid liabilities posed by mortgage backed securities and foreclosure processes.  Stay tuned.