GMAC Mortgage Commissions Nationwide Foreclosure ReviewOct 13, 2010 | Parker Waichman LLP
GMAC Mortgage is going to review its home foreclosures in all 50 states. GMAC had announced several weeks prior that it would suspend foreclosures in 23 states where home seizures require a court order because of documentation issues.
GMAC’s initial announcement was quickly followed by similar decrees on the part of JP Mortgage Chase, Bank of America and other mortgage servicers. The banks’ actions came after it was learned that some mortgage servicers employed people who could sign foreclosure affidavits so quickly they popularized a new term for them: “robo-signer.” In depositions taken by lawyers for embattled homeowners, some robo-signers said they or their team had signed 10,000 or more foreclosure affidavits a month. Those affidavits say the preparer personally reviewed the files, but in their depositions, the workers acknowledge they had no time to actually do that. In some cases, the affidavits weren’t properly notarized.
Yesterday, Bank of America announced it would expand its own review and halt foreclosures in all 50 states. In addition, The Wall Street Journal is reporting that Bank of America has agreed to cover legal costs of title insurer Fidelity National Financial Inc. if any foreclosure errors emerge, and in exchange, Fidelity National will provide title insurance on sales of foreclosed properties.
In its latest announcement, GMAC said it would not halt additional foreclosures, but would commission “several legal and accounting firms” to conduct “independent reviews” to look for errors in foreclosure sales nationwide.
Wells Fargo & Co. also announced it has initiated a review of all pending home foreclosures where affidavits are required, the Journal said.
Meanwhile, a probe of wrongful foreclosures has been launched by attorneys general in 49 states. According to the Associated Press, the attorneys general said they intend to use their investigation to fix the problems that surfaced in the mortgage industry.
“This is not simply about a glitch in paperwork,” said Iowa Attorney General Tom Miller, who is leading the probe. “It’s also about some companies violating the law and many people losing their homes.”
“What we have seen are not mere technicalities,” said Ohio Attorney General Richard Cordray. “This is about the private property rights of homeowners facing foreclosure and the integrity of our court system, which cannot enter judgments based on fraudulent evidence.”
The revelations by the lenders could provide an opening for homeowners in default to contest their foreclosures. If foreclosures were not properly done, families who bought the troubled homes could be vulnerable to claims by the former owners.