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From testimony in a Chase case, same as dozens of others I have seen —-

Q. So if you didn’t review any books, records, and documents or computerized records, how is it that you had personal knowledge of all the matters contained therein?

A. Well, I have personal knowledge that my staff has personal knowledge. That is our process.

KEEP IN MIND that these admitted facts now are the same facts treated with incredulity and derision from the bench and opposing counsel. The Judges were wrong. The foreclosures were wrong. Now what? How will homeowners and counsel be treated in court now? Will the Judge still think the homeowner is trying to get out of a legitimate debt or will the Courts start to allow these cases to heard on their MERITS instead of improper PRESUMPTIONS? Will the courts start following rules of evidence or will they continue to give the “benefit of the doubt” (i.e., and improper presumption) to the foreclosure mill that fabricated documents with false affidavits?

The tide is turning from defending borrowers to prosecuting damage claims for slander of title, fraud, appraisal fraud, and criminal prosecutions by state, local and federal law enforcement. GMAC is only the first of the pretender lenders to admit the false representations contained in pleadings and affidavits. The methods used to to obtain foreclosure sales were common throughout the industry. The law firms and fabrication mills will provide precious little cover for the culprits whose interests they served. AND now that millions of homes were foreclosed, their position is set and fixed — they can no longer “fix” the problem by manipulating the documents.

The bottom line is that GMAC mortgagors who “lost” their homes still own them, as I have repeatedly opined on these pages. The damages are obvious and the punitive damages available are virtually inevitable. Maybe Judges will change their minds about applying TILA and RESPA, both of which amply cover this situation. Maybe those teeth in those statutes do NOT lead to windfall gains for homeowners but only set things right.

These people can move back into their homes in my opinion and even taken possession from those who allegedly purchased them, since the title was based upon a fatal defect in the chain. Whether these people will end up owing any money and whether they might still be subject to foreclosure from SOMEBODY is not yet known, but we know that GMAC-sponsored foreclosures are now admitted to be defective. There is no reason to suppose that GMAC was any different from any of the other pretender lenders who initiated foreclosure sales either on false pleading or false instructions using the power of sale in non-judicial states.

Those hundreds of millions of dollars earned by the foreclosure mills, those tens of billions of wealth stolen from homeowner are all up for grabs as lawyers start to circle the kill, having discovered that there is more money here than any personal injury or malpractice suit and that anyone can do it with the right information on title and securitization.

With subpoenas coming in from law enforcement agencies around the country, GMAC is the first to crumble, aware that the choice was to either take a massive commercial hit for damages or face criminal charges. Finger pointing will start in earnest as the big boys claim plausible deniability in a scheme they hatched and directed. The little guys will flip on them like pancakes as they testify under oath about the instructions they received which they knew were contrary to law and the rules governing their licenses and charters. Real Estate Brokers, licensed appraisers, licensed mortgage mortgage brokers, notaries, witnesses, title agents and their collective title and liability insurance carriers will soon discover that their licenses, livelihood and reputations are not only at risk but almost certainly headed for a major hit.

There can be no doubt that all GMAC cases will be affected by this action although GMAC has thus far limited the instruction to judicial states. In non-judicial states, most of the foreclosures were done without affidavits because they were uncontested. GMAC will now find small comfort that they didn’t use affidavits but merely false instructions to “Trustees” whose status was acquired through the filing of “Substitution of Trustee” documents executed by the same folks who falsified the affidavits in the judicial states. But the fact is that GMAC was not the creditor and obtained title through a “credit bid.” THEY CAN’T FIX THIS! Thus the transfer of title was void, in my opinion, or certainly voidable.

The denial that the affidavit contained false information is patently false — and, as usual, not under oath (see below). GMAC takes the position that the affidavits were “inadvertently” signed (tens of thousands of them) by persons without knowledge of their truth or falsity and that the action is taken only to assure that the mortgage holder is actually known. So the fight isn’t over and don’t kid yourself. They are not all going to roll over and play dead. Just take this as another large step toward the ultimate remedy — reinstatement of people in their homes, damage awards to people who were defrauded, and thus restoration of hundreds of billions of dollars of wealth back into the economic sector where money is spent and the economy actually works for people who don’t trade false papers at the expense of pensioners and homeowners around the world.

September 20, 2010

GMAC Halts Foreclosures in 23 States for Review

By DAVID STREITFELD

GMAC Mortgage, one of the country’s largest and most troubled home lenders, said on Monday that it was imposing a moratorium on many of its foreclosures as it tried to ensure they were done correctly.

The lender, which specialized in subprime loans during the boom, when it was owned by General Motors, declined in an e-mail to specify how many loans would be affected or the “potential issue” it had identified with them.

GMAC said the suspension might be a few weeks or might last until the end of the year.

States where the moratorium is being carried out include New York, Connecticut, New Jersey, Illinois, Florida and 18 others, mostly on the East Coast and in the Midwest. All of the affected states are so-called judicial foreclosure states, where courts control the interactions of defaulting homeowners and their lenders.

Since the real estate collapse began, lawyers for homeowners have sparred with lenders in those states. The lawyers say that in many cases, the lenders are not in possession of the original promissory note, which is necessary for a foreclosure.

GMAC, which has been the recipient of billions of dollars of government aid, declined to provide any details or answer questions, but its actions suggest that it is concerned about potential liability in evicting families and selling houses to which it does not have clear title.

The lender said it was also reviewing completed foreclosures where the same unnamed procedure might have been used.

Matthew Weidner, a real estate lawyer in St. Petersburg, Fla., said he interpreted the lender’s actions as saying, “We have real liability here.”

Mr. Weidner said he recently received notices from the opposing counsel in two GMAC foreclosure cases that it was withdrawing an affidavit. In both cases, the document was signed by a GMAC executive who said in a deposition last year that he had routinely signed thousands of affidavits without verifying the mortgage holder.

“The Florida rules of civil procedure are explicit,” Mr. Weidner said. “If you enter an affidavit, it must be based on personal knowledge.”

The law firm seeking to withdraw the affidavits is Florida Default Law Group, which is based in Tampa. Ronald R. Wolfe, a vice president at the firm, did not return calls. The firm is under investigation by the State of Florida, according to the attorney general’s Web site.

Real estate agents who work with GMAC to sell foreclosed properties were told to halt their activities late last week. The moratorium was first reported by Bloomberg News on Monday. Bloomberg said it had obtained a company memorandum dated Friday in which GMAC Mortgage instructed brokers to immediately stop evictions, cash-for-key transactions and sales.

Nerissa Spannos, a Fort Lauderdale agent, said GMAC represents about half of her business — 15 houses at the moment in various stages of foreclosure.

“It’s all coming to a halt,” she said. “I have so many nice listings and now I can’t sell them.”

The lender’s action, she said, was unprecedented in her experience. “Every once in a while you get a message saying, ‘Take this house off the market. We have to re-foreclose.’ But this is so much bigger,” she said.

Ally Says GMAC Mortgage Mishandled Affidavits on Foreclosures

By Dakin Campbell and Lorraine Woellert – Sep 21, 2010

Ally Financial Inc., whose GMAC Mortgage unit halted evictions in 23 states amid allegations of mishandled affidavits, said its filings contained no false claims about home loans.

The “defect” in affidavits used to support evictions was “technical” and was discovered by the company, Gina Proia, an Ally spokeswoman, said in an e-mailed statement. Employees submitted affidavits containing information they didn’t personally know was true and sometimes signed without a notary present, according to the statement. Most cases will be resolved in the next few weeks and those that can’t be fixed will “require court intervention,” Proia said.

“The entire situation is unfortunate and regrettable and GMAC Mortgage is diligently working to resolve the situation,” Proia said. “There was never any intent on the part of GMAC Mortgage to bypass court rules or procedures. Nor do these failures reflect any disrespect for our courts or the judicial processes.”

State officials are investigating allegations of fraudulent foreclosures at the nation’s largest home lenders and loan servicers. Lawyers defending mortgage borrowers have accused GMAC and other lenders of foreclosing on homeowners without verifying that they own the loans. In foreclosure cases, companies commonly file affidavits to start court proceedings.

“All the banks are the same, GMAC is the only one who’s gotten caught,” said Patricia Parker, an attorney at Jacksonville, Florida-based law firm, Parker & DuFresne. “This could be huge.”

No Misstatements

Aside from signing the affidavits without knowledge or a notary, “the sum and substance of the affidavits and all content were factually accurate,” Proia wrote in the e-mail. “Our internal review has revealed no evidence of any factual misstatements or inaccuracies concerning the details typically contained in these affidavits such as the loan balance, its delinquency, and the accuracy of the note and mortgage on the underlying transaction.”

Affidavits are statements written and sworn to in the presence of someone authorized to administer an oath, such as a notary public.

GMAC told brokers and agents to halt evictions tied to foreclosures on homeowners in 23 states including Florida, Connecticut and New York and said it may have to take “corrective action” on other foreclosures, according to a Sept. 17 memo. Foreclosures won’t be suspended and will continue with “no interruption,” Proia said in a statement yesterday.

10,000 a Week

In December 2009, a GMAC Mortgage employee said in a deposition that his team of 13 people signed “a round number of 10,000” affidavits and other foreclosure documents a month without verifying their accuracy. The employee said he relied on law firms sending him the affidavits to verify their accuracy instead of checking them with GMAC’s records as required. The affidavits were then used to complete the process of repossessing homes and evicting residents.

Florida Attorney General William McCollum is investigating three law firms that represent loan servicers in foreclosures, and are alleged to have submitted fraudulent documents to the courts, according to an Aug. 10 statement. The firms handled about 80 percent of foreclosure cases in the state, according to a letter from Representative Alan Grayson, a Florida Democrat.

“It appears that the actions we have taken and the attention we’ve paid to this issue could have had some impact on the actions that GMAC took today, but we can’t take full credit,” Ryan Wiggins, a spokeswoman for McCollum, said yesterday in a telephone interview.

‘Committed Fraud’

In August, Florida Circuit Court Judge Jean Johnson blocked a Jacksonville foreclosure brought by Washington Mutual Bank N.A. and JPMorgan Chase Bank, which had purchased the failed bank’s assets, and Shapiro & Fishman, the companies’ law firm. Documents eventually showed that the mortgage on the house was in fact owned by Washington-based Fannie Mae.

WaMu and the law firm “committed fraud on this court,” Johnson wrote. JPMorgan had presented a document prepared by Shapiro showing the mortgage was sold directly to WaMu in April 2008.

Tom Ice, founding partner of Ice Legal PA in Royal Palm Beach, Florida, said a fourth law firm representing GMAC in recent weeks has begun withdrawing affidavits signed by the GMAC employee.

“The banks are sitting up and taking notice that they can’t use falsified documents in the courtroom,” Ice said. “There may be others doing the same thing. They’re going to come back and say, ‘We’d better withdraw these,’” Ice said in a telephone interview.

Alejandra Arroyave, a lawyer with Lapin & Leichtling, a law firm in Coral Gables, Florida, who represented the employee at his December 2009 deposition, didn’t respond to a request for comment. A phone call to the employee wasn’t returned.

Mortgage Market

GMAC ranked fourth among U.S. home-loan originators in the first six months of this year, with $26 billion of mortgages, according to Inside Mortgage Finance, an industry newsletter. Wells Fargo & Co. ranked first, with $160 billion, and Citigroup Inc. was fifth, with $25 billion.

Iowa Assistant Attorney General Patrick Madigan said the implications of Ally’s internal review and the GMAC employee’s deposition could be “enormous.”

“It would call into question whether other servicers have engaged in similar practices,” Madigan said in a telephone interview. “It would be a major disruption to the foreclosure pipeline.”

To contact the reporters on this story: Dakin Campbell in San Francisco at dcampbell27@bloomberg.net; Lorraine Woellert in Washington at lwoellert@bloomberg.net.

Filed under: bubble, CASES, CORRUPTION, Eviction, evidence, expert witness, foreclosure, foreclosure mill, GTC | Honor, HERS, investment banking, Investor, MODIFICATION, Mortgage, Motions, Pleading, securities fraud, Servicer, STATUTES, taxes, trustee | Tagged: affidavits, Ally, damages, foreclosures, fraud, GMAC, personal knowledge, slander of title | 48 Comments »