Sifma CEO Tim Ryan released this statement today:
“It would be catastrophic to impose a system wide moratorium on all foreclosures and such actions could do damage to the housing market and the economy. It must be recognized that the mortgage market, investors and the health of the economy are all inter-related. Investors in the housing market—including American workers with pension funds, 401k plans, and mutual funds—would unjustly suffer losses in their savings from these actions. Increased uncertainty in the securitization market would further constrain consumer credit and spending, dampening our already unhealthy economic situation. If mistakes have been made in relation to foreclosure processing, SIFMA firmly believes such mistakes should be corrected. It is imperative, however, that care be taken in addressing these issues to ensure that no unnecessary damage is done to an already weak housing market and, in turn, that there is no further negative impact on the economy.”
It’s worth going through this slowly to see just how bizarre it is.
Firstly, it’s Sifma’s own members — with Bank of America taking the lead — who are imposing “a system wide moratorium on all foreclosures”. No one’s suggesting that the government could or should do such a thing: a foreclosure is, after all, a legal action brought by one private entity against another. It makes sense, if you’re going to sue somebody, that you make sure in advance that you have the your legal ducks in a row. Right now it’s abundantly clear that most loan servicers don’t have their legal ducks in a row, so it makes sense for them to stop foreclosing on homeowners, at least for the time being. (In Bank of America’s case, it has even tried to foreclose on houses which don’t have a mortgage at all.)
Secondly, it’s not foreclosure moratoriums which damage the housing market, it’s badly-documented mortgages. A healthy market is one in which title and ownership are clear and legally watertight; in which assets change hands at market-clearing prices; and in which value and market price are generally understood to be one and the same thing. Using these criteria, it’s pretty obvious that the housing market is not healthy now, and that the longer this foreclosure crisis drags on, the less healthy it’s going to be.
Crucially, you can’t judge the health of the market by house prices alone, especially when home sales are plunging and foreclosure sales often take place a good 35% below market values. And what goes for the housing market also goes, mutatis mutandis, for the mortgage market. It’s entirely possible that secondary-market RMBS prices will fall if housing prices drop. But in the medium to long term, what’s really necessary is for investors in mortgage-backed securities to have faith that they really own what they think they own. And the only way to do that is to bite the bullet and fix the mortgage mess.
In any case, it’s far from clear that a foreclosure moratorium would hurt house prices — or even RMBS prices — at all; indeed, it’s pretty hard to see exactly what Ryan and Sifma are worried about. They say that they firmly believe that the mistakes made in relation to foreclosure processing should be corrected, but they don’t bother to tell us how that’s meant to happen.
It would be great if Sifma were to take the lead on this issue, and come up with constructive solutions to a serious problem. Instead, they’re just delivering an inchoate and unhelpful blast of opposition. Sad.
The news reports on GMAC Mortgage’s decision to halt evictions and foreclosure sales in 23 states, as originally reported by Bloomberg News, has generated keen interest in the mortgage and securitizaion communities. One reason is the oddly abrupt and broad nature of GMAC Mortgage’s action. GMAC Mortgage subsequently issued a rebuttal of sorts to the article. Not only did it fail to clairify matters, it is inconsistent with the actual notice it sent last week.
Various accounts have described how one officer of GMAC Mortgage’s servicing unit has admitted during testimony that, while he signs thousands of affidavits each month in order to affect steps in the foreclosure process, he does not have personal knowledge of certain critical facts in the affidavit which he asserts to be true. Reader Stupendous Man provided the text of Federal Rule 56 on affidavits (although the cases in question are in state courts, the same principles no doubt apply). Boldface ours:
A supporting or opposing affidavit must be made on personal knowledge, set out facts that would be admissible in evidence, and show that the affiant is competent to testify on the matters stated.
The key here is you can’t delegate creating affidavits to parties who weren’t close to relevant matter out of administrative convenience; you need to find people who were directly involved. And evidence in a number of foreclosure suits indicates that this problem not only extends well beyond GMAC, and is not a matter of matter of officers providing affidavits based on a review of copies of the paperwork in a transaction. As one attorney wrote:
It is beyond people signing things when they don’t see the “originals” These people don’t see shit. We have depositions from these folks, the only thing they are able to verify on the documents is what title they are supposed to use, from the particular servicer they are working for – Executive Secretary, Executive Vice President, Asst. Sec., etc…..
So there is evidence to support the notion GMAC was not alone in providing cooked up affidavits. The only question is how widespread this practice was at other servicers.
What are the implications of the GMAC Mortgage actions and how serious are the problems? GMAC Mortgage and similarly situated parties contend that there is nothing fundamentally wrong with their foreclosure process and this is simply a procedural issue which is readily curable. In contrast, advocates for borrowers in foreclosure have indicated that the questionable affidavits are only the “tip of the iceberg” and represent the beginning of the end for the foreclosure mills and the banks, servicers and trustees who have been seeking to exercise foreclosure under false pretenses. The heightened scrutiny and increasing interest by state attorneys general means we may finally get to the bottom of a long-running “he said-she said” dispute.
Let’s review the current state of play:
1. What is the problem with evictions and foreclosure sales that GMAC Mortgage is worried about?
Based on GMAC Mortgage’s press release, the action is limited to evictions and foreclosure sales in certain states, but its new foreclosures are not affected. It isn’t clear exactly what distinction they are making . Presumably, their concern relates to the affidavits they used to initiate the evictions in their foreclosure cases. If the affidavit is flawed, they want to get a new improved one in place before they take title to the property. Similarly, for properties where they have already taken title, if the affidavits which enabled the evictions were flawed, they may need to prepare a new affidavit that would allow them to demonstrate that they have good title prior to selling the property to third parties.
2. Is this problem curable? On the surface, concerns about flawed affidavits used in the eviction process of a foreclosure, seems a technical, legalistic issue. Certainly, GMAC Mortgage’s statements seem to give the impression that the issue is curable and will, in fact, soon be cured. Did GMAC Mortgage prepare the affidavits improperly due to weak procedural controls or economic expediency? If so, then it would seem like they would have to incur some additional cost and take some additional time to have the affidavits properly prepared and then the problem would not be fatal from a legal standpoint. The added expenses and longer time will cost the certificate holders in the MBS more money. Remember, securitizations have come to be modeled and price assuming a streamlined foreclosure process. Actually finding and involving the proper parties in the affidavit process will at a minimum be cumbersome, and could add meaningful costs.
Moroever, it is possible the affidavits were prepared improperly to remedy other problems in the related mortgage loan. If, for the purpose of the foreclosure, the servicer did not have the proper information but stated that they did anyway in the affidavit, this would be a far more serious problem. For instance, if the courts for a foreclosure required a particular party to be pursuing the foreclosure, but GMAC Mortgage did not have documentation supporting such ownership or right, was GMAC Mortgage misrepresenting the facts in the affidavit?
3. Is the problem limited to judicial foreclosure states? That does not seem credible, although GMAC may believe it needs only to remedy it in those states. GMAC Mortgage indicated that the action was only for states that use judicial foreclosure, or similar procedures.
In general, if the issue is limited to improperly documented affidavits, GMAC may be able to limit its response to the 23 states on its list. However, if the underlying documentation for its mortgages have problems in the chain of title, then the improper affidavits are just a manifestation of a deeper issue. By happenstance, I know of cases in a non-judicial foreclosure state not on GMAC’s list where GMAC took similar short cuts. Tom Adams and I have been in touch with a number of attorneys in the foreclosure world who have uncovered problems in non-judicial foreclosure states with inaccurate affidavits, including mis-statements about the parties to the foreclosure, the time of mortgage transfers, the status of the loan file and related issues. There is not good grounds to believe that GMAC had sufficiently different procedures in judicial versus non-judicial foreclosure states to believe their flawed procedures were limited to only judicial foreclosure states.
4. is the problem limited to GMAC Mortgage? GMAC Mortgage and other banks may hope to sell the story line that its problem is limited to a lone “rogue servicing officer.” Unfortunately, the servicing officer in question indicated in his testimony that he prepared 10,000 or more affidavits per month, so it strains credulity to think that GMAC management was ignorant of his actions.
So far, mainstream press accounts have been limited to issues at GMAC Mortgage, which is a large servicer, but only a modest portion of the overall market. However, it is possible, that the root of the problem lies not with the servicer, but started with the sellers and the trustees in the mortgage securitization process. If the mortgage loans were conveyed in the securitization process in a way that clouded the title, the problem could be widespread, and borrower attorneys can provide a large body of evidence from cases in many states. Although GMAC appears to be the party ultimately responsible, it also works very closely with the foreclosure outsourcing firm, Loan Processing Services, so they or the foreclosure mills they retain may also bear some responsibility.
5. Are foreclosure problems limited to this sort of technical issue? The conveyance of real estate has a long legal history and is governed by state law. Numerous checks and balances are written into both the sale and the foreclosure process to ensure that the transfers are conducted properly and disputes over ownership are minimized. Part of the appeal of mortgage loans as an asset, back before the financial crisis, was that the procedures and laws for mortgage loans was well establishes, so owners or investors could take comfort that their interests were well protected.
Unfortunately, there is increasing evidence that the mortgage loan industry went off the rails during the bubble years. And if the issues underlying GMAC Mortgage action are a result of bad origination and closing procedures, rather than poor servicing, the problems may be much larger than inaccurate affidavits.
We will be watching on the GMAC Mortgage situation and related issues. GMAC Mortgage’s remarks today did not clarify matters, and their failure to come clean, and the obvious conflict between the claims in their press release and their own memo suggests other shoes have yet to drop. If these issues extend beyond GMAC Mortgage and inaccurate affidavits, the mortgage industry will be facing some deep and difficult problems.
eric seiger doBad news for those of you that use more than 5GB of data each month. Starting October 16th, T-Mobile will enforce a new policy that will reduce data speeds.
Riley McDermid is a contributing reporter to VentureBeat. She was previously the online editor at institutional investing and trading forum ...
Here are the latest reports on msnbc news mediabistro.com'Joe' hosts get dramaticVarietyMika Brzezinski and Joe Scarborough, anchors of MSNBC's.
eric seiger dermatologist Sifma CEO Tim Ryan released this statement today:
“It would be catastrophic to impose a system wide moratorium on all foreclosures and such actions could do damage to the housing market and the economy. It must be recognized that the mortgage market, investors and the health of the economy are all inter-related. Investors in the housing market—including American workers with pension funds, 401k plans, and mutual funds—would unjustly suffer losses in their savings from these actions. Increased uncertainty in the securitization market would further constrain consumer credit and spending, dampening our already unhealthy economic situation. If mistakes have been made in relation to foreclosure processing, SIFMA firmly believes such mistakes should be corrected. It is imperative, however, that care be taken in addressing these issues to ensure that no unnecessary damage is done to an already weak housing market and, in turn, that there is no further negative impact on the economy.”
It’s worth going through this slowly to see just how bizarre it is.
Firstly, it’s Sifma’s own members — with Bank of America taking the lead — who are imposing “a system wide moratorium on all foreclosures”. No one’s suggesting that the government could or should do such a thing: a foreclosure is, after all, a legal action brought by one private entity against another. It makes sense, if you’re going to sue somebody, that you make sure in advance that you have the your legal ducks in a row. Right now it’s abundantly clear that most loan servicers don’t have their legal ducks in a row, so it makes sense for them to stop foreclosing on homeowners, at least for the time being. (In Bank of America’s case, it has even tried to foreclose on houses which don’t have a mortgage at all.)
Secondly, it’s not foreclosure moratoriums which damage the housing market, it’s badly-documented mortgages. A healthy market is one in which title and ownership are clear and legally watertight; in which assets change hands at market-clearing prices; and in which value and market price are generally understood to be one and the same thing. Using these criteria, it’s pretty obvious that the housing market is not healthy now, and that the longer this foreclosure crisis drags on, the less healthy it’s going to be.
Crucially, you can’t judge the health of the market by house prices alone, especially when home sales are plunging and foreclosure sales often take place a good 35% below market values. And what goes for the housing market also goes, mutatis mutandis, for the mortgage market. It’s entirely possible that secondary-market RMBS prices will fall if housing prices drop. But in the medium to long term, what’s really necessary is for investors in mortgage-backed securities to have faith that they really own what they think they own. And the only way to do that is to bite the bullet and fix the mortgage mess.
In any case, it’s far from clear that a foreclosure moratorium would hurt house prices — or even RMBS prices — at all; indeed, it’s pretty hard to see exactly what Ryan and Sifma are worried about. They say that they firmly believe that the mistakes made in relation to foreclosure processing should be corrected, but they don’t bother to tell us how that’s meant to happen.
It would be great if Sifma were to take the lead on this issue, and come up with constructive solutions to a serious problem. Instead, they’re just delivering an inchoate and unhelpful blast of opposition. Sad.
The news reports on GMAC Mortgage’s decision to halt evictions and foreclosure sales in 23 states, as originally reported by Bloomberg News, has generated keen interest in the mortgage and securitizaion communities. One reason is the oddly abrupt and broad nature of GMAC Mortgage’s action. GMAC Mortgage subsequently issued a rebuttal of sorts to the article. Not only did it fail to clairify matters, it is inconsistent with the actual notice it sent last week.
Various accounts have described how one officer of GMAC Mortgage’s servicing unit has admitted during testimony that, while he signs thousands of affidavits each month in order to affect steps in the foreclosure process, he does not have personal knowledge of certain critical facts in the affidavit which he asserts to be true. Reader Stupendous Man provided the text of Federal Rule 56 on affidavits (although the cases in question are in state courts, the same principles no doubt apply). Boldface ours:
A supporting or opposing affidavit must be made on personal knowledge, set out facts that would be admissible in evidence, and show that the affiant is competent to testify on the matters stated.
The key here is you can’t delegate creating affidavits to parties who weren’t close to relevant matter out of administrative convenience; you need to find people who were directly involved. And evidence in a number of foreclosure suits indicates that this problem not only extends well beyond GMAC, and is not a matter of matter of officers providing affidavits based on a review of copies of the paperwork in a transaction. As one attorney wrote:
It is beyond people signing things when they don’t see the “originals” These people don’t see shit. We have depositions from these folks, the only thing they are able to verify on the documents is what title they are supposed to use, from the particular servicer they are working for – Executive Secretary, Executive Vice President, Asst. Sec., etc…..
So there is evidence to support the notion GMAC was not alone in providing cooked up affidavits. The only question is how widespread this practice was at other servicers.
What are the implications of the GMAC Mortgage actions and how serious are the problems? GMAC Mortgage and similarly situated parties contend that there is nothing fundamentally wrong with their foreclosure process and this is simply a procedural issue which is readily curable. In contrast, advocates for borrowers in foreclosure have indicated that the questionable affidavits are only the “tip of the iceberg” and represent the beginning of the end for the foreclosure mills and the banks, servicers and trustees who have been seeking to exercise foreclosure under false pretenses. The heightened scrutiny and increasing interest by state attorneys general means we may finally get to the bottom of a long-running “he said-she said” dispute.
Let’s review the current state of play:
1. What is the problem with evictions and foreclosure sales that GMAC Mortgage is worried about?
Based on GMAC Mortgage’s press release, the action is limited to evictions and foreclosure sales in certain states, but its new foreclosures are not affected. It isn’t clear exactly what distinction they are making . Presumably, their concern relates to the affidavits they used to initiate the evictions in their foreclosure cases. If the affidavit is flawed, they want to get a new improved one in place before they take title to the property. Similarly, for properties where they have already taken title, if the affidavits which enabled the evictions were flawed, they may need to prepare a new affidavit that would allow them to demonstrate that they have good title prior to selling the property to third parties.
2. Is this problem curable? On the surface, concerns about flawed affidavits used in the eviction process of a foreclosure, seems a technical, legalistic issue. Certainly, GMAC Mortgage’s statements seem to give the impression that the issue is curable and will, in fact, soon be cured. Did GMAC Mortgage prepare the affidavits improperly due to weak procedural controls or economic expediency? If so, then it would seem like they would have to incur some additional cost and take some additional time to have the affidavits properly prepared and then the problem would not be fatal from a legal standpoint. The added expenses and longer time will cost the certificate holders in the MBS more money. Remember, securitizations have come to be modeled and price assuming a streamlined foreclosure process. Actually finding and involving the proper parties in the affidavit process will at a minimum be cumbersome, and could add meaningful costs.
Moroever, it is possible the affidavits were prepared improperly to remedy other problems in the related mortgage loan. If, for the purpose of the foreclosure, the servicer did not have the proper information but stated that they did anyway in the affidavit, this would be a far more serious problem. For instance, if the courts for a foreclosure required a particular party to be pursuing the foreclosure, but GMAC Mortgage did not have documentation supporting such ownership or right, was GMAC Mortgage misrepresenting the facts in the affidavit?
3. Is the problem limited to judicial foreclosure states? That does not seem credible, although GMAC may believe it needs only to remedy it in those states. GMAC Mortgage indicated that the action was only for states that use judicial foreclosure, or similar procedures.
In general, if the issue is limited to improperly documented affidavits, GMAC may be able to limit its response to the 23 states on its list. However, if the underlying documentation for its mortgages have problems in the chain of title, then the improper affidavits are just a manifestation of a deeper issue. By happenstance, I know of cases in a non-judicial foreclosure state not on GMAC’s list where GMAC took similar short cuts. Tom Adams and I have been in touch with a number of attorneys in the foreclosure world who have uncovered problems in non-judicial foreclosure states with inaccurate affidavits, including mis-statements about the parties to the foreclosure, the time of mortgage transfers, the status of the loan file and related issues. There is not good grounds to believe that GMAC had sufficiently different procedures in judicial versus non-judicial foreclosure states to believe their flawed procedures were limited to only judicial foreclosure states.
4. is the problem limited to GMAC Mortgage? GMAC Mortgage and other banks may hope to sell the story line that its problem is limited to a lone “rogue servicing officer.” Unfortunately, the servicing officer in question indicated in his testimony that he prepared 10,000 or more affidavits per month, so it strains credulity to think that GMAC management was ignorant of his actions.
So far, mainstream press accounts have been limited to issues at GMAC Mortgage, which is a large servicer, but only a modest portion of the overall market. However, it is possible, that the root of the problem lies not with the servicer, but started with the sellers and the trustees in the mortgage securitization process. If the mortgage loans were conveyed in the securitization process in a way that clouded the title, the problem could be widespread, and borrower attorneys can provide a large body of evidence from cases in many states. Although GMAC appears to be the party ultimately responsible, it also works very closely with the foreclosure outsourcing firm, Loan Processing Services, so they or the foreclosure mills they retain may also bear some responsibility.
5. Are foreclosure problems limited to this sort of technical issue? The conveyance of real estate has a long legal history and is governed by state law. Numerous checks and balances are written into both the sale and the foreclosure process to ensure that the transfers are conducted properly and disputes over ownership are minimized. Part of the appeal of mortgage loans as an asset, back before the financial crisis, was that the procedures and laws for mortgage loans was well establishes, so owners or investors could take comfort that their interests were well protected.
Unfortunately, there is increasing evidence that the mortgage loan industry went off the rails during the bubble years. And if the issues underlying GMAC Mortgage action are a result of bad origination and closing procedures, rather than poor servicing, the problems may be much larger than inaccurate affidavits.
We will be watching on the GMAC Mortgage situation and related issues. GMAC Mortgage’s remarks today did not clarify matters, and their failure to come clean, and the obvious conflict between the claims in their press release and their own memo suggests other shoes have yet to drop. If these issues extend beyond GMAC Mortgage and inaccurate affidavits, the mortgage industry will be facing some deep and difficult problems.
eric seiger dermatologyBad news for those of you that use more than 5GB of data each month. Starting October 16th, T-Mobile will enforce a new policy that will reduce data speeds.
Riley McDermid is a contributing reporter to VentureBeat. She was previously the online editor at institutional investing and trading forum ...
Here are the latest reports on msnbc news mediabistro.com'Joe' hosts get dramaticVarietyMika Brzezinski and Joe Scarborough, anchors of MSNBC's.
eric seigereric seiger dermatologist
eric seigerBad news for those of you that use more than 5GB of data each month. Starting October 16th, T-Mobile will enforce a new policy that will reduce data speeds.
Riley McDermid is a contributing reporter to VentureBeat. She was previously the online editor at institutional investing and trading forum ...
Here are the latest reports on msnbc news mediabistro.com'Joe' hosts get dramaticVarietyMika Brzezinski and Joe Scarborough, anchors of MSNBC's.
Dr. eric seigerSifma CEO Tim Ryan released this statement today:
“It would be catastrophic to impose a system wide moratorium on all foreclosures and such actions could do damage to the housing market and the economy. It must be recognized that the mortgage market, investors and the health of the economy are all inter-related. Investors in the housing market—including American workers with pension funds, 401k plans, and mutual funds—would unjustly suffer losses in their savings from these actions. Increased uncertainty in the securitization market would further constrain consumer credit and spending, dampening our already unhealthy economic situation. If mistakes have been made in relation to foreclosure processing, SIFMA firmly believes such mistakes should be corrected. It is imperative, however, that care be taken in addressing these issues to ensure that no unnecessary damage is done to an already weak housing market and, in turn, that there is no further negative impact on the economy.”
It’s worth going through this slowly to see just how bizarre it is.
Firstly, it’s Sifma’s own members — with Bank of America taking the lead — who are imposing “a system wide moratorium on all foreclosures”. No one’s suggesting that the government could or should do such a thing: a foreclosure is, after all, a legal action brought by one private entity against another. It makes sense, if you’re going to sue somebody, that you make sure in advance that you have the your legal ducks in a row. Right now it’s abundantly clear that most loan servicers don’t have their legal ducks in a row, so it makes sense for them to stop foreclosing on homeowners, at least for the time being. (In Bank of America’s case, it has even tried to foreclose on houses which don’t have a mortgage at all.)
Secondly, it’s not foreclosure moratoriums which damage the housing market, it’s badly-documented mortgages. A healthy market is one in which title and ownership are clear and legally watertight; in which assets change hands at market-clearing prices; and in which value and market price are generally understood to be one and the same thing. Using these criteria, it’s pretty obvious that the housing market is not healthy now, and that the longer this foreclosure crisis drags on, the less healthy it’s going to be.
Crucially, you can’t judge the health of the market by house prices alone, especially when home sales are plunging and foreclosure sales often take place a good 35% below market values. And what goes for the housing market also goes, mutatis mutandis, for the mortgage market. It’s entirely possible that secondary-market RMBS prices will fall if housing prices drop. But in the medium to long term, what’s really necessary is for investors in mortgage-backed securities to have faith that they really own what they think they own. And the only way to do that is to bite the bullet and fix the mortgage mess.
In any case, it’s far from clear that a foreclosure moratorium would hurt house prices — or even RMBS prices — at all; indeed, it’s pretty hard to see exactly what Ryan and Sifma are worried about. They say that they firmly believe that the mistakes made in relation to foreclosure processing should be corrected, but they don’t bother to tell us how that’s meant to happen.
It would be great if Sifma were to take the lead on this issue, and come up with constructive solutions to a serious problem. Instead, they’re just delivering an inchoate and unhelpful blast of opposition. Sad.
The news reports on GMAC Mortgage’s decision to halt evictions and foreclosure sales in 23 states, as originally reported by Bloomberg News, has generated keen interest in the mortgage and securitizaion communities. One reason is the oddly abrupt and broad nature of GMAC Mortgage’s action. GMAC Mortgage subsequently issued a rebuttal of sorts to the article. Not only did it fail to clairify matters, it is inconsistent with the actual notice it sent last week.
Various accounts have described how one officer of GMAC Mortgage’s servicing unit has admitted during testimony that, while he signs thousands of affidavits each month in order to affect steps in the foreclosure process, he does not have personal knowledge of certain critical facts in the affidavit which he asserts to be true. Reader Stupendous Man provided the text of Federal Rule 56 on affidavits (although the cases in question are in state courts, the same principles no doubt apply). Boldface ours:
A supporting or opposing affidavit must be made on personal knowledge, set out facts that would be admissible in evidence, and show that the affiant is competent to testify on the matters stated.
The key here is you can’t delegate creating affidavits to parties who weren’t close to relevant matter out of administrative convenience; you need to find people who were directly involved. And evidence in a number of foreclosure suits indicates that this problem not only extends well beyond GMAC, and is not a matter of matter of officers providing affidavits based on a review of copies of the paperwork in a transaction. As one attorney wrote:
It is beyond people signing things when they don’t see the “originals” These people don’t see shit. We have depositions from these folks, the only thing they are able to verify on the documents is what title they are supposed to use, from the particular servicer they are working for – Executive Secretary, Executive Vice President, Asst. Sec., etc…..
So there is evidence to support the notion GMAC was not alone in providing cooked up affidavits. The only question is how widespread this practice was at other servicers.
What are the implications of the GMAC Mortgage actions and how serious are the problems? GMAC Mortgage and similarly situated parties contend that there is nothing fundamentally wrong with their foreclosure process and this is simply a procedural issue which is readily curable. In contrast, advocates for borrowers in foreclosure have indicated that the questionable affidavits are only the “tip of the iceberg” and represent the beginning of the end for the foreclosure mills and the banks, servicers and trustees who have been seeking to exercise foreclosure under false pretenses. The heightened scrutiny and increasing interest by state attorneys general means we may finally get to the bottom of a long-running “he said-she said” dispute.
Let’s review the current state of play:
1. What is the problem with evictions and foreclosure sales that GMAC Mortgage is worried about?
Based on GMAC Mortgage’s press release, the action is limited to evictions and foreclosure sales in certain states, but its new foreclosures are not affected. It isn’t clear exactly what distinction they are making . Presumably, their concern relates to the affidavits they used to initiate the evictions in their foreclosure cases. If the affidavit is flawed, they want to get a new improved one in place before they take title to the property. Similarly, for properties where they have already taken title, if the affidavits which enabled the evictions were flawed, they may need to prepare a new affidavit that would allow them to demonstrate that they have good title prior to selling the property to third parties.
2. Is this problem curable? On the surface, concerns about flawed affidavits used in the eviction process of a foreclosure, seems a technical, legalistic issue. Certainly, GMAC Mortgage’s statements seem to give the impression that the issue is curable and will, in fact, soon be cured. Did GMAC Mortgage prepare the affidavits improperly due to weak procedural controls or economic expediency? If so, then it would seem like they would have to incur some additional cost and take some additional time to have the affidavits properly prepared and then the problem would not be fatal from a legal standpoint. The added expenses and longer time will cost the certificate holders in the MBS more money. Remember, securitizations have come to be modeled and price assuming a streamlined foreclosure process. Actually finding and involving the proper parties in the affidavit process will at a minimum be cumbersome, and could add meaningful costs.
Moroever, it is possible the affidavits were prepared improperly to remedy other problems in the related mortgage loan. If, for the purpose of the foreclosure, the servicer did not have the proper information but stated that they did anyway in the affidavit, this would be a far more serious problem. For instance, if the courts for a foreclosure required a particular party to be pursuing the foreclosure, but GMAC Mortgage did not have documentation supporting such ownership or right, was GMAC Mortgage misrepresenting the facts in the affidavit?
3. Is the problem limited to judicial foreclosure states? That does not seem credible, although GMAC may believe it needs only to remedy it in those states. GMAC Mortgage indicated that the action was only for states that use judicial foreclosure, or similar procedures.
In general, if the issue is limited to improperly documented affidavits, GMAC may be able to limit its response to the 23 states on its list. However, if the underlying documentation for its mortgages have problems in the chain of title, then the improper affidavits are just a manifestation of a deeper issue. By happenstance, I know of cases in a non-judicial foreclosure state not on GMAC’s list where GMAC took similar short cuts. Tom Adams and I have been in touch with a number of attorneys in the foreclosure world who have uncovered problems in non-judicial foreclosure states with inaccurate affidavits, including mis-statements about the parties to the foreclosure, the time of mortgage transfers, the status of the loan file and related issues. There is not good grounds to believe that GMAC had sufficiently different procedures in judicial versus non-judicial foreclosure states to believe their flawed procedures were limited to only judicial foreclosure states.
4. is the problem limited to GMAC Mortgage? GMAC Mortgage and other banks may hope to sell the story line that its problem is limited to a lone “rogue servicing officer.” Unfortunately, the servicing officer in question indicated in his testimony that he prepared 10,000 or more affidavits per month, so it strains credulity to think that GMAC management was ignorant of his actions.
So far, mainstream press accounts have been limited to issues at GMAC Mortgage, which is a large servicer, but only a modest portion of the overall market. However, it is possible, that the root of the problem lies not with the servicer, but started with the sellers and the trustees in the mortgage securitization process. If the mortgage loans were conveyed in the securitization process in a way that clouded the title, the problem could be widespread, and borrower attorneys can provide a large body of evidence from cases in many states. Although GMAC appears to be the party ultimately responsible, it also works very closely with the foreclosure outsourcing firm, Loan Processing Services, so they or the foreclosure mills they retain may also bear some responsibility.
5. Are foreclosure problems limited to this sort of technical issue? The conveyance of real estate has a long legal history and is governed by state law. Numerous checks and balances are written into both the sale and the foreclosure process to ensure that the transfers are conducted properly and disputes over ownership are minimized. Part of the appeal of mortgage loans as an asset, back before the financial crisis, was that the procedures and laws for mortgage loans was well establishes, so owners or investors could take comfort that their interests were well protected.
Unfortunately, there is increasing evidence that the mortgage loan industry went off the rails during the bubble years. And if the issues underlying GMAC Mortgage action are a result of bad origination and closing procedures, rather than poor servicing, the problems may be much larger than inaccurate affidavits.
We will be watching on the GMAC Mortgage situation and related issues. GMAC Mortgage’s remarks today did not clarify matters, and their failure to come clean, and the obvious conflict between the claims in their press release and their own memo suggests other shoes have yet to drop. If these issues extend beyond GMAC Mortgage and inaccurate affidavits, the mortgage industry will be facing some deep and difficult problems.
eric seiger dermatologist
Dr. eric seigerBad news for those of you that use more than 5GB of data each month. Starting October 16th, T-Mobile will enforce a new policy that will reduce data speeds.
Riley McDermid is a contributing reporter to VentureBeat. She was previously the online editor at institutional investing and trading forum ...
Here are the latest reports on msnbc news mediabistro.com'Joe' hosts get dramaticVarietyMika Brzezinski and Joe Scarborough, anchors of MSNBC's.
eric seiger dermatology
skin
and vein centerBad news for those of you that use more than 5GB of data each month. Starting October 16th, T-Mobile will enforce a new policy that will reduce data speeds.
Riley McDermid is a contributing reporter to VentureBeat. She was previously the online editor at institutional investing and trading forum ...
Here are the latest reports on msnbc news mediabistro.com'Joe' hosts get dramaticVarietyMika Brzezinski and Joe Scarborough, anchors of MSNBC's.
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and vein centerBad news for those of you that use more than 5GB of data each month. Starting October 16th, T-Mobile will enforce a new policy that will reduce data speeds.
Riley McDermid is a contributing reporter to VentureBeat. She was previously the online editor at institutional investing and trading forum ...
Here are the latest reports on msnbc news mediabistro.com'Joe' hosts get dramaticVarietyMika Brzezinski and Joe Scarborough, anchors of MSNBC's.
eric seiger doBad news for those of you that use more than 5GB of data each month. Starting October 16th, T-Mobile will enforce a new policy that will reduce data speeds.
Riley McDermid is a contributing reporter to VentureBeat. She was previously the online editor at institutional investing and trading forum ...
Here are the latest reports on msnbc news mediabistro.com'Joe' hosts get dramaticVarietyMika Brzezinski and Joe Scarborough, anchors of MSNBC's.
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big seminar 14 big seminar 14Bad news for those of you that use more than 5GB of data each month. Starting October 16th, T-Mobile will enforce a new policy that will reduce data speeds.
Riley McDermid is a contributing reporter to VentureBeat. She was previously the online editor at institutional investing and trading forum ...
Here are the latest reports on msnbc news mediabistro.com'Joe' hosts get dramaticVarietyMika Brzezinski and Joe Scarborough, anchors of MSNBC's.
big seminar 14 The prospect of losing your home is something that could very well happen to all homeowners which could deeply disrupt the lives of families who fall victim to foreclosure. Did you know that over last few recent years foreclosure has increased nearly 200%? With that being said, it is never too early for homeowners to begin taking precautionary measures that will enable you to avoid becoming a part of the growing trend. This is simply started with simple decision making that will lead you to where you'd like to be in the near and far future.
Delayed Loan Payments If you are experiencing trouble in making monthly payments, it is very important that you contact the lender of your home loan immediately. Do not feel afraid or intimidated by contacting your lender because believe it or not, they are always willing to help you because they are in the business of helping buyers become home owners. Not in kicking people out of their homes! In fact, the lender will always stand to be on the losing money when a home goes into foreclosure so in effect, it's in their best financial interest to help you make smaller or delayed payments than to receive no payment at all.
It may not be a simple process to negotiate an agreeable payment structure, so you must always be persistent and focused in your discussions towards finding a win-win agreement. Also be forthcoming and honest with your lender, there is no need to hide any details that could come back later to haunt you.
Seek Advice From Your AttorneyBe sure to seek out the advice of a real estate focused attorney who is familiar with helping families facing foreclosure. Always beware of those fly-by-night attorneys who offer 'quick fixes' as most likely they will recommend that you file for drastic measure such as bankruptcy which may not help you at all and may have been unnecessary.
Another benefit of seeking a qualified attorney is that their legal representation can very well bring a beneficial solution that you nor the lender is able to recognize. Seek legal assistance early on as you realize you may fall behind in home mortgage payments - absolutely do not wait until it is too late.
Renegotiate the Terms of Your LoansAs we mentioned earlier, lenders do want you to stay in your home and will be flexible to achieve that. They want you to be able to repay them because they will lose money, and they are lenders, not a repossession firm. Renegotiating the terms of your mortgage can also lead to a long term fix to a short term problem where you are able to remain a homeowner and they are receiving payments to profit and further continue lending. After all, if they are not lending and making money, then they will go out of business.
Refinancing Your Mortgage DebtIf there is sufficient equity within your home, then consolidating your total debt would be a very helpful situation to pursue. For example, if you are currently suffering from high interest rate, you'd be able to refinance to a lower rate which would reduce your monthly payments as well.
Be weary of schemes that seem exotic and always seek the advice from your lender or qualified legal representative.
Modifying Your LoanThis is referred to as 'Loan Modification' which is when the terms of your home mortgage are changed without the need to completely refinance your entire loan. This is one of the best ways to avoid foreclosure and save your home. One of the largest factors contributing to rising foreclosure is because of adjustable rate mortgages where the rate adjusts and just doesn't seem to have a limit in sight. In many cases, loan modification will help you fix your adjust rate and payments so it's stable which can offer great relief to the homeowner.
Short SalesShore sales are also becoming more and more common. This scenario is when your lender accepts a discount on your mortgage and sells your home to avoid foreclosure. When you aren't able to save your home, you just may be able to sell it on your own which is much more preferable to the lender than repossession of your home. Now if there is not sufficient equity within your home to cover the mortgage and the lender accepts it, this is known as a short sale. In this case you should very well seek professional advice from a Realtor and attorney - this can only help in the negotiations with your lender.
Sell Your HouseNow a lot of people will want to avoid this at all costs, however if you are able to command a price that will cover the mortgage balance that avoids foreclosure with enough time before foreclosure date, it may be a good option. In many cases, contacting a real estate agent who is experienced in selling homes near foreclosure is best because they will be able to sell your home the fastest.
Filing for BankruptcyIn some instances, if you file for bankruptcy that may be able to stop foreclosure that could buy you some time figure out how you will keep your home. This is a very sensitive option so again, seek qualified advice from a lawyer. This only works in some instances, and your credit scores will be adversely affected for at least 7 years in most cases.
File a Deed in Lieu of ForeclosureNow this means that you would sign your home over to your lender and in exchange the lender will cancel your mortgage. The lender will also agree to not pursue or begin foreclosure and to terminate any that may be going on at the moment. One thing you want be sure is that lender 'forgives' any portion of the mortgage that is not covered by the sale.
big seminar 14Bad news for those of you that use more than 5GB of data each month. Starting October 16th, T-Mobile will enforce a new policy that will reduce data speeds.
Riley McDermid is a contributing reporter to VentureBeat. She was previously the online editor at institutional investing and trading forum ...
Here are the latest reports on msnbc news mediabistro.com'Joe' hosts get dramaticVarietyMika Brzezinski and Joe Scarborough, anchors of MSNBC's.
big seminar 14Bad news for those of you that use more than 5GB of data each month. Starting October 16th, T-Mobile will enforce a new policy that will reduce data speeds.
Riley McDermid is a contributing reporter to VentureBeat. She was previously the online editor at institutional investing and trading forum ...
Here are the latest reports on msnbc news mediabistro.com'Joe' hosts get dramaticVarietyMika Brzezinski and Joe Scarborough, anchors of MSNBC's.
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