Judge puts RI foreclosure cases on hold

WPRI ^ | August 18, 2011 | Kathryn Sotnik

[Chunga85]

PROVIDENCE, R.I. (WPRI) - Rhode Island's new federal judge makes a decision that could affect dozens of Rhode Islanders facing foreclosure.

Judge John McConnell, Junior has ordered the bulk of mortgage foreclosure cases in before Rhode Island's U.S. District Court to be put on hold, and for banks to try and negotiate with homeowners.

63 foreclosure cases in Rhode Island are affected.

One of the homeowners taking interest in the ruling is Philip Aceto, whose Cranston home is in foreclosure.

"I feel vindicated," Aceto said, "I feel this judge has made a fair decision."

Aceto blames a title issue for landing his home in foreclosure.

"It stops the banks and the services in their tracks," said George Babcock, a Pawtucket attorney who is handling the majority of the foreclosure cases.

"It gives them opportunity to sit with the magistrate," Babcock said, "and with the bank or servicer to try and work out a reasonable deal."

The idea Babcock says is to keep Rhode Islanders in their homes.

[dan on the right]

As someone with experience in this industry, I see it differently.

CDS which AIG was involved in were, in effect, side bets on whether existing mortgage backed securities would default or perform. They weren’t even parties to the original transactions. You have to real “The Big Short”. Pure gambling and recklessness. However, this did not affect individual transactions.

That being said, the original securitization of bundled mortgages was a huge contributor to the problem as the people putting the pools together (big Wall Street Houses) got drunk with their excesses. Thsy dropped underwriting standards so anyone could qualify. Likewise, the product mix (especially “option arms” which allowed interest only payments at rates less than the contract rates) were abused products and - admittedly sold to people who didn’t understand negative amortization.

Still, people borrowed money, signed notes, agreed to pay them back. The financial terms were laid out in plain english. Individuals and the lenders were gambling that values would continue to incresase. That didn’t happen and everyone loses.

Time to take some responsiblity. Banks should not be forced to cut deals with owners. However, most will work with borrowers and reduce rates, agree to short sales, etc. if it makes econimic sense. I am all for that. But allowing people to live without paying any mortgage for years is patently unfair and is the number one reason why the residential market can’t find bottom.

[Chunga85]

Banks should not be forced to cut deals with owners.

As "someone in the industry" I'm sure you do see it differently. In lieu of being prosecuted for crimes, cutting a deal would seem preferential. That's what they are doing now.

Looking back then we should have let them fail. Same with AIG. They knew exactly what they were doing. Their failure has been delayed but remains imminent.

[Kartographer]

"As someone with experience in this industry, I see it differently."

As someone with experience in the industry can you then explain why suddenly paper work and legal documents which have be required for foreclosure for years are now suddenly unavailable? And why so many case so many lenders have been reduced to fraud forgery and perjury in their attempts to produce those documents?

[Kartographer]

I can’t say I am surprised that neither of you choose to answer my question about the ramped forgery, perjury and Fraud on the Court presently being committed by all the big lenders.

As I said the foreclosure laws have not varied that much in all the years they have been on the books. These laws not only protect the rights of lenders and those being foreclosed upon, but all property owners. There must be a strict and orderly procedures for transferring property or the whole system becomes meaningless.

What boggles the mind is that those who should know that system and its procedures the best are these big lenders and their lawyers and yet here they are unable to produce basic legally required documents and paperwork. And what’s their answer to not having it? It is forging, back dating, the swearing under oath the veracity of documents being well and true and all the time they were produced in some back room by some minimum wage fluky off the street and you want to let them ‘skate’?

When did the failure to honor a civil agreement become more serious than the committing of multiple felonies in multiple cases?

Our country has under gone a number of financial crises and survived them, but the present undermining of the legal system by the lenders massive perpetration of Fraud on the Court is something the country may not recover from. Once the the you undermine the rule of law a Republic ends.

I really like it when people make statements well they shouldn’t be able to hide behind legalities if the are behind on the mortgage they should just get out and honor they agreement, but let me ask you this when was the last time you know of that a bank or for that matter any large corporation broke the law and then just came out and readily admitted it and took their punishment? NEVER every time they get caught they take advantage of every legal right they have the drag out case after case wearing down their opposition until they can get them to settle while never admitting to their wrong doing. How many times have they committed grievous errors and then dragged out settlements until the damage party ended up with nothing because the legal fees ate up the settlement? And yet you want to deny some poor guy trying to keep a roof over his families head the same rights?

I love it when people point to the morality of the person that fell behind but over look the lack of business ethics in many of out leading institutions.

Let me say if you are behind and the lender goes to court and follows the rule of law then out the door you go! At the same time I want to see that every time one of these lenders, they lawyers or the agents commit these felonies that the lawyer, servicing agent, notary and the lenders employee who signed off on them carted off to jail just like you or I would be if we tried and got caught committing the same crimes.

The real problem is the lenders for what ever reason can not produce the proper paperwork with out committing fraud and no matter how good your case is if you can’t prove it without breaking the law you loose.

[businessprofessor]

‘I can’t say I am surprised that neither of you choose to answer my question about the ramped forgery, perjury and Fraud on the Court presently being committed by all the big lenders.”

I am not aware of fraud, perjury, and forgery. I see a conflict between states that want to prevent modernization of the mortgage industry. States want to keep transaction costs high to protect a source of revenue and local jobs. The mortgage industry with a large boost from the GSAs developed a system to modernize part of the transaction. In this conflict, I see home squattors attempting to prevent valid foreclosures and the usual array of trial lawyers looking for a large payday.

States interfere with interstate commerce when possible. The auto dealership industry is an example of interference with interstate commerce in which states through dealership laws prevent individuals from buying cars from manufacturers and national retailers.

[Kartographer]

Real Estate Law has always been a matter of States Rights and has never been subject in Interstate Commerce Laws and nor should it be. Seems to me you are advocating changing the law by violating/ignoring it and bypassing/usurping the Legislature of every state of the Union. We have a orderly system for changing laws and you want to replace it with ‘TBTF’ making the law up as they go.

For a business professor you seem very unaware of what is going on.

http://www.cbsnews.com/video/watch/?id=7361572n

http://www.dailyfinance.com/2011/03/09/foreclosure-fraud-maryland-banks-lawyers-forged-deeds-signatures/

http://www.reuters.com/article/2011/01/29/foreclosures-deutschebank-probe-idUSN2811753620110129

http://www.stockmarketsreview.com/realestate/2010/12/28/banks-found-guilty-of-foreclosure-fraud/

http://www.businessinsider.com/foreclosure-fraud-worse-than-you-think-2010-10#ixzz1VRnrQpge

http://www.dailymarkets.com/stock/2010/10/11/foreclosuregate-the-biggest-fraud-in-the-history-of-capital-markets/

http://www.cnbc.com/id/39634568/Foreclosure_Fraud_It_s_Worse_Than_You_Think

More available if you like.

[Sherman Logan]

It is forging, back dating, the swearing under oath the veracity of documents being well and true and all the time they were produced in some back room by some minimum wage fluky off the street and you want to let them ‘skate’?

How very Clintonian.

We have apparently expanded the "perjury doesn't count if it's about sex" defense to include "perjury doesn't count if it's about a mortgage."

[Sherman Logan]

It is forging, back dating, the swearing under oath the veracity of documents being well and true and all the time they were produced in some back room by some minimum wage fluky off the street and you want to let them ‘skate’?

How very Clintonian.

We have apparently expanded the "perjury doesn't count if it's about sex" defense to include "perjury doesn't count if it's about a mortgage."

[dan on the right]

Two points.

Agreed, the paperwork is awful.

The mortgage servicers (usually not the same entity as the original lender, and often not the owner of the actual underlying debt) manage millions of mortgages. A process called MERS allows multiple assignments of the debt outside of the usual mortgage recording process to permit the sale and resale of mortgage paper. MERS was created with the blessing and assistance of Fannie and Freddie and the entire securitization industry to facilitate the easy sale of mortgage debt among investors. When tens of thousands of borrowers stop paying, the servicers have an obligation for the people holding the debt (often there is no one owner but multiple owners of a bond which was issued in the security) to either get paid off or start a legal action. Their bond documents don't usually permit them to cut deals. The “big lenders” is a misnomer. These companies identified in the press usually don't even own the debt, but are merely servicers. Agreed, that is no excuse; the paperwork should be accurate and someone should look at the file and do the right foreclosure documents.

All that being said, the servicers should just hire more people and do the paperwork for the foreclosure correctly. The restructure plans have been proven time and time again not to work. That is what most are doing, Just redocumenting the default (easy - no payment for many months or years) and refile. Then, of course, the judges who are sympathetic sit on the filings for many months. In NY it takes over 2 years to foreclose downstate; NJ is the same.

Why do you think Fannie Mae has to stay in business? Because traditional lenders don't want to do this business without the ability to foreclose if the borrower stops paying. So they originate the loan, sell the debt to Fannie (Freddie or FHA) and service the loan (keeping the customer) for them.

If you don't allow Banks to enforce their docs they simply won't lend anymore or charge more. That is where we are headed.

Second, tell me what fraud the lenders committed that caused this? The lenders were stupid, granted, in giving loans to people who didn't deserve them (but since they sold them, they didn't care); but how did they commit fraud on the consumer? Was the rate different than the docs? Were the terms different than the docs? Did they give them less money than agreed? Right or wrong, the borrowers received the deal they bargained for. If they didn't understand the terms, is that the lender's fault?

The fact is that the borrowers signed the notes and should bear some responsibility. Right now, in hindsight, it was a pretty good deal; - put no or little money down, buy the house, the crisis comes along, stop paying, and live there mortgage free for a few years! You have little equity in the first place. Nice gig.

[Kartographer]

"Agreed, the paperwork is awful."

Auful? You do understand that it's just a little bit worse than awful? TRY ILLEGAL, Try if you or I was to submit the same type paperwork no matter how good our case was it would not only get our case thrown out, but we would end up paying a fine if not going to jail. He is where we differ the law on real estate transaction are very strict they need to be because property changes hands and everything done to and with a property effect any and every future owner.As I said the foreclosure laws have not varied that much in all the years they have been on the books. These laws not only protect the rights of lenders and those being foreclosed upon, but all property owners. There must be a strict and orderly procedures for transferring property or the whole system becomes meaningless. There is also the fact that these people knew that the paper false and many of the lawyers sworn Officers of the Court who then submitted to the court fraudulent, perjured and illegal and just like you the are fine with it. I guess the ends justify the means? I'll as you again; When did the failure to honor a civil agreement become more serious than the committing of multiple felonies in multiple cases? You say that its OK because MERS was created with the blessing and assistance of Fannie and Freddie so what you are saying is that all you have to do to usurp the laws of 50 states is to get the blessing of some quasi government back entity and you are GOLD! If the law needs to be changed when have legal ways to change them and they usually involve elected state legislatures, but I guess that to burdensome for 'TBTF'. If you allow big corporations and quasi government bureaucracies to over rule the laws written by the elected legislatures no matter how good, bad or indifferent they might be you are killing the Republic as the Republic lives or dies by the rule of law. The The “big lenders” is a misnomer you say, true they don't own the debt, but they help created they sold it re-solded and resold it again. These companies have created a system where they make money from everyone and if they finally do get in a position where they lose the government compensation them. Nice system isn't it? Yes many of these companies are just the servicers have an obligation for the people holding the debt (often there is no one owner but multiple owners of a bond which was issued in the security) but who created the bonds? Face it under existing law these bonds have nothing to secure them because of the way the were created and who's fault is that? The law in most states is that only the person actually owed the money can foreclose and who would want it any other way. If we except your way any one could just 'create' paperwork in their back-room and foreclose on whom ever they want. Non it isn't that I don't want to allow Banks to enforce their documents I wanted them punished when the knowingly summit false and I don't want any foreclosures granted (no matter how justified) based on perjured statements and forged documents. What harm have they cause, nothing less than to disobey the law as written in an attempt to undermine the system for no better reason than their convenience. How would you like to see these same type 'documents' make their way into other legal proceedings? I'll tell you what how about you make up a list of other legal proceedings that should allow without question perjured, false, forged, post dated, etc documents? I look forward to seeing your list.