10/18/10

Deep Foreclosure Thoughts, by MBSGuy

"It is patently incorrect to say that the “foreclosure gate” issue is about “robo-signers”. A dozen top banks or servicers voluntarily halted foreclosure across much of the country because title insurers were no longer comfortable working on their foreclosure sales, borrowers were having increasing success challenging the foreclosures, their sub-contractors (such as Lender Processing Services and various foreclosure mill law firms) were being investigated for fraud and perjury, and news was starting to get out that the problems were much more widespread than had been previously reported.

The entire legal structure of foreclosure was coming undone. Robo-signers were just a manifestation of a much larger issue that was already becoming a problem.


...I believe that a reasonable examination of the facts shows that the documents were not prepared incorrectly due to mistake, but rather due to a strategic choice.

How can you look at this issue in detail and not wonder why the servicers chose the routes they took?

If it was really just a bunch of technical mistakes, how come they never did anything to fix the problem, even though they have been facing legal challenge from a growing number of borrowers?

Surely, someone at the servicer knew that submitting unverified affidavits could create legal problems.

The deposition of GMAC’s robo-signor Jeffrey Stephan, which seemed to break the case open in September, was actually from 2009. GMAC was on notice of the problem with unverified affidavits for over a year and did nothing about it – in fact they submitted thousands more with the same problems, even after Mr. Stephan admitted in court that he repeatedly submitted false affidavits to court. It was their business to submit them on an unverified basis, it was not a technical mistake.

Having witnessed a servicer and its counsel lie repeatedly in a court where I was testifying, I can say with confidence that the incorrect statements they made were not mistakes. I wondered why they spent so much money to dispute our claim that the form of the note and mortgage were not in the proper form.

If the servicer had just made a technical error, why didn’t they just go correct it and re-submit the foreclosure in the name of the party actually holding title (rather than the people they wanted to be holding the title)?

They submitted the documents to cover earlier mistakes in the origination process. If it is true that the servicing “mistakes” are correlated to the number of loans with conveyance problems, then it appears that the conveyance problem could be quite large.

...Doesn’t preemptively and voluntarily halting foreclosure in 23 or 50 states seem like a bit of an overreaction if this really were just a few technical mistakes in preparing some otherwise uncontested servicing documents?

Refusing to ask “WHY did the servicers prepare so many incorrect documents?” is evidence of a very advanced stage of denial.”"

MBSGuy
Securitization Expert Witness
Naked Capitalism

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