New York judges dismiss up to 50-percent of foreclosure cases due to paperwork issues
Homeowners in foreclosure in the New York counties of Suffolk and Nassau on Long Island and Kings County in Brooklyn have judges in their corner
In these counties the 81 judges handling foreclosures have become infamous over the past few years for scrutinizing paperwork for errors and provides a window into how the crisis could unfold across in the country.
While the level of tolerance for document mistakes varies from judge to judge, the group as a whole has a reputation for ruling against mortgage companies when paperwork issues or other problems arise.
Judge Dana Winslow of Nassau County says he’s thought a lot about why judges in his area are more apt to question filings. He said it comes down to one thing: Lack of trust for Wall Street. In this region, judges have seen a lot of inaccurate filings from the financial sector.
Trust “of the lending institutions and Wall Street has eroded in some areas of the country more than others,” Winslow said.
Sample rulings
- On June 17, for example, Judge Karen Murphy of Nassau County ruled that Wachovia Bank lacked standing to foreclose on a home because the document used to prove ownership of the mortgage was incomplete.
- On Sept. 21, Judge Peter Mayer of Suffolk County delayed a foreclosure by Ally Financial’s GMAC mortgage unit after noticing that the paperwork transferring the mortgage to the bank was dated two days after the foreclosure was initiated.
- On Oct. 21, Judge Arthur Schack of Kings County dismissed a OneWest foreclosure motion because the bank had not adequately documented how the mortgage had been sold and resold to investors. He also questioned why the employee who signed many of the documents claimed to be a vice president of several different mortgage companies at the same time.
- In a different case in May, Schack ruled that HSBC Bank could not foreclose on a home because the paperwork that assigned the mortgage to HSBC from the original lender, Cambridge, was “defective.”
That didn’t mean the borrower, Lovely Yeasmin, a 28-year-old cashier who immigrated from Bangladesh, got her three-story townhouse in Brooklyn’s Bushwick neighborhood for free. Wells Fargo, the mortgage servicer for HSBC, has not appealed the case. Instead, it has offered to temporarily lower her monthly payment from $4,700 to $3,000.
Yeasmin’s eldest brother, Mohammed Parpez, 35, said that before the judge’s order, Wells Fargo was resistant to a loan modification. “The banks are crooks. They tell everyone they are trying to help people like us, but they are really doing the opposite,” Parpez said.
- A year ago, Long Island Judge Jeffrey Spinner concluded that a mortgage company’s paperwork in a foreclosure case was so flawed and its behavior in negotiations with the borrower, Diane Yano-Horoski, so “repugnant” that he erased the family’s $292,500 debt and gave the house back for free.
Members of the Yano-Horoski family said they struggled similarly to get their lender to modify their loan after Greg Horoski fell ill in 2005 and his online business selling specialty dolls suffered. After he underwent a triple bypass surgery, two stents and two hip replacements, he and his wife, Diane – who teaches an online English composition course – found themselves unable to pay the bills.
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Despite his pleas, Horoski said, he failed to get OneWest to come to an agreement, even though he became able to pay the debt after his company’s sales picked up.
In his November 2009 ruling, Judge Spinner of Suffolk County blasted OneWest for negotiating with an “opprobrious demeanor and condescending attitude.” He also cited the bank’s “duplicity” in offering a forbearance agreement with a deadline that had already passed and for presenting contradictory paperwork claiming different amounts for what the family owed.
Of course the mortgage servicer is not happy with the ruling and stated, “We believe the Yano-Horoski ruling, if allowed to stand, has sweeping and dangerous implications for the entire mortgage lending industry,” said OneWest Bank, the family’s mortgage servicer.
Craig D. Robins, a foreclosure defense attorney who authors the Long Island Bankruptcy blog, said of the Yano-Horoski case: “I think we’re going to see more decisions like this across the country. Many judges are finding their court calendars clogged with cases that have all these flaws in them that never should have been brought in the first place or should never have been brought without more due diligence.”
Judges and big banks will likely fight this out for years with so much at stake
With so much at stake, lenders in this part of New York are aggressively appealing foreclosure dismissals, which is likely to keep the legal system bogged down, foreclosed homes off the market, and homeowners like the Yano-Horoski family in legal limbo for years.
The judgment in favor of the homeowner has alarmed the nation’s biggest lenders, who say it could establish a dramatic new legal precedent and roil the nation’s foreclosure system.
It is not the only case that has big banks worried. Spinner and some of colleagues in the New York City area estimate they are dismissing 20 to 50 percent of foreclosure cases on the basis of sloppy or fraudulent paperwork filed by lenders.
Mortgage companies trying to foreclosure in the state of New York will face stiffer requirements
On Oct. 20, the state’s chief judge said attorneys for lenders will have to vouch personally for the accuracy of documents.
“We can’t have the process being a fraud,” New York State Chief Judge Jonathan Lippman said in announcing the new procedure. “It has to be real and based on credible information.”
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Source: http://www.washingtonpost.com/wp-dyn/content/article/2010/11/08/AR2010110806583.html
Documenting mortgage fraud could be your best defense to stop foreclosure then force negotiations
As this article has pointed out, sloppy or fraudulent paperwork is a legal basis to stop foreclosure. In states that require a court process to foreclosure on a property, the lender is required to verify information on the mortgage including who owns it. [See this post for the list of these states]
TIP: If you live in a non-judicial state like California, where you do not get a court hearing, I explain in this article a strategy you can use that will stop foreclosure in one day and buy you the time you need to document mortgage fraud to use against the lender/servicer.
In the same post, John Ennis, a lawyer in Rhode Island who defends homeowners, stated, “The fraud in paperwork for foreclosures is highly pervasive,” he said. “I would say 99 percent of the documents I am seeing have some sort of problem.”
How do you document mortgage fraud?
More and more homeowners and foreclosure defense attorneys are obtaining a forensic loan audit. A mortgage loan audit will uncover state and federal loan lending violations – that will give you ammunition to use against the mortgage lender, investor and/or loan servicer – to stop an impending foreclosure and bring them to the negotiating table.
Such lending laws include:
* (Truth in Lending Act (TILA)
* Real Estate Settlement Procedures Act (RESPA)
* Home Ownership and Equity Protection Act (HOEPA)
* FHA pre-foreclosure Requirements
* Unfair and Deceptive Practices (UDAP)
Ideally, forensic audits should be done by hand and reverse engineer the loan parameters to determine infractions of State Lending Fairness Guidelines and Predatory Lending laws. A manual audit by legal professionals can look for things that software can’t find.
Learn about a loan audit company that meets this standard from my research. They are a preferred service by defense attorneys because of the high quality of their audits that will stand up in court. Click Here to Find Out More
Technorati Tags: new york foreclosure dismissed, new york foreclosure dismissals, Judge Dana Winslow, Judge Karen Murphy, Judge Arthur Schack, Judge Peter Mayer, New York State Chief Judge Jonathan Lippman, onewest foreclosure dismissed, hsbc foreclosure dismissed, wachovia foreclosure dismissed
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