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Robert Trigaux

Tip of Titanic iceberg: GMAC Mortgage halts foreclosures to fix flawed process

21

September

gmac_mortgage_logo.jpgWake up and good morning. We are reminded again of one of the biggest messes -- and that's a competitive world -- in Florida these days: Banks and their law firms pushing to foreclose on homes without proper paperwork and without following court-mandated procedures. In this case, the screw-up belongs to Ally Financial Inc., whose GMAC Mortgage unit halted evictions in Florida and 22 other states amid allegations of mishandled affidavits. So says a Bloomberg News story.

Here's where the story gets interesting. 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, Bloomberg reports.

mathewweidneratty.jpgIn a related New York Times story today, St. Petersburg real estate attorney Matthew Weidner (photo, right), who has been relentlessly blowing the whistle on this very topic, said he interpreted GMAC’s actions as saying, "We have real liability here." On Weidner's blog, which appears on his web site, his Sept. 20 entry is headline Bombshell - GMAC Suspends Actions on Foreclosures!

Weidner told the newspaper 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 law firm seeking to withdraw the affidavits is Florida Default Law Group, based in Tampa. Ronald R. Wolfe, a vice president at the firm, did not respond to the New York Times. The firm already is under investigation by the Florida attorney general and mentioned prominently in this Tampa Tribune piece.

In addition, the Florida's attorney general is investigating three law firms for unfair and deceptive practices that represent loan servicers in foreclosures and are alleged to have submitted fraudulent documents to the courts. They are the Law Offices of Marshall C. Watson, P.A. in Fort Lauderdale; Shapiro & Fishman, LLP in Tampa and Boca Raton; and the already infamous Law Offices of David J. Stern, P.A. (See more on Stern's "foreclosure mill" tactics here and defended here.) The law firms were hired by loan servicers to begin foreclosure proceedings when consumers were in arrears on their mortgages.

States the Bloomberg story: "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," Patricia Parker, an attorney at the Jacksonville law firm, Parker & DuFresne, told Bloomberg. "This could be huge."

No kidding. For a closer look at Florida's court fiasco, check out this New York Times piece, headlined Florida's High-Speed Answer to a Foreclosure Mess.

-- Robert Trigaux, Times Business Columnist

[Last modified: Tuesday, September 21, 2010 8:08am]

    

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