Banks Are Still Cheating!

After all the hullaballoo last fall over the “robo-signing” scandal, you would think that banks had learned their lesson. You wouldn’t expect to see a big bank still forging documents so it could foreclose, would you? You would be wrong.  GMAC, one of the biggest of the big mortgage lenders/servicers, was recently caught-again!-doing that very thing.

Here’s what happened. The bank wanted to foreclose on a property in New York and, as often happens in these days of mortgage-backed securities, tranches and what have you,  did not have the requisite documents. Usually in a case like this, the bank goes to the original lender and asks permission to recreate the original documents. Even that sounds pretty murky. We consumers are required to have documentation for everything or–too bad for you–no dice. In this case for GMAC, though, it was even worse because the original lender, notorious subprime mortgage-maker Ameriquest, had gone out of business in 2007.

So, GMAC, not to be deterred, started seeking ways to craft the documents anyway. The problem, as stated by its own “Document Execution Team” head, Jeffrey Stephan, was that the bank did not have signing authority.  Several months passed and no solution appeared to help GMAC out of this legal “snag.”  Then, suddenly, GMAC had an answer. It filed a document with New York City authorities  stating  the delinquent Ameriquest loan had been assigned to it “effective” August 2005. The document was dated July 7, 2010, three years after Ameriquest had ceased to exist and was signed by Stephan, who was identified as a “Limited Signing Officer” for Ameriquest Mortgage Company. Soon after, GMAC filed for foreclosure.

Was it legal? No way was this little trick legal as it did not have signing authority from the defunct Ameriquest. In fact, it’s own paperwork giving itself authority was dated in 2010. Oops!

Guess what, GMAC? In New York it’s a felony to file paperwork “with intent to deceive”.  Already we know that GMAC was at the forefront of the fradulent “robo-signers” and, apparently, has not taken its lesson to heart because, according to ProPublica which discovered this particular case, this is just one of hundreds, if not thousands of similar work-ups arranged by GMAC so it can proceed to foreclosure, regulations and laws be damned.

Snagged in the act, so to speak, GMAC has not yet been able to foreclose on this home where the owner still resides. And, since apparently no one did much homework at the time of the demise of these sub-prime lenders, this will continue to plague not only GMAC, but also other mortgage servicers in their quest to foreclose.

How inconvenient it is that real estate laws exist! How much better if these silly little laws could be just wiped off the books and the banks allowed to do as they wish-foreclose without proper documentation.

That is the root of the cries for “less regulation”, “free market capitalism,” no “job-killing rules” and the like.   GMAC is not alone in its tricky interpretation of foreclosure laws.  Many banks have filed thousands of false foreclosures, knowing full well that few homeowners will contest them in court.  In fact, fewer than 4% of foreclosures are contested, though the stakes are very high for homeowners.   Recently, in Vermont a judge threw out a pending foreclosure from GMAC, based on a flawed signature emanating from the aforementioned Stephan who has admitted to signing up to 400 foreclosure notices a day, precipitating the foreclosure scandal.

Losing Your Home? Avoid These Scams

Let’s say you’re behind in your payments and the bank has just issued a Notice of Default [NOD], discussed in a previous post. Now, armed with this public information, just watch as the scammers head straight for you.

Here are some tricks to watch out for. A stranger approaches and offers to “save” your credit, your house or both. All you have to do is put your house in his name or pay mortgage payments to him or pay a fee and let him “take care” of the “problem”. Is that going to help? Most likely, no…

How about getting a second on the property if it doesn’t already have one? If the property has an NOD on it, probably the only lender willing to do it would be a crook, so there’s half the answer. The next part is, assuming you do get a second, you now owe more than you did before! If you couldn’t pay before, how are you going to pay now?

That doesn’t mean there are no reliable ways to attack your problem. The first thing to do when you realize you may not be able to make your payments is to IMMEDIATELY talk to your mortgage lender. Don’t wait until you’ve piled up several months of partial or no payments, IMMEDIATELY speak to your lender. If you are hesitant, call in a professional real estate broker whom you trust. Like me, for example [626-641-0346] or anyone you know, especially someone who has been in business at least 5 years and preferably 10.

Your lender may well work out a deal with you, especially these days. But, it’s true–some lenders really are not too smart or perhaps too untrusting, so you may have to bring in a professional or miss some payments. But, whatever you do–don’t let some stranger who comes to your house talk you into signing any papers. Speak to an attorney first. For anyone claiming to be a real estate agent or broker, you can look up any licensed person on the CA Department of Real Estate webpage to check. There you can find out if the person has a license and if there are complaints filed against the licensee.

If you believe you have been scammed, here are some useful resources to try:

L.A. County Department of Consumer Affairs
Real Estate Fraud & Information

800-973-3370

Federal Trade Commission (FTC)

File a complaint — https://rn.ftc.gov/pls/dod/wsolcq$.startup?Z_ORG_CODE=PU01

Federal Bureau of Investigation (FBI)

Read about mortgage fraud — http://www.fbi.gov/pub .. … 5.htm#d1
Locations of FBI’s Field Offices — http://www.fbi.gov/con .. … o/fo.htm
File a complaint — https://tips.fbi.gov/

Mortgage Bankers Association (MBA)

State-by-state list of resources — http://mbafightsfraud. .. … aud.html