Judges Fight Back!
By now, everyone has heard of “robo signing” parties at the law firms that are representing the banks. Employees were signing documents in droves having no clue as to the validity of the documents. Surojit Chatterjee reports that the chief judge for the New York State Court of Appeals is holding the lawyers that are representing the lenders accountable for the accuracy of the documents that they are presenting. In concept, this is a great first step. In practice, it will be interesting to see if the court holds the individual lawyers accountable for their actions. While I would like to believe that they will, the proverbial proof will be in the pudding!
NY chief judge orders lawyers to verify foreclosure paperwork
By Surojit Chatterjee
The chief judge of New York has directed lawyers handling foreclosure cases for banks and servicers in the state to verify the paperwork and ensure that the procedure is followed properly.
According to Jonathan Lippman, the chief judge of the New York State Court of Appeals, the courts were appalled to find that big banks were lax in handling mortgage documents and several lenders and servicers had hired staff who did not properly review files or submitted false statements to evict delinquent borrowers.
Lippman said the state courts are concerned that many banks were using ‘robo-signers’ (dubbed so because of the speed with which they signed thousands of foreclosure affidavits a month without reviewing them carefully), a practice that led to unfair eviction of thousands of homeowners.
The state courts, the judge said, were seeing “systemic structural failings” in the foreclosure process and are concerned about the “nationwide crisis.”
Hence, Lippman said, the courts have decided to make lawyers, who represent the plaintiffs in residential foreclosure actions, responsible for the accuracy of the underlying documents.
The lawyers, the judge said, must file signed affirmations ( click here ) that they took “reasonable” steps to verify the accuracy of the documents.
“We cannot allow the courts in New York State to stand by idly and be party to what we now know is a deeply flawed process, especially when that process involves basic human needs – such as a family home – during this period of economic crisis,” Lippman said in a statement.
Though in New York, lawyers already have an obligation (under the Rules of Professional Conduct) to ensure that the documents they present to the court are valid, the new rule, Lippman said will hold the lawyers more accountable.
“This new filing requirement will play a vital role in ensuring that the documents judges rely on will be thoroughly examined, accurate, and error-free before any judge is asked to take the drastic step of foreclosure,” the judge said, adding that the rule, that was passed on October 20, comes into immediate effect.
In New York, which is one of the 23 states where court approval is needed to foreclose, there are nearly 80,000 foreclosures actions pending in the courts.
Earlier this week, Maryland’s Court of Appeals approved a measure that outlines howstate judges can review foreclosures and stop them if documents are invalid.
The measures imposed by New York and Maryland came close on the heels of a scathing criticism launched by the attorney generals of all 50 U.S. states and the District of Columbia who are jointly investigating whether mortgage companies have violated state laws.
The attorney generals said the “corner-cutting and slipshod paperwork (by lenders) are troubling” and may impose financial penalties “where appropriate.” They also said they might require lenders to change the way they process mortgages and foreclosures.
The banks accused of hiring “robo-signers” include JPMorgan Chase & Co, Wells Fargo & Co., Ally Financial Inc. (formerly GMAC) and Bank of America. These banks froze all foreclosures nationwide while they reviewed their filings for errors. However, earlier this week Bank of America and Ally Financial Inc. resumed foreclosure proceedings.