Thursday, September 30, 2010

Foreclosure Fraud by Major Financial Institutions on a Massive Scale

Update Oct. 6, 2010: Ohio Attorney General Richard Cordray has filed a lawsuit against GMAC Mortgage, accusing it and its parent company of "filing fraudulent affidavits to mislead courts in hundreds of Ohio foreclosures."  This is part of the "robo-signing" of affidavits by many large mortgage banks.  The story is expanding faster than I can keep up with it!

Here a link to get more information:

Ohio Attorney General's law suit against GMAC Mortgage

[The original blog entry is below.]

When a bank forecloses on a consumer's home, a bank agent signs an affidavit testifying under oath as to who owns the mortgage and note. 

Typically, when you buy a house, the initial lender sells the loan to another bank.  The loan often gets transferred multiple times.  By the time a foreclosure is filed, the company enforcing the note is often one the consumer never even heard of (such as "Deutsche Bank Trust Company Americas, as Indenture Trustee for Saxon Asset Securities Trust 2006-3" -- yes, that's from an actual foreclosure case).  So, the company doing the foreclosing needs to prove to the court that it actually owns the mortgage, and has a right to foreclose.

Recently, some consumer lawyers have uncovered massive fraud in connection with the people signing these affidavits on behalf of foreclosing banks.  Through depositions (where the witness must answer questions under oath), these attorneys have found that the people signing these affidavits routinely ignore the law.  They are supposed to sign based on their personal knowledge, or based on their review of reliable business records.  But that's not what there were doing.

Some of the people signing these affidavits sit at a table and just start signing them, on a massive scale, without verifying the accuracy of the information.  In one case, a team of just eight people notarized 18,000 affidavits per month!  No oath was administered, as required by law.  The person signing was not even the person supplying the information -- it was the notary!  (The notary's involvement is supposed to be merely making sure that the document is signed and acknowledged properly, and to administer an oath to the person signing.)  In many cases, the notary was not even present when the document was signed!

You might think that these are just formalities, but keep in mind that folks are losing their homes based on these affidavits.

Two major banks recently announced a halt to thousands of foreclosures because this fraud has come to light.  But before you think the banks are "doing the right thing" keep in mind that they only put a stop to the foreclosures AFTER they got caught.  They knew this was happening, and it was part of their normal business practice!

Here's an article about JPMorgan Chase freezing foreclosures:
Washington Post - Chase 9-23-10

Ohio's Secretary of State, Jennifer Brunner, is in charge of regulating notary publics in Ohio.  As part of her duties (and to her credit), she has referred Chase Home Finance LLC to federal authorities for investigation into whether federal crimes have been committed.

Here's Secretary Brunner's letter to the U.S. Attorney:

Here's Secretary Brunner's press release:

Here's an article from the Washington Post:
Washington Post Article 9-23-10

Not to be outdone, a OneWest Bank executive admits that their team whips out about 24,000 affidavits a month without reading all of them, according to a Washington Post article.

This is a big development.  The foreclosing banks are thumbing their noses at the rules.  And it's not an isolated incident.

Greg Reichenbach
Bluffton, Ohio

Tuesday, September 28, 2010

NY Debt Collectors face felony charges

Sometimes debt collectors deserve to be sued when they act unfairly.  Other times, they need to be put out of business and sent to prison.

Here's a press release from the New York Attorney General on another Buffalo, NY collector who crossed the line, specifically targeting military consumers with their lies:


Greg Reichenbach
Bluffton OH

Thursday, September 16, 2010

Identity Theft from Public Records?

In Shreveport, Louisiana, someone left documents containing residents' private information unattended in a public area of a city building.  A potential identity thief could have simply swiped someone's social security number, address and other information, and opened a line of credit in their name.  Here's a local news story:

KSLA News report

The incident in Shreveport is (hopefully) an isolated incident.  But I see a lot of cases where this happens in Ohio courts.  When a creditor or debt collector files a collection law suit, the collection lawyer often files a copy of a contract or account statement as an attachment to the complaint.  These documents are filed with the clerk of courts.  Sometimes, these documents contain the consumer's social security number.  Court rules require that a social security number, and some other private information, be redacted (covered up) before filing with the court.

But I've seen a lot of cases where the collection lawyer files a social security number, un-redacted, with a clerk of court.  Normally, documents filed with a clerk of courts are a public record, available to anyone, without question.  Many clerks go out of their way to correct this when it happens.  But when a social security number or other private information is filed in court, this creates an unacceptable risk of identity theft.  Many consumer rights attorneys believe that filing a consumer's social security number with a clerk of courts is unfair and violates consumer protection laws.

If you've been sued on a debt, take a look at the complaint and all the attachments.  If your social security number or other private information appears, you should notify the attorney who filed it and demand that they redact it or have it sealed by the judge (ordered not to be disclosed without a court order).  Of course, you should also consult with an attorney familiar with debt collection.

For more information about identity theft, see:

FTC Identity Theft website

US Department of Justice Identity Theft website

Ohio Attorney General's ID Theft website

Greg Reichenbach
Bluffton OH