Ohio state attorney general sues GMAC and other banks for "$10 billion"

tomterm8

From his statement:

The actions by lenders that I am talking about today show gross disregard for the integrity of this legal process and for the private property rights of homeowners.
We are talking about lenders and servicers treating foreclosure not as a legal proceeding that deserves the careful attention of the property owner, the servicer of the mortgage and the courts, but rather as a production line making widgets, that accords foreclosures little deliberate accuracy that the law – or for, that matter, basic courtesy and common sense – mandates be given to such serious matters.”

The legal action is because GMAC and other banks are alleged to have filed tens of thousands of incorrectly issued affidavits in order to reposess homes.

more on this at naked capitalism:

http://www.nakedcapitalism.com/2010/10/ohio-attorney-general-sues-gmac-over-improper-affidavits-maximum-damages-exceed-10-billion.html .

The $10 billion is an estimate of how many cases have been filed using the disputed procedure, so should be taken with a large shovel of salt.

Conrad

I agree with our Mayor here but in the end it will be Taxpayers pciking up the bill as the Banks will keep on opening thier palms for bailouts.

Generali

Au bouche de cheval:

http://www.ohioattorneygeneral.gov/getdoc/1d7fa652-b928-425d-8321-03bde9d7db3e

According to the lawsuit filed today in Lucas County Common Pleas Court, GMAC and its employees committed fraud on Ohio consumers and Ohio courts by signing and filing hundreds of false affidavits in foreclosure cases. The fraud came to light after a GMAC employee, Jefferey Stephan of Sellersville, Pa., testified in a foreclosure case out of Maine that from 2006 to 2010, he signed thousands of affidavits without verifying the content.


Through the lawsuit, Cordray is asking the court to grant a preliminary and permanent injunction preventing GMAC/Ally from proceeding to foreclose in any pending Ohio case or allowing the property to be sold. Cordray is also asking for civil penalties of up to $25,000 for every violation of Ohio's Consumer Sales Practices Act and for consumer restitution.


As a result of similar reports regarding depositions taken by a JPMorgan Chase and Bank of America employees, Cordray today also requested that JPMorgan Chase and Bank of America suspend moving toward a judgment, sale, eviction or property transfer involving any foreclosure case with affidavits signed by those employees. Cordray also sent letters to Wells Fargo and Citibank, requesting that the banks meet with his office to discuss foreclosure affidavit procedures.


According to recent statistics from the Ohio Supreme Court, the wave of foreclosures in Ohio has shown no signs of receding. In the first half of this year, there have been 45,930 foreclosures in Ohio, which is ahead of last year's record-breaking pace. From 1995-2009, Ohio foreclosure filings quadrupled.

The interesting thing to me is that if signing off on affidavits required before starting foreclosure proceedings without reading the file is a significant breach then it is quite possible that pretty much all of the foreclosure cases are fraudulent. That would mean $1,000,000,000 being sought for this year alone in a state which only has about 3.5% of the population of the US living in it. Presumably, national companies like JP Morgan, Citibank and GMAC operate in much the same way across the country and that $1,000,000,000 comes out at a very big number if you scale it up across the country.

Obviously there are an awful lot of ifs and buts in there, not least of which is that all that has happened so far is a couple of letters have been sent. Just out of interest, does anyone know what the outcome was the last time the US banks engaged in dodgy practices regarding the housing market?

Letters sent to the banks:

http://www.ohioattorneygeneral.gov/GMACBankLetters

eg:

Dear Mr. Stein:
I am writing to you about the announcement Chase made on September 29 that it is halting or delaying a number of foreclosures in 23 states, including Ohio. According to Chase’s spokesperson, this action stems directly from the acknowledged fact that Chase employees have signed and filed faulty affidavits in foreclosure cases attesting to the ownership or default status of loans when in fact they lacked personal knowledge as stated under oath in the affidavits filed with the courts. Media reports indicate that this announcement may affect at least 56,000 foreclosures nationwide. While we recognize that delaying foreclosures is an important first step, Chase’s announcement did not elaborate on the nature of the delay and what actions that Chase was taking to ensure that Ohio homeowners are not divested of their private property rights through improper procedures that would appear to amount to a fraud upon our courts.
As Ohio’s chief law enforcement officer, I am deeply troubled that Chase may have routinely filed affidavits that would not have complied with the basic and clear requirements of Ohio law. For example, see a deposition taken in Columbus, Ohio of Chase employee Beth Anne Cottrell on May 17, 2010, in which Ms. Cottrell states that she signs thousands of affidavits a month, but often does so without having personal knowledge of the information contained in the affidavit, despite her sworn statement to the contrary made in the affidavit itself.
To ensure that the integrity of Ohio’s court system is respected and that Ohio’s homeowners are not being stripped of their property rights without proper proof or adequate justification, I request that Chase meet with my office to discuss the problem and the steps Chase is taking to remedy it. In particular, I request that Chase suspend moving towards a judgment, sale, eviction, or transfer of REO property involving any foreclosure case for which Beth Cottrell signed an affidavit or anyone else “robo-signed” an affidavit in similar circumstances where the affidavit was falsified or otherwise is in error about whether the signer could truthfully attest to having personal knowledge of the circumstances and information presented therein. I further request that Chase provide my office with a list of all affidavit signers for which it has reason to believe that the process was flawed in the same manner, as well as a list of all Ohio loans it is
servicing that are in foreclosure. The list of loans should also identify which proceedings have been halted thus far in connection with the September 29 announcement.

Mr_Mumble

Senate Shockingly Passes Bill That Could Bail The Banks Out Of Foreclosure-Gate

The hottest story right now in the banking industry is foreclosure-gate, as various firms like Bank of America, JPMorgan, and GMAC have halted foreclosures upon realizing that the paperwork behind them has been shoddy at best.

The fallout -- which has already invited investigations from state AGs -- could throw a major wrench into what's already been a costly, tedious, and economically damaging process.

Seemingly out of nowhere, the Senate passed a bill that could get the banks out of this mess.

Funny how this law gets through the senate after languishing for six months. Can't have anything to do with senators desperate for campaign money

Mr_Mumble

*Bump*

Obama killed the above senate bill last week

Despite this story being around a couple of weeks its only now financial markets are taking real notice (they were too entranced by Helicopter Ben's money drop?!):

Bank stocks slide on foreclosure fears

Wells Fargo, Bank of America, Citi shares hurt by widening scandal

BOSTON (MarketWatch) — Shares of large-cap banks Wells Fargo & Co., Bank of America Corp. and Citigroup Inc. slid more than 4% Thursday on growing concerns about the “robo-signing” foreclosure scandal.

Financials were the worst-performing sector as the Financial Select Sector SPDR Fund (XLF 14.49, -0.37, -2.48%) fell roughly 2%.

On Wednesday, officials in all 50 states unveiled a joint investigation into mortgage companies’ conduct during foreclosure proceedings. Some big banks like Bank of America (BAC 12.51, -0.79, -5.91%) and J.P. Morgan Chase & Co. (JPM 38.23, -1.62, -4.05%) have placed moratoriums on foreclosures. See related story on the foreclosure fraud scandal.

CDS rates for Bank of America are at their highest since July 2009 (still way below Ireland or Portugal of course!)