From the Wall Street Journal:
He (the judge) ordered GMAC Mortgage, a unit of Ally Financial Inc., to pay the $8,000 fee of the Jacksons’ attorney after finding GMAC had filed false testimony, an affidavit in which a document signer, Margie Kwiatanowski, said she had personal knowledge of the details of loans such as the Jacksons’. GMAC declined to make Ms. Kwiatanowski available for an interview.
The judge also ordered GMAC to confirm that it had changed its policies to make sure anyone signing a document on its behalf read and fully understood the instrument. “Do not sign unless you have that comfort level,” a GMAC memo then advised employees. “Do not sign verifications on court pleading documents unless you have independently checked the facts.”
GMAC, which serviced the Jacksons’ loan but didn’t hold the mortgage, said: “As a servicer we try to avoid foreclosure whenever possible and work with the borrower on forbearance and home-preservation options before pursuing foreclosure.” The firm wouldn’t comment on cases still to be litigated.
GMAC also said it is reviewing all mortgages it services to make sure documents are properly prepared. It has never re-filed the case involving the Jacksons’ house.
The Jacksons, still living there, are seeking a settlement. “What we want to do is to take the foreclosure off the credit report and dissolve it completely, so we can refinance the home and start over,” said Ms. Jackson, 57.
Read the whole article. If anyone is so foolish (Barry Ritholtz?) as to think the desired remedy for a faulty affidavit filed in court is a corrected affidavit, this piece detailing several of the first cases to start the wave of fraudclosure should wake them up to what is really going on.
In each case, the borrowers are still in the house, years after having ceased paying. And the Jackson’s case (the example, above) says it all–they want to wipe the slate clean, and get a new mortgage. Well, of course they do.
I wish someone could tell me how the filing of a faulty affidavit, stating in error that you reviewed a mortgage file when you didn’t, has anything substantive to do with the relationship of borrower to lender? Does if matter if the affidavit stating the file had been reviewed is false if the information in the file is correct?
Nowhere in any of the cases in this article is the substantive information in the relationship between the borrower and lender questioned. Just whether a file had been properly reviewed or not. Isn’t the purpose of a proper review to ascertain whether the file has errors? If the file turns out not to have any errors, then how does it matter what an affidavit about its review says?
But in actuality, this whole fraudclosure scam is simply using lawyers and the court system to facilitate getting property from the hands of the party that values it less (the banks) and into the hands of the party that values it most (the foreclosee). People put a premium on the places where they live, beyond just their market values. Banks do not. Homes are more highly valued than are simply houses. Lawyers understand this, and are facilitating the transfer of property interests from the bank to the borrower. So long as the cost of the lawyers is lower than the difference between the bank’s and the borrower’s valuation of the premises, the transaction will proceed. The Coase Theorem tells us this.
But I think banks would do better to just renegotiate the loan directly with the homeowner, and let them continue to live there. Getting something is better than nothing, and nothing, or less, will be the bank’s return on a great many of these fraudclosure cases.