GMAC and the Foreclosure Problem: Has the Dam Finally Broken on Fraudulent Foreclosures

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Initial reports were that GMAC had stopped foreclosures in 23 states.  GMAC then issued the following response:

     "Recent reports have stated that GMAC Mortgage instituted a moratorium on all residential foreclosures in 23 states," the statement said in response to media reports saying that the lender had imposed the moratorium. "This is not true. In fact, all new residential foreclosures are continuing in the ordinary course of business with no interruption in our usual practice."

What Gives and Where is this Going!!!!!!

Various accounts have described how one officer of GMAC Mortgage’s servicing unit has admitted during testimony that, while he signs thousands of affidavits each month in order to affect steps in the foreclosure process, he does not have personal knowledge of certain critical facts in the affidavit which he asserts to be true.

Why is this a problem?  A supporting or opposing affidavit must be made on personal knowledge, set out facts that would be admissible in evidence, and show that the affiant is competent to testify on the matters stated. 

What are the implications of the GMAC Mortgage actions and how serious are the problems? GMAC Mortgage and similarly situated parties contend that there is nothing fundamentally wrong with their foreclosure process and this is simply a procedural issue which is readily curable. In contrast, advocates for borrowers in foreclosure have indicated that the questionable affidavits are only the “tip of the iceberg” and represent the beginning of the end for the foreclosure mills and the banks, servicers and trustees who have been seeking to exercise foreclosure under false pretenses. The heightened scrutiny and increasing interest by state attorneys general means we may finally get to the bottom of a long-running “he said-she said” dispute.

NOT SO FAST

Consumer protection attorneys have for years claimed that finance companies and their servicers  have been playing fast and loose with the rules.  Specifically, there are have been allegations that almost all foreclosures were tainted by assignments and alonges (the documents that transfer ownership) that were fraudulently signed, not at the time of assignment, but to effectuate the foreclosure.

SECURITIZATION MAKES MATTERS WORSE

Think of it like this.  During the boom, mortgages are being pumped out faster than oil in the gulf coast.  Those mortgages were being assigned faster than Bernie Madoff could steal money and being cut into pieces faster than an onion on a Ginsu knife commercial.  Those pieces were being securitized and resold on Wall Street.  No one thought that loans for 120% of the value of the property would ever go down and anyone would ever default.  They were making money so fast they never thought they might have to comply with the law and actually LEGALLY assign the paper.

So, the paper ends up in securitized trusts (a legal entity) governed by New York trust law, i.e. legal requirements must be met before it goes into the trust--like actual assignments.

HERE COMES TROUBLE

Then one day someone has to foreclose.  In order to foreclose you must prove that you actually own the paper.  

MAKE IT UP AS YOU GO

In order to get paid, servicers must actually foreclose on the property.  Many lawyers have argued that these entities literally had people sit in rooms all day and sign affidavits and assignments so that the properties could be foreclosed. 

IS THIS THE END OR JUST THE BEGINNING

GMAC Mortgage and other banks may hope to sell the story line that its problem is limited to a lone “rogue servicing officer.” Unfortunately, the servicing officer in question indicated in his testimony that he prepared 10,000 or more affidavits per month. 

IF YOU BELIEVE THIS WAS NOT AND INSTITUTIONAL PROBLEM, I HAVE A PYRAMID SCHEME I WOULD LIKE TO SELL YOU.

Chris Hellums is the managing shareholder of Pittman Dutton & Hellums.  He is currently litigating wrongful foreclosure cases.  He can be reached toll free at 866-515-8880 or by e-mail at Chrish@pittmandutton.com

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• GMAC Mortgage Statement on Speculation Related to Foreclosure Moratorium (prnewswire.com)

CHINESE DRYWALL CLAIMS STILL BEING ACCEPTED IN MDL

Lead Counsel, Arnold Levin, has decided that the Plaintiff Steering Committee may file additional interventions or complaints against Knauf, Taishan, and any other identifiable Chinese manufacturer. Knauf, one of the largest manufacturers of defective Chinese Drywall, has accepted service for home owners in the MDL litigation out of New Orleans.


The toxic Chinese drywall plaguing most of the Gulf Coast was used in the construction of homes in the Birmingham area. The drywall was imported into the U.S between 2005 and 2008 and used particularly in 2006, when there was a shortage of building supplies after several hurricanes and during the building boom. The toxic material is known to emit a sulfuric compound that corrodes metals and may cause upper respiratory problems. While a sulfur odor in a home may indicate the product was used, the main indicator would be if the homeowner has had to replace air conditioning coils more than once over the past few years. Also, home owners can look on the back of the drywall, possibly in the attic, to see if it has any Chinese markings such as “Knauf-Tianjin” or is stamped “Made in China.”

There are many reasons to choose to litigate through the MDL against Knauf. U.S. District Court Judge Eldon Fallon ordered Knauf Plasterboard Tianjin Co. Ltd., a committee of attorneys representing plaintiffs and certain drywall installers, suppliers and insurers to participate in mediation in New Orleans in August. Fallon wanted the parties to discuss the "global resolution of claims," according to an entry in the court record. Fallon "encouraged all parties to consider global settlement rather than individual resolution of claims." Fallon has ordered the same parties to participate in mediation again in September. This is very promising for homeowners affected by Chinese drywall.

If you believe you have defective Chinese drywall in your home and experienced repeated AC coil failures, electrical issues, appliance failures, tarnished fixtures, sulfur odors in your home and/or suffer with respiratory issues, nose bleeds, headaches and or unexplained rashes, please contact me.

FOR A FREE CASE EVALUATION, CONTACT BOOTH SAMUELS AT BOOTHS@PITTMANDUTTON.COM OR CALL TOLL FREE 1-866-515.8880.