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Oct 20

Mediation: Finding Order in The Chaos

Mediation Lifeline
Mediation: Finding Order in The Chaos 

Recently interviewed by the BBC, one Florida foreclosure attorney explains the foreclosure crisis in stark terms: “This is no different from Bernie Madoff signing documents for trades that didn’t occur…It is literally defrauding the legal system and it’s done with impunity on a systematic basis.”

DJSP LogoAmericans nationwide are now becoming familiar with phrases such as “robo-signers” and “foreclosure mills” that have slowed court cases, opened fraud investigations, and put mortgage lenders and their attorneys in the deep trouble. In fact, two more depositions of former employees of the Offices of David J. Stern corroborated with an earlier depo describing commonplace, automated document forgery as well as inappropriate gifts and relationships between David Stern and the top-ranking employees responsible for procuring these documents. As recently as Tuesday 3 board members of DJSP have offered their resignations and Stern has been replaced as Chairman of the Board.

Bank of America In the Hot Seat

Bank of America & GMAC/Ally has begun to unfreeze its foreclosure process. While they have not admitted any wrongdoing, BoA is now refiling over 102,000 foreclosures that will require a judge’s approval to proceed. However, as fellow foreclosure blogger Karl Denninger put it, “That’s an admission that 102,000 cases had falsely-sworn documents submitted to courts…here’s 102,000 felonies.” Additionally, the White House stated on Tuesday that they will hold banks accountable for these practices, and has now stated that on top of a joint investigation between all the state’s attorney generals, the Federal Housing Administration and other federal organizations are forming inter-agency taskforces to investigate. Congress has also announced hearings will begin November 18th. Will Bank of America be held liable for these admissions?

Angelo MoziloA still worse problem may be awaiting Bank of America and the major lenders. More fundamental than the “robo-signing” scandal is the slowly developing problem regarding the lenders’ improper use of mortgage backed securities (MBS), already well-known for causing the financial crisis of 2008. Recently holders of Countrywide MBS, now owned by BoA, have alleged that more than $47,000,000,000 worth of their investments were not properly assigned to their respective trusts, violating the service agreements and therefore, are eligible for buyback. (Countrywide CEO Angelo Mozilo recently avoided jail by settling with the SEC for $67 million, although Mozilo is said to have illegally pocketed at least $140 million.) As noted by activists and attorneys for some time now, potentially millions of mortgages in the last 5 years were not entered into their trusts and their chain of title were broken through their use of MERS (Mortgage Electronic Registration System). These widespread paperwork problems are threatening to hold lenders liable for misleading millions of borrowers AND investors, with trillions of dollars at stake! So far, BoA Ceo Brian Moynihan says the claims “don’t have the defects that people allege.”

Clean the Mess with Mediation

NPR writer Chris Arnold recently highlighted a struggling couple in Maine:

“John and Nancy Longval have had their income cut back in the recession. They still make enough money to pay the mortgage on their Maine home at a reduced interest rate, so they’ve been trying for two years to get a loan modification from CitiMortgage. “We’d send in the paperwork — I faxed everything they asked for — and the next day someone else would call and say, ‘We need more paperwork,’ ” Nancy Longval says. John Longval adds that after they submitted the paperwork, the lender would say it was lost. The couple says they could never talk to the same person. Nobody knew what they had discussed in their last conversation. The process dragged on with daily debt collection calls from the bank that went nowhere.”

“So the Longvals signed up for a new mandatory mediation program that the state of Maine started in 2010. The program requires lenders to send a representative with some authority to meet with homeowners and their lawyer or counselor, and try to work out a plan in person with a mediator. Chris Larosh, the Longvals’ housing counselor, says that after the Longvals requested mediation, “CitiMortgage responded within a couple of weeks with a permanent modification.”

More homeowners across Florida have been learning and taking advantage of court-mandated foreclosure mediation. The Department of Financial Services’ Florida Housing Help Workshops as well as internet bloggers have been eager to inform struggling borrowers of their rights under this new program. Find out more about mediation!

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