Two recent actions, one that is likely the result of the other--show that lenders are thinking real hard before foreclosing on a property these days.
Recently a judge in Florida found that Wamu/Chase and their attorneys committed fraud on the Court by failing to disclose the identity of the current note holder of the promissory note upon which the foreclosure was based. In fact these folks apparently lead the Court to believe that Chase was the note holder based on an assignment that it knew was not valid.
Based on the Order of the above case, GMAC announced today that it was suspending foreclosure activity on all foreclosures it had pending in 23 states. Courts are showing far less tolerance for lender/servicers coming into court with arguments and documents (not the current note holder or the promissory note) that earlier allowed them to gloss over this fundamental issue. Courts in Kansas, Ohio, Georgia, Massachusetts, California and Florida have all sent a clear message the foreclosing lenders--the current note holder of loan that is being foreclosed upon must be named as a plaintiff in any foreclosure action and be prepared to produce a current first generation copy of the note to the court or the action will be dismissed.
Florida Attorney General William McCollum in August announced an investigation into three law firms that represent loan servicers in foreclosures. McCollum issued subpoenas to the firms, which are alleged to have submitted fraudulent documents to the courts in “numerous occasions” or failed to submit documents at all, according to an Aug. 10 statement from McCollum’s office.
“Thousands of final judgments of foreclosure against Florida homeowners may have been the result of the allegedly improper actions of the law firms under investigation,” the statement said.
Similar enforcement action appears to be warranted in other jurisdictions to ensure lenders and their servicing agents are held accountable for conduct that has escaped strict scrutiny for too long.
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