Attorneys ask courts to toss out foreclosure cases

Motions focus on 'robo-signers' with GMAC, Wells Fargo

November 01, 2010|By Jamie Smith Hopkins, The Baltimore Sun

Attorneys for Maryland homeowners are asking the courts to dismiss hundreds of foreclosure cases that depended on paperwork submitted by so-called robo-signers on behalf of mortgage servicers.

Civil Justice, a Baltimore nonprofit that specializes in foreclosure issues, made the request in motions filed last week in two cases. One motion asks that all Maryland foreclosure cases with documents signed by Jeffrey Stephan of GMAC Mortgage — including the Baltimore case in question — be tossed out. The other asks for the same treatment of all Maryland cases with documents signed by Xee Moua of Wells Fargo.

Both Stephan and Moua acknowledged in depositions that they signed hundreds of affidavits a day — attesting to information being used to foreclose on U.S. homeowners — without the legally required "personal knowledge" of that information. Quickly dubbed "robo-signing," the practice has prompted investigations by regulators and foreclosure freezes by mortgage servicers.

"It's another example of an attack on the integrity of the courts," said Peter A. Holland, co-counsel on the case and head of the consumer protection clinic at the University of Maryland School of Law. "These affidavits are integral to the honest operating of the foreclosure process."

GMAC declined to comment. Vickee Adams, a spokeswoman for Wells Fargo, said the company anticipates that it will defend itself "vigorously."

Phillip Robinson, an attorney and executive director of Civil Justice, believes the two employees from GMAC and Wells Fargo are each responsible for documents in hundreds of pending foreclosure cases in Maryland. If the courts allowed the mortgage servicers to repossess these homes and resell them, true ownership of the properties would be thrown into question because the cases were filed with "defective" paperwork, he said.

The motions contend that failing to dismiss the cases "would further harm our housing recovery by allowing years and years of litigation concerning the title to properties."

"We have a huge title problem that needs to be solved," Robinson said. "The only way to clear title is to dismiss cases and make [mortgage servicers] do it the right way."

Wells Fargo announced last week that it would submit "supplemental affidavits" in about 55,000 pending foreclosure cases where the original affidavits "did not strictly adhere to the required procedures" — though not in Maryland. The bank planned to do so in the 23 states in which foreclosure requires court hearings. Maryland does not, except when homeowners contest their cases.

GMAC temporarily suspended evictions and foreclosure sales in the same 23 states but has said it is moving forward on cases as reviews are completed. The company also said in October that it has hired legal and accounting firms to review its foreclosure procedures in every state.

Civil Justice's motions to dismiss were filed after Maryland's highest court approved an emergency rule. The court was reacting to national revelations of robo-signing as well as to local examples of attorneys directing others to reproduce their signatures on affidavits. Affidavits, the written equivalent of court testimony, must be signed by the people whose names they bear.

The new rule makes clear that judges aware of affidavit irregularities can order the person who signed the documents to appear in court and explain why the case should not be dismissed. The rule also authorizes courts to hire "special masters" to examine cases for problematic paperwork.

Robinson requested that he and his co-counsel be appointed special masters to find all the GMAC and Wells Fargo cases with affidavits signed by Stephan and Moua.

Homeowners who believe their cases were improperly filed should seek help from a nonprofit housing counseling agency, Robinson said. Those agencies — which can be found at mdhope.org — refer cases in need of legal assistance to Civil Justice and other attorneys with foreclosure expertise.

Pending cases with paperwork problems can be dismissed and refiled properly, Robinson said. He added that the really troubling question is what can be done about the homes — potentially thousands in Maryland — that have already been auctioned off in cases involving robo-signed or improperly signed documents.

Ten former homeowners called his office in recent days to ask for legal help because they believed the foreclosure documents filed in the cases against them had fraudulent signatures, Robinson said. He wonders how many other attorneys are hearing from people who want their former homes back.

"There's going to be years and years and years of litigation," he said.

jamie.smith.hopkins@baltsun.com

http://twitter.com/realestatewonk

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