Stop Those Foreclosures Now!

Stop those foreclosures now!

The Washington Post reported on September 22 that Ally Financial and some other large mortgage lenders did not follow proper procedures when processing foreclosures. An excerpt:

Some of the nation’s largest mortgage companies used a single document processor who said he signed off on foreclosures without having read the paperwork – an admission that may open the door for homeowners across the country to challenge foreclosure proceedings.

The legal predicament compelled Ally Financial, the nation’s fourth-largest home lender, to halt evictions of homeowners in 23 states this week. Now it appears hundreds of other companies, including mortgage giants Fannie Mae and Freddie Mac, may also be affected because they use Ally to service their loans.

As head of Ally’s foreclosure document processing team, 41-year-old Jeffrey Stephan was required to review cases to make sure the proceedings were legally justified and the information was accurate. He was also required to sign the documents in the presence of a notary.

In a sworn deposition, he testified that he did neither.

The reason may be the sheer volume of the documents he had to hand-sign: 10,000 a month. Stephan had been at that job for five years.

Wow. 10,000 a month for five yearsYou do the math.

Let me say that I have precious little sympathy for homeowners who lied about their incomes in order to obtain loans. Or buyers who bought, knowing there was no way they could afford the homes, but figured they could sell for a nice profit. Or for others who gamed the system. Or for others who are now walking away from homes that they’re fully capable of making payments on, just because the home’s lost value. If there was mortgage fraud, then prosecute them to the full extent of the law. (I do have sympathy who, through job loss, illness, or other tragedy beyond their control lost their homes.) Hopefully, I’m making myself clear.

But it looks like Ally may not have been playing by the rules, either. If that’s the case, then let’s go after them to the full extent of the law. And if that means stopping hundreds of thousands of foreclosures, then so be it. And if that means going after them for already completed foreclosures that can’t be undone, let’s do that, too.

Here’s a passage I love from Robert Bolt’s A Man for All Seasons about Sir Thomas Moore:

ROPER So now you’d give the Devil benefit of law!

MORE Yes. What would you do? Cut a great road through the law to get after the Devil?

ROPER I’d cut down every law in England to do that!

MORE (Roused and excited) Oh? (Advances on ROPER) And when the last law was down, and the Devil turned round on you-where would you hide, Roper, the laws all being flat? (He leaves him) This country’s planted thick with laws from coast to coast-man’s laws, not God’s-and if you cut them down-and you’re just the man to do it-d’you really think you could stand upright in the winds that would blow then? (Quietly) Yes, I’d give the Devil benefit of law, for my own safety’s sake.

It may be distasteful. It may be messy. It may stick in your craw. But if Ally failed to comply with the law or applicable regulations, then it must be held accountable.

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