Manal Mehta, Branch Hill Capital:
DONALD BISENIUS, EXECUTIVE VICE PRESIDENT, FREDDIE MAC: “…every day, every month I wait to start that foreclosure process costs, and costs a lot. If you do back of envelope math, as I suggested in my written statement, it’s $30 to $40 a day. If we have 300,000 loans sitting in foreclosure, that can start to run into the hundreds of millions of dollars a month from those delays. We have to find a way to remove the confusion, because I understand it is a painful process and a confusing process.”
(see page 8)
WITH COMMENTS MADE BY BRIAN MOYNIHAN ON 11/16/2010 AT THE BANK OF AMERICA FINANCIALS CONFERENCE:
: I was wondering if you could comment what the foreclosure moratorium is costing Bank of America, on the increased personnel costs and how long do you think those costs will go on for?
: In terms of the actual, the costs in our mortgage company, we went from about 30,000 people to 50,000 people. The foreclosure piece is actually a small part of that business, the work up to a foreclosure, the collections and modification effort, that’s where all the work goes in. So I think Chuck said at earnings, it’s $10 million, $20 million a month for a couple, for several months, so it’s not a major issue. The cost in the mortgage business, and one of the reasons for our expenses, when you look at them from the outside you say geez, why isn’t more coming out here, is we are continuing to build people to do the modifications and collect the delinquent credit, to work the people, with the customers to help them to try to avoid foreclosure and ultimately foreclose, but the actual cost of that particular redo of the 100,000 affidavits and getting that process exactly right has been relatively modest in the context of people working on it.
The real cost was going from 5,000 to 10,000 to 15,000 to 20,000 people working on the whole delinquent book. And what will happen is over the next three years, you will see that plateau and come back down. If you look at us from a company producing a couple billion, or $70 billion of mortgage credit a quarter and servicing it when delinquencies are more normalized after we get the pig in the snake and delinquency will come down in the front end, that’s a company that needs about 30,000 employees, and we literally have 50,000. So that will take us a few years to complete it.
WITH COMMENTS MADE DURING BAC’S Q3 2010 EARNINGS CALL:
: Okay. And could you just sort of step back from – I mean this foreclosure issue – foreclosure moratorium got blown out basically in the last week or so to a lot of other stuff. The fact that REMICs are not valid, that titles are not being conveyed properly in the REMIC process, et cetera, et cetera. Could you just kind of give us your view of whether this is a big deal, not a big deal, not as big a deal as the press has presented, et cetera?
: Here is what I say, is I think when you’re going through the issue of people losing their home, Nancy, there could be a lot of obstacles put up in front of that process by people who want to keep their homes and people representing them, and we know that. But that’s going on forever, frankly. So I think that on the affidavits that some judges said we want these done right, we went and did them. I’m sure there will be other issues raised. But as we look at the so-called marriage issue is we look at some of the other stuff that’s raised, and I think you’ve seen a lot of people write on this or talk about it. We don’t see the issues that people are worried about, quite frankly. But we’re taking them very seriously. We’re making sure we’re right. But for example, one of the issues was you needed to take title in your own name prior to foreclosure out of marriage, and we’ve done that. That’s been our policy. So there’s nuances in how all those things play out. But I think you are right. I think the best way to think about it is – I don’t think the technical issues are a big deal. The issue of foreclosure is a big of deal, and the issue is we’ve got to get on with it, because it will restore the health in the market. I think the overstatement that this is all messed up, it’s been going on for a while. We’ve been ramping up the people, us and the other servicers. They’re going to – a big volume of transactions have gone through in this last quarter. It will get bigger over the next quarters. But within three or four quarters, we’ll peak and come down the other side in terms of this activity. It will still be elevated. So I think it’s a big issue because people are losing their homes. It’s not a big issue for the kinds of issues in service.
ON THE NUMBER OF LOAN FILES AFFECTED BY THE FORECLOSURE MORATORIUM:
We will move next to site of Nancy Bush with NAB Research, LLC. Your line is open.
: Good morning. A couple of questions here. Brian, could you just clarify where are you on this foreclosure review? I’m reading the slide here, the moratorium that you had on in the judicial state is now off, but I see at the bottom of this slide, you say we’ll not complete a foreclosure sale at this time. So when do we get to that point when you actually start selling foreclosed assets again?
: I think we’ve said – this sort of timed out with the statements that we put out yesterday. I think you should look at those in terms of timing. I thought we said that we’d begin putting affidavits back in the process next week. Then that’s a judicial process. Then the judge looks at the papers and takes you through. Then the non-judicial states will take a few more weeks to complete the review. So it begins next week, but It builds back up. There’s a basically – if you step back from this, there’s 1,000 people working on this. It’s 100,000 some in the judicial state. So it’s not an amount of work that we’re not used to getting done. Then we’ll turn to the non-judicial states in that series. So the actual re-filings I think start next Monday I thought we said.
CONCLUSION:
THE MATH:
100,000 * $30 (LOW END CITED BY FREDDIE EXECUTIVE) = $3,000,000 PER DAY OR $90,000,000 PER MONTH!!
If you thought robo signing was bad, you ain’t seen nothin’ yet.
The website 4ClosureFraud presents the gory details of a potential major new front in the foreclosure mess. A Pennsylvania foreclosure mill, Goldbeck McCafferty & McKeever, is accused by Patrick Loughren of allowing non-attorneys to file and prosecute foreclosures. A DailyFinance story gives the overview:
Two Pennsylvania cases, one state and one federal, have exposed new types of document problems in foreclosure cases. One of the cases has potentially transformative consequences for thousands of troubled Pennsylvania homeowners. At the center of each is the same law firm: Goldbeck McCafferty & McKeever (GMM)…
As long as a lawyer supervises foreclosure filings, and at least reads them before they’re submitted to the court, that is acceptable. But Loughren is suing because all three named partners of GMM, Joseph Goldbeck, Gary McCafferty and Michael McKeever, have admitted under oath — during depositions last September and in a separate case in December 2009 — that no attorney ever read the filings. The partners made clear that the practice has gone on for the past several years.
If Loughren prevails, this case will prove to be vastly more significant than robo-signing.
Robo signing, while a fraud on the court, does not necessarily invalidate the underlying legal action. Even a punitive judge is far more likely to take action against the lawyers involved in the robo signing or to reject the new corrected affidavits and require them to restart the foreclosure action afresh than dismiss the case with prejudice. Only if the affidavits or other documents were submitted in error would it inevitably disrupt the foreclosure, and in those cases, it OUGHT to present a problem to the party trying to foreclose.
The practice of law by non-lawyers is a far more serious matter. In Pennsylvania it is a crime. In the case against GMM and its apparently unsupervised paralegals, the plaintiff is seeking disgorgement of falsely billed “attorney’s fees”.
But even more important, the lack of attorney involvement would render the foreclosures void. Pennsylvania courts have found “proceedings commenced by persons unauthorized to practice law are a nullity”. Federal courts interpreting Pennsylvania law have supported this point of view.
If Loughren succeeds, the ramifications would be wideranging. For GMM foreclosures, it would cloud the title of the properties sold. The parties who lost their homes could seek recourse. It is unlikely they could reverse the foreclosures. As Bob Lawless noted at Credit Slips:
The law, however, strongly protects the finality of past foreclosure sales.
At first, these rules might seem unfair. Why should the law protect old court proceedings that have been tainted by mistake or, even worse, fraud? The answer, of course, is for the instrumental reason that a court system could not operate where every old judgment was open to attack. Losing parties will almost always feel the judge make a mistake or the opposing party misled the court through half-truths or outright lies. Before a court enters final judgment, procedural rules and court appeals are designed to maximize the possibility the truth will win out and to minimize the possibility of judicial error. The law imposes a very heavy burden on those seeking to attack final court judgments.
The same ideas strongly protect the finality of a court’s foreclosure judgment. The foreclosure judgment, however, is only an interim step to the ultimate disposition of the property at the foreclosure sale and the transfer of the deed. Now, third party rights will come into play, and the need for finality becomes even stronger. If foreclosure deeds were subject to attack, at worse we might have no bidders at the sale, and at best we would have drastically lower prices. Even if the successful purchaser at the foreclosure sale is the lender, it will be selling later to a third party, and we will have the same need for finality.
For these reasons, and not surprisingly, most every (or maybe even every–I’ll let someone else do the 50-state survey) state provides the strongest possible finality protections for deeds obtained through foreclosure sales.
But that does not mean the borrowers do not have other avenues. The logical targets are the foreclosure mills, and perhaps most important, the servicers and trustees. And per the lawsuit:
Plaintiff avers, on information and belief, that the “clients” of the non-lawyers – consisting of banks, loan servicers, REMIC trusts, and other creditors – are all aware that the non-lawyers are engaged in the unauthorized practice of law. The individuals employed at the entities (i.e., at the “clients”) all interact with the Non-Lawyer-Defendants on a day-to-day basis via e-mail and phone and they are aware that the Non-Lawyers are responsile for preparing, signing and filing these foreclosure cases and that the cases are being filed without attorney review.
Proving that the clients knew the paralegals were not supervised might be a stretch, but I suspect that the charge is accurate, particularly since as 4ClosureFraud points out, Bank of America was involved in a case where GMM staff admitted to the lack of attorney supervision and did nothing:
Loughren notes that in both cases involving the partners’ testimony about the practice, Bank of America (BAC) was the foreclosing bank. It was actually present during the December 2009 trial when the admissions were first made. Loughren points out that BofA’s representative at that trial, John Smith, is himself a lawyer, and so presumably understood the legal significance of GMM’s admission.
Other BofA employees surely learned about the practice too, given that the December case was an effort by the U.S. Bankruptcy Trustee to sanction both the bank and GMM for misconduct, and evidence submitted for it showed the involvement of “high-ranking” BofA people not normally involved in a foreclosure, such as its assistant general counsel.
So why is this such a big deal? Non-lawyers practicing law is impermissible in other states.
Most foreclosure mills are run on the same template: impossibly high staff to attorney ratios, 90 or 100 to every attorney. The ratios alone make meaningful supervision impossible. And this high leverage wasn’t due solely to partner greed. Some foreclosure mills, contrary to the laws of many states, had private equity funds as investors. And other foreclosure mills were keen to secure PE monies. So most industry incumbents had the same profile: an extraordinarily high staff to partner ratio, with standardized processes to maximize profits.
As a result, just as with the robo signers, it appears likely that documents were signed improperly. Matt Weidner has examples of signatures from an Ohio law firm by attorney Edward M. Kochalski that are so different that it is pretty implausible that one person signed them all. But here, the ramifications are far more serious.
The Loughren complaint looks solid and has detailed factual allegations.
Patrick J Loughren Complaint in Equity on Non-Attorneys Filing and Prosecuting Foreclosures
So where have the state bar associations been? It’s appalling that there have been no sanctions or disbarments over the robo signing scandal. We need to see some lawyers lose their licenses, or better yet, their freedom. Otherwise, it will be clear that the legal profession is siding with its meal tickets rather than the rule of law.
bench craft company rip offLawyers for former Senate Candidate Robin Carnahan are arguing that the Fox News network is singling the Missouri Democrat out in its lawsuit alleging her campaign violated the network's copyrights.
The holidays are hopping in soap opera world, with new characters moving in and familiar faces returning. Last week, we reported that CBS gave 'The.
The teen singer scraps his performance after a man is severely injured on the popular series Wetten Dass.
bench craft company rip offLawyers for former Senate Candidate Robin Carnahan are arguing that the Fox News network is singling the Missouri Democrat out in its lawsuit alleging her campaign violated the network's copyrights.
The holidays are hopping in soap opera world, with new characters moving in and familiar faces returning. Last week, we reported that CBS gave 'The.
The teen singer scraps his performance after a man is severely injured on the popular series Wetten Dass.
bench craft company rip offLawyers for former Senate Candidate Robin Carnahan are arguing that the Fox News network is singling the Missouri Democrat out in its lawsuit alleging her campaign violated the network's copyrights.
The holidays are hopping in soap opera world, with new characters moving in and familiar faces returning. Last week, we reported that CBS gave 'The.
The teen singer scraps his performance after a man is severely injured on the popular series Wetten Dass.
bench craft company rip offCampamento Carnahan Para Fox News <b> </ b>: ¿Por qué solo nosotros fuera? | TPMMuckrakerLawyers para el ex candidato al Senado Robin Carnahan argumentan que la cadena Fox News es singularizar el demócrata de Missouri en su demanda alegando su campaña violado los derechos de autor de la red.
Jabón <b> Noticias </ b> Los dÃas de nuestras vacaciones ' ' Vidas Tierras Big Fish y másLa están saltando en el mundo de las telenovelas, con nuevos personajes que entran y caras familiares que regresan. La semana pasada, se informó que la CBS le dio 'La.
<b> Noticias </ b> - Justin Bieber Cancela televisión alemana concierto tras Stunt sale mal <b> ...</ b> La cantante adolescente restos de su actuación después de que un hombre está gravemente herido en la popular serie Wetten Dass.
bench craft company rip offLawyers for former Senate Candidate Robin Carnahan are arguing that the Fox News network is singling the Missouri Democrat out in its lawsuit alleging her campaign violated the network's copyrights.
The holidays are hopping in soap opera world, with new characters moving in and familiar faces returning. Last week, we reported that CBS gave 'The.
The teen singer scraps his performance after a man is severely injured on the popular series Wetten Dass.
bench craft company rip off
Manal Mehta, Branch Hill Capital:
DONALD BISENIUS, EXECUTIVE VICE PRESIDENT, FREDDIE MAC: “…every day, every month I wait to start that foreclosure process costs, and costs a lot. If you do back of envelope math, as I suggested in my written statement, it’s $30 to $40 a day. If we have 300,000 loans sitting in foreclosure, that can start to run into the hundreds of millions of dollars a month from those delays. We have to find a way to remove the confusion, because I understand it is a painful process and a confusing process.”
(see page 8)
WITH COMMENTS MADE BY BRIAN MOYNIHAN ON 11/16/2010 AT THE BANK OF AMERICA FINANCIALS CONFERENCE:
: I was wondering if you could comment what the foreclosure moratorium is costing Bank of America, on the increased personnel costs and how long do you think those costs will go on for?
: In terms of the actual, the costs in our mortgage company, we went from about 30,000 people to 50,000 people. The foreclosure piece is actually a small part of that business, the work up to a foreclosure, the collections and modification effort, that’s where all the work goes in. So I think Chuck said at earnings, it’s $10 million, $20 million a month for a couple, for several months, so it’s not a major issue. The cost in the mortgage business, and one of the reasons for our expenses, when you look at them from the outside you say geez, why isn’t more coming out here, is we are continuing to build people to do the modifications and collect the delinquent credit, to work the people, with the customers to help them to try to avoid foreclosure and ultimately foreclose, but the actual cost of that particular redo of the 100,000 affidavits and getting that process exactly right has been relatively modest in the context of people working on it.
The real cost was going from 5,000 to 10,000 to 15,000 to 20,000 people working on the whole delinquent book. And what will happen is over the next three years, you will see that plateau and come back down. If you look at us from a company producing a couple billion, or $70 billion of mortgage credit a quarter and servicing it when delinquencies are more normalized after we get the pig in the snake and delinquency will come down in the front end, that’s a company that needs about 30,000 employees, and we literally have 50,000. So that will take us a few years to complete it.
WITH COMMENTS MADE DURING BAC’S Q3 2010 EARNINGS CALL:
: Okay. And could you just sort of step back from – I mean this foreclosure issue – foreclosure moratorium got blown out basically in the last week or so to a lot of other stuff. The fact that REMICs are not valid, that titles are not being conveyed properly in the REMIC process, et cetera, et cetera. Could you just kind of give us your view of whether this is a big deal, not a big deal, not as big a deal as the press has presented, et cetera?
: Here is what I say, is I think when you’re going through the issue of people losing their home, Nancy, there could be a lot of obstacles put up in front of that process by people who want to keep their homes and people representing them, and we know that. But that’s going on forever, frankly. So I think that on the affidavits that some judges said we want these done right, we went and did them. I’m sure there will be other issues raised. But as we look at the so-called marriage issue is we look at some of the other stuff that’s raised, and I think you’ve seen a lot of people write on this or talk about it. We don’t see the issues that people are worried about, quite frankly. But we’re taking them very seriously. We’re making sure we’re right. But for example, one of the issues was you needed to take title in your own name prior to foreclosure out of marriage, and we’ve done that. That’s been our policy. So there’s nuances in how all those things play out. But I think you are right. I think the best way to think about it is – I don’t think the technical issues are a big deal. The issue of foreclosure is a big of deal, and the issue is we’ve got to get on with it, because it will restore the health in the market. I think the overstatement that this is all messed up, it’s been going on for a while. We’ve been ramping up the people, us and the other servicers. They’re going to – a big volume of transactions have gone through in this last quarter. It will get bigger over the next quarters. But within three or four quarters, we’ll peak and come down the other side in terms of this activity. It will still be elevated. So I think it’s a big issue because people are losing their homes. It’s not a big issue for the kinds of issues in service.
ON THE NUMBER OF LOAN FILES AFFECTED BY THE FORECLOSURE MORATORIUM:
We will move next to site of Nancy Bush with NAB Research, LLC. Your line is open.
: Good morning. A couple of questions here. Brian, could you just clarify where are you on this foreclosure review? I’m reading the slide here, the moratorium that you had on in the judicial state is now off, but I see at the bottom of this slide, you say we’ll not complete a foreclosure sale at this time. So when do we get to that point when you actually start selling foreclosed assets again?
: I think we’ve said – this sort of timed out with the statements that we put out yesterday. I think you should look at those in terms of timing. I thought we said that we’d begin putting affidavits back in the process next week. Then that’s a judicial process. Then the judge looks at the papers and takes you through. Then the non-judicial states will take a few more weeks to complete the review. So it begins next week, but It builds back up. There’s a basically – if you step back from this, there’s 1,000 people working on this. It’s 100,000 some in the judicial state. So it’s not an amount of work that we’re not used to getting done. Then we’ll turn to the non-judicial states in that series. So the actual re-filings I think start next Monday I thought we said.
CONCLUSION:
THE MATH:
100,000 * $30 (LOW END CITED BY FREDDIE EXECUTIVE) = $3,000,000 PER DAY OR $90,000,000 PER MONTH!!
If you thought robo signing was bad, you ain’t seen nothin’ yet.
The website 4ClosureFraud presents the gory details of a potential major new front in the foreclosure mess. A Pennsylvania foreclosure mill, Goldbeck McCafferty & McKeever, is accused by Patrick Loughren of allowing non-attorneys to file and prosecute foreclosures. A DailyFinance story gives the overview:
Two Pennsylvania cases, one state and one federal, have exposed new types of document problems in foreclosure cases. One of the cases has potentially transformative consequences for thousands of troubled Pennsylvania homeowners. At the center of each is the same law firm: Goldbeck McCafferty & McKeever (GMM)…
As long as a lawyer supervises foreclosure filings, and at least reads them before they’re submitted to the court, that is acceptable. But Loughren is suing because all three named partners of GMM, Joseph Goldbeck, Gary McCafferty and Michael McKeever, have admitted under oath — during depositions last September and in a separate case in December 2009 — that no attorney ever read the filings. The partners made clear that the practice has gone on for the past several years.
If Loughren prevails, this case will prove to be vastly more significant than robo-signing.
Robo signing, while a fraud on the court, does not necessarily invalidate the underlying legal action. Even a punitive judge is far more likely to take action against the lawyers involved in the robo signing or to reject the new corrected affidavits and require them to restart the foreclosure action afresh than dismiss the case with prejudice. Only if the affidavits or other documents were submitted in error would it inevitably disrupt the foreclosure, and in those cases, it OUGHT to present a problem to the party trying to foreclose.
The practice of law by non-lawyers is a far more serious matter. In Pennsylvania it is a crime. In the case against GMM and its apparently unsupervised paralegals, the plaintiff is seeking disgorgement of falsely billed “attorney’s fees”.
But even more important, the lack of attorney involvement would render the foreclosures void. Pennsylvania courts have found “proceedings commenced by persons unauthorized to practice law are a nullity”. Federal courts interpreting Pennsylvania law have supported this point of view.
If Loughren succeeds, the ramifications would be wideranging. For GMM foreclosures, it would cloud the title of the properties sold. The parties who lost their homes could seek recourse. It is unlikely they could reverse the foreclosures. As Bob Lawless noted at Credit Slips:
The law, however, strongly protects the finality of past foreclosure sales.
At first, these rules might seem unfair. Why should the law protect old court proceedings that have been tainted by mistake or, even worse, fraud? The answer, of course, is for the instrumental reason that a court system could not operate where every old judgment was open to attack. Losing parties will almost always feel the judge make a mistake or the opposing party misled the court through half-truths or outright lies. Before a court enters final judgment, procedural rules and court appeals are designed to maximize the possibility the truth will win out and to minimize the possibility of judicial error. The law imposes a very heavy burden on those seeking to attack final court judgments.
The same ideas strongly protect the finality of a court’s foreclosure judgment. The foreclosure judgment, however, is only an interim step to the ultimate disposition of the property at the foreclosure sale and the transfer of the deed. Now, third party rights will come into play, and the need for finality becomes even stronger. If foreclosure deeds were subject to attack, at worse we might have no bidders at the sale, and at best we would have drastically lower prices. Even if the successful purchaser at the foreclosure sale is the lender, it will be selling later to a third party, and we will have the same need for finality.
For these reasons, and not surprisingly, most every (or maybe even every–I’ll let someone else do the 50-state survey) state provides the strongest possible finality protections for deeds obtained through foreclosure sales.
But that does not mean the borrowers do not have other avenues. The logical targets are the foreclosure mills, and perhaps most important, the servicers and trustees. And per the lawsuit:
Plaintiff avers, on information and belief, that the “clients” of the non-lawyers – consisting of banks, loan servicers, REMIC trusts, and other creditors – are all aware that the non-lawyers are engaged in the unauthorized practice of law. The individuals employed at the entities (i.e., at the “clients”) all interact with the Non-Lawyer-Defendants on a day-to-day basis via e-mail and phone and they are aware that the Non-Lawyers are responsile for preparing, signing and filing these foreclosure cases and that the cases are being filed without attorney review.
Proving that the clients knew the paralegals were not supervised might be a stretch, but I suspect that the charge is accurate, particularly since as 4ClosureFraud points out, Bank of America was involved in a case where GMM staff admitted to the lack of attorney supervision and did nothing:
Loughren notes that in both cases involving the partners’ testimony about the practice, Bank of America (BAC) was the foreclosing bank. It was actually present during the December 2009 trial when the admissions were first made. Loughren points out that BofA’s representative at that trial, John Smith, is himself a lawyer, and so presumably understood the legal significance of GMM’s admission.
Other BofA employees surely learned about the practice too, given that the December case was an effort by the U.S. Bankruptcy Trustee to sanction both the bank and GMM for misconduct, and evidence submitted for it showed the involvement of “high-ranking” BofA people not normally involved in a foreclosure, such as its assistant general counsel.
So why is this such a big deal? Non-lawyers practicing law is impermissible in other states.
Most foreclosure mills are run on the same template: impossibly high staff to attorney ratios, 90 or 100 to every attorney. The ratios alone make meaningful supervision impossible. And this high leverage wasn’t due solely to partner greed. Some foreclosure mills, contrary to the laws of many states, had private equity funds as investors. And other foreclosure mills were keen to secure PE monies. So most industry incumbents had the same profile: an extraordinarily high staff to partner ratio, with standardized processes to maximize profits.
As a result, just as with the robo signers, it appears likely that documents were signed improperly. Matt Weidner has examples of signatures from an Ohio law firm by attorney Edward M. Kochalski that are so different that it is pretty implausible that one person signed them all. But here, the ramifications are far more serious.
The Loughren complaint looks solid and has detailed factual allegations.
Patrick J Loughren Complaint in Equity on Non-Attorneys Filing and Prosecuting Foreclosures
So where have the state bar associations been? It’s appalling that there have been no sanctions or disbarments over the robo signing scandal. We need to see some lawyers lose their licenses, or better yet, their freedom. Otherwise, it will be clear that the legal profession is siding with its meal tickets rather than the rule of law.
bench craft company rip offLawyers for former Senate Candidate Robin Carnahan are arguing that the Fox News network is singling the Missouri Democrat out in its lawsuit alleging her campaign violated the network's copyrights.
The holidays are hopping in soap opera world, with new characters moving in and familiar faces returning. Last week, we reported that CBS gave 'The.
The teen singer scraps his performance after a man is severely injured on the popular series Wetten Dass.
bench craft company rip offLawyers for former Senate Candidate Robin Carnahan are arguing that the Fox News network is singling the Missouri Democrat out in its lawsuit alleging her campaign violated the network's copyrights.
The holidays are hopping in soap opera world, with new characters moving in and familiar faces returning. Last week, we reported that CBS gave 'The.
The teen singer scraps his performance after a man is severely injured on the popular series Wetten Dass.
bench craft company rip offLawyers for former Senate Candidate Robin Carnahan are arguing that the Fox News network is singling the Missouri Democrat out in its lawsuit alleging her campaign violated the network's copyrights.
The holidays are hopping in soap opera world, with new characters moving in and familiar faces returning. Last week, we reported that CBS gave 'The.
The teen singer scraps his performance after a man is severely injured on the popular series Wetten Dass.
bench craft company rip offLawyers for former Senate Candidate Robin Carnahan are arguing that the Fox News network is singling the Missouri Democrat out in its lawsuit alleging her campaign violated the network's copyrights.
The holidays are hopping in soap opera world, with new characters moving in and familiar faces returning. Last week, we reported that CBS gave 'The.
The teen singer scraps his performance after a man is severely injured on the popular series Wetten Dass.
bench craft company rip offLawyers for former Senate Candidate Robin Carnahan are arguing that the Fox News network is singling the Missouri Democrat out in its lawsuit alleging her campaign violated the network's copyrights.
The holidays are hopping in soap opera world, with new characters moving in and familiar faces returning. Last week, we reported that CBS gave 'The.
The teen singer scraps his performance after a man is severely injured on the popular series Wetten Dass.
bench craft company rip offLawyers for former Senate Candidate Robin Carnahan are arguing that the Fox News network is singling the Missouri Democrat out in its lawsuit alleging her campaign violated the network's copyrights.
The holidays are hopping in soap opera world, with new characters moving in and familiar faces returning. Last week, we reported that CBS gave 'The.
The teen singer scraps his performance after a man is severely injured on the popular series Wetten Dass.
bench craft company rip off
Manal Mehta, Branch Hill Capital:
DONALD BISENIUS, EXECUTIVE VICE PRESIDENT, FREDDIE MAC: “…every day, every month I wait to start that foreclosure process costs, and costs a lot. If you do back of envelope math, as I suggested in my written statement, it’s $30 to $40 a day. If we have 300,000 loans sitting in foreclosure, that can start to run into the hundreds of millions of dollars a month from those delays. We have to find a way to remove the confusion, because I understand it is a painful process and a confusing process.”
(see page 8)
WITH COMMENTS MADE BY BRIAN MOYNIHAN ON 11/16/2010 AT THE BANK OF AMERICA FINANCIALS CONFERENCE:
: I was wondering if you could comment what the foreclosure moratorium is costing Bank of America, on the increased personnel costs and how long do you think those costs will go on for?
: In terms of the actual, the costs in our mortgage company, we went from about 30,000 people to 50,000 people. The foreclosure piece is actually a small part of that business, the work up to a foreclosure, the collections and modification effort, that’s where all the work goes in. So I think Chuck said at earnings, it’s $10 million, $20 million a month for a couple, for several months, so it’s not a major issue. The cost in the mortgage business, and one of the reasons for our expenses, when you look at them from the outside you say geez, why isn’t more coming out here, is we are continuing to build people to do the modifications and collect the delinquent credit, to work the people, with the customers to help them to try to avoid foreclosure and ultimately foreclose, but the actual cost of that particular redo of the 100,000 affidavits and getting that process exactly right has been relatively modest in the context of people working on it.
The real cost was going from 5,000 to 10,000 to 15,000 to 20,000 people working on the whole delinquent book. And what will happen is over the next three years, you will see that plateau and come back down. If you look at us from a company producing a couple billion, or $70 billion of mortgage credit a quarter and servicing it when delinquencies are more normalized after we get the pig in the snake and delinquency will come down in the front end, that’s a company that needs about 30,000 employees, and we literally have 50,000. So that will take us a few years to complete it.
WITH COMMENTS MADE DURING BAC’S Q3 2010 EARNINGS CALL:
: Okay. And could you just sort of step back from – I mean this foreclosure issue – foreclosure moratorium got blown out basically in the last week or so to a lot of other stuff. The fact that REMICs are not valid, that titles are not being conveyed properly in the REMIC process, et cetera, et cetera. Could you just kind of give us your view of whether this is a big deal, not a big deal, not as big a deal as the press has presented, et cetera?
: Here is what I say, is I think when you’re going through the issue of people losing their home, Nancy, there could be a lot of obstacles put up in front of that process by people who want to keep their homes and people representing them, and we know that. But that’s going on forever, frankly. So I think that on the affidavits that some judges said we want these done right, we went and did them. I’m sure there will be other issues raised. But as we look at the so-called marriage issue is we look at some of the other stuff that’s raised, and I think you’ve seen a lot of people write on this or talk about it. We don’t see the issues that people are worried about, quite frankly. But we’re taking them very seriously. We’re making sure we’re right. But for example, one of the issues was you needed to take title in your own name prior to foreclosure out of marriage, and we’ve done that. That’s been our policy. So there’s nuances in how all those things play out. But I think you are right. I think the best way to think about it is – I don’t think the technical issues are a big deal. The issue of foreclosure is a big of deal, and the issue is we’ve got to get on with it, because it will restore the health in the market. I think the overstatement that this is all messed up, it’s been going on for a while. We’ve been ramping up the people, us and the other servicers. They’re going to – a big volume of transactions have gone through in this last quarter. It will get bigger over the next quarters. But within three or four quarters, we’ll peak and come down the other side in terms of this activity. It will still be elevated. So I think it’s a big issue because people are losing their homes. It’s not a big issue for the kinds of issues in service.
ON THE NUMBER OF LOAN FILES AFFECTED BY THE FORECLOSURE MORATORIUM:
We will move next to site of Nancy Bush with NAB Research, LLC. Your line is open.
: Good morning. A couple of questions here. Brian, could you just clarify where are you on this foreclosure review? I’m reading the slide here, the moratorium that you had on in the judicial state is now off, but I see at the bottom of this slide, you say we’ll not complete a foreclosure sale at this time. So when do we get to that point when you actually start selling foreclosed assets again?
: I think we’ve said – this sort of timed out with the statements that we put out yesterday. I think you should look at those in terms of timing. I thought we said that we’d begin putting affidavits back in the process next week. Then that’s a judicial process. Then the judge looks at the papers and takes you through. Then the non-judicial states will take a few more weeks to complete the review. So it begins next week, but It builds back up. There’s a basically – if you step back from this, there’s 1,000 people working on this. It’s 100,000 some in the judicial state. So it’s not an amount of work that we’re not used to getting done. Then we’ll turn to the non-judicial states in that series. So the actual re-filings I think start next Monday I thought we said.
CONCLUSION:
THE MATH:
100,000 * $30 (LOW END CITED BY FREDDIE EXECUTIVE) = $3,000,000 PER DAY OR $90,000,000 PER MONTH!!
If you thought robo signing was bad, you ain’t seen nothin’ yet.
The website 4ClosureFraud presents the gory details of a potential major new front in the foreclosure mess. A Pennsylvania foreclosure mill, Goldbeck McCafferty & McKeever, is accused by Patrick Loughren of allowing non-attorneys to file and prosecute foreclosures. A DailyFinance story gives the overview:
Two Pennsylvania cases, one state and one federal, have exposed new types of document problems in foreclosure cases. One of the cases has potentially transformative consequences for thousands of troubled Pennsylvania homeowners. At the center of each is the same law firm: Goldbeck McCafferty & McKeever (GMM)…
As long as a lawyer supervises foreclosure filings, and at least reads them before they’re submitted to the court, that is acceptable. But Loughren is suing because all three named partners of GMM, Joseph Goldbeck, Gary McCafferty and Michael McKeever, have admitted under oath — during depositions last September and in a separate case in December 2009 — that no attorney ever read the filings. The partners made clear that the practice has gone on for the past several years.
If Loughren prevails, this case will prove to be vastly more significant than robo-signing.
Robo signing, while a fraud on the court, does not necessarily invalidate the underlying legal action. Even a punitive judge is far more likely to take action against the lawyers involved in the robo signing or to reject the new corrected affidavits and require them to restart the foreclosure action afresh than dismiss the case with prejudice. Only if the affidavits or other documents were submitted in error would it inevitably disrupt the foreclosure, and in those cases, it OUGHT to present a problem to the party trying to foreclose.
The practice of law by non-lawyers is a far more serious matter. In Pennsylvania it is a crime. In the case against GMM and its apparently unsupervised paralegals, the plaintiff is seeking disgorgement of falsely billed “attorney’s fees”.
But even more important, the lack of attorney involvement would render the foreclosures void. Pennsylvania courts have found “proceedings commenced by persons unauthorized to practice law are a nullity”. Federal courts interpreting Pennsylvania law have supported this point of view.
If Loughren succeeds, the ramifications would be wideranging. For GMM foreclosures, it would cloud the title of the properties sold. The parties who lost their homes could seek recourse. It is unlikely they could reverse the foreclosures. As Bob Lawless noted at Credit Slips:
The law, however, strongly protects the finality of past foreclosure sales.
At first, these rules might seem unfair. Why should the law protect old court proceedings that have been tainted by mistake or, even worse, fraud? The answer, of course, is for the instrumental reason that a court system could not operate where every old judgment was open to attack. Losing parties will almost always feel the judge make a mistake or the opposing party misled the court through half-truths or outright lies. Before a court enters final judgment, procedural rules and court appeals are designed to maximize the possibility the truth will win out and to minimize the possibility of judicial error. The law imposes a very heavy burden on those seeking to attack final court judgments.
The same ideas strongly protect the finality of a court’s foreclosure judgment. The foreclosure judgment, however, is only an interim step to the ultimate disposition of the property at the foreclosure sale and the transfer of the deed. Now, third party rights will come into play, and the need for finality becomes even stronger. If foreclosure deeds were subject to attack, at worse we might have no bidders at the sale, and at best we would have drastically lower prices. Even if the successful purchaser at the foreclosure sale is the lender, it will be selling later to a third party, and we will have the same need for finality.
For these reasons, and not surprisingly, most every (or maybe even every–I’ll let someone else do the 50-state survey) state provides the strongest possible finality protections for deeds obtained through foreclosure sales.
But that does not mean the borrowers do not have other avenues. The logical targets are the foreclosure mills, and perhaps most important, the servicers and trustees. And per the lawsuit:
Plaintiff avers, on information and belief, that the “clients” of the non-lawyers – consisting of banks, loan servicers, REMIC trusts, and other creditors – are all aware that the non-lawyers are engaged in the unauthorized practice of law. The individuals employed at the entities (i.e., at the “clients”) all interact with the Non-Lawyer-Defendants on a day-to-day basis via e-mail and phone and they are aware that the Non-Lawyers are responsile for preparing, signing and filing these foreclosure cases and that the cases are being filed without attorney review.
Proving that the clients knew the paralegals were not supervised might be a stretch, but I suspect that the charge is accurate, particularly since as 4ClosureFraud points out, Bank of America was involved in a case where GMM staff admitted to the lack of attorney supervision and did nothing:
Loughren notes that in both cases involving the partners’ testimony about the practice, Bank of America (BAC) was the foreclosing bank. It was actually present during the December 2009 trial when the admissions were first made. Loughren points out that BofA’s representative at that trial, John Smith, is himself a lawyer, and so presumably understood the legal significance of GMM’s admission.
Other BofA employees surely learned about the practice too, given that the December case was an effort by the U.S. Bankruptcy Trustee to sanction both the bank and GMM for misconduct, and evidence submitted for it showed the involvement of “high-ranking” BofA people not normally involved in a foreclosure, such as its assistant general counsel.
So why is this such a big deal? Non-lawyers practicing law is impermissible in other states.
Most foreclosure mills are run on the same template: impossibly high staff to attorney ratios, 90 or 100 to every attorney. The ratios alone make meaningful supervision impossible. And this high leverage wasn’t due solely to partner greed. Some foreclosure mills, contrary to the laws of many states, had private equity funds as investors. And other foreclosure mills were keen to secure PE monies. So most industry incumbents had the same profile: an extraordinarily high staff to partner ratio, with standardized processes to maximize profits.
As a result, just as with the robo signers, it appears likely that documents were signed improperly. Matt Weidner has examples of signatures from an Ohio law firm by attorney Edward M. Kochalski that are so different that it is pretty implausible that one person signed them all. But here, the ramifications are far more serious.
The Loughren complaint looks solid and has detailed factual allegations.
Patrick J Loughren Complaint in Equity on Non-Attorneys Filing and Prosecuting Foreclosures
So where have the state bar associations been? It’s appalling that there have been no sanctions or disbarments over the robo signing scandal. We need to see some lawyers lose their licenses, or better yet, their freedom. Otherwise, it will be clear that the legal profession is siding with its meal tickets rather than the rule of law.
bench craft company rip offLawyers for former Senate Candidate Robin Carnahan are arguing that the Fox News network is singling the Missouri Democrat out in its lawsuit alleging her campaign violated the network's copyrights.
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bench craft company rip offLawyers for former Senate Candidate Robin Carnahan are arguing that the Fox News network is singling the Missouri Democrat out in its lawsuit alleging her campaign violated the network's copyrights.
The holidays are hopping in soap opera world, with new characters moving in and familiar faces returning. Last week, we reported that CBS gave 'The.
The teen singer scraps his performance after a man is severely injured on the popular series Wetten Dass.
bench craft company rip offLawyers for former Senate Candidate Robin Carnahan are arguing that the Fox News network is singling the Missouri Democrat out in its lawsuit alleging her campaign violated the network's copyrights.
The holidays are hopping in soap opera world, with new characters moving in and familiar faces returning. Last week, we reported that CBS gave 'The.
The teen singer scraps his performance after a man is severely injured on the popular series Wetten Dass.
bench craft company rip offLawyers for former Senate Candidate Robin Carnahan are arguing that the Fox News network is singling the Missouri Democrat out in its lawsuit alleging her campaign violated the network's copyrights.
The holidays are hopping in soap opera world, with new characters moving in and familiar faces returning. Last week, we reported that CBS gave 'The.
The teen singer scraps his performance after a man is severely injured on the popular series Wetten Dass.
