The Ohio Attorney General and a Cleveland Judge are taking a stand against robo signers. The issue started when James Renfro's home was being foreclosed by Ally Financial Inc.'s GMAC Mortgage unit. Two affidavits submitted in Renfro's foreclosure case were signed by "Jeffery Stephan a GMAC employee who said in sworn depositions in Florida and Maine that he hadn't read thousands of affidavits he'd signed."
Ohio AG Richard Cordray asked Cuyahoga County Court of Common Pleas Judge Nancy Russo to not let GMAC off easy by allowing them to simply submit new documents without consequences. Cordray also indicated "This is just the first".
The judge in Cleveland set an accelerated schedule on Monday for evidence-gathering in the case, leading up to a Feb. 17 hearing on the integrity of the loan documents. Cordray's office plans to file a motion today asking to take part in the case and participate in so-called discovery.
Perjury by False Affidavit is a crime. A felony in fact. All these robo signers and the lenders and attorneys that knew what they were doing were committing a crime.
Perjury in civil cases seems to rarely be enforced but there are instances where it has. The local District Attorney would have to choose to prosecute.
I wonder if the Judge can also issue a contempt of court order? Knowingly submitting thousands of false affidavits seems like an attempt to impede the court's duties to this non legal expert.
The effect of this action in Ohio could have broad implications. Yesterday I posted how State Bank Regulators were denied help from the Office of the Comptroller of Currency when they wanted to look into the foreclosure operations of some of the largest banks. The State's inquiries could have exposed robo signer's three years ago.
State regulators and the OCC, which regulates national banks, frequently butt heads over jurisdiction. Unfortunately the OCC has prevailed when the States have tried to intervened. If the OCC didn't intervene on behalf of the banks back in the early part of the century we might not have a predatory lending or subprime problems in NJ.
If the State regulators work with their respective AG's or DA's, it's possible they can regain some control over what banks are allowed to do in their States by prosecuting lenders and other parties for the crimes they committed. The OCC can't overrule AG's and DA's.
This type of pressure can persuade mortgage servicers to work on modifying loans instead of pushing them to go to foreclosure. Servicers are just the middlemen between borrowers and investors. Because the housing bubble finally burst and house values decreased significantly it's often better for the investors if the borrower makes lower payments rather than foreclosing. From More on the Mortgage Mess:
Take, for example, underwater borrowers — the millions of Americans who owe more on their loans than their homes are worth. For them, the best modification is often to reduce the loan’s principal balance, lowering the monthly payment and restoring some equity. That could be best for investors too, because even reduced payments are often better than a foreclosure sale. A bank’s servicing fee is based on the principal balances of the loan — a strong incentive not to reduce a troubled borrower’s balance.
Thanks to Mike Konczal's post which helped me find that article.