Foreclosure System Fraught with Failure

Man's house wrongly sold in a foreclosure mistake. From the Sun Sentinel:

When Jason Grodensky bought his modest Fort Lauderdale home in December, he paid cash. But seven months later, he was surprised to learn that Bank of America had foreclosed on the house, even though Grodensky did not have a mortgage.

Grodensky knew nothing about the foreclosure until July, when he learned that the title to his home had been transferred to a government-backed lender. "I feel like I'm hanging in the wind and I'm scared to death," said Grodensky. "How did some attorney put through a foreclosure illegally?"

This is shocking - and must be an isolated incident, right?
Apparently not:

In Florida courts, which have been swamped with foreclosure cases for several years, mistakes "happen all the time," said foreclosure defense attorney Matt Weidner in St. Petersburg. "It's just not getting reported."

And the legal efforts required to resolve a foreclosure mistake are complicated. "Unwrapping it is like unwrapping Fort Knox," said Carol Asbury, a Fort Lauderdale foreclosure attorney. "It's very difficult."

It seems the foreclosure system is a disaster. From WaPo:

The nation's overburdened foreclosure system is riddled with faked documents, forged signatures and lenders who take shortcuts reviewing borrower's files, according to court documents and interviews with attorneys, housing advocates and company officials.

The problems, which are so widespread that some judges approving the foreclosures ignore them, are coming to light after Ally Financial, the country's fourth-biggest mortgage lender, halted home evictions in 23 states this week.

The stories coming to light are horrifying:

Ally Financial is now double-checking to make sure all documents are in order after lawsuits uncovered that a single employee of the company's GMAC mortgage unit, a 41-year-old named Jeffrey Stephan, signed off on 10,000 foreclosure papers a month without checking whether the information justified an eviction.

and

Beth Ann Cottrell said in a sworn deposition in May that she signed off on thousands of foreclosures a month for JPMorgan Chase even though she did not verify the accuracy of the information.

and

In Georgia, an employee of a document processing company, Linda Green, for years claimed to be executives of Bank of America, Wells Fargo, U.S. Bank and dozens of other lenders while signing off on tens of thousands of foreclosure affidavits. In many cases, her signature appeared to be forged by different employees.

Thousands of families were undoubtedly booted out of their homes because of these callous, incompetent individuals working on behalf of callous banks and assisting companies. The whole story is well worth reading.

We can hope that the new consumer protection agency being set up by Elizabeth Warren will tackle this, but it's hard to tell just yet what will fall under the purview of the new agency.


cross-posted at MainSt/workingamerica.org