News coverage of the most recent foreclosure crisis abounds:
"The house that set off the national furor over faulty foreclosures is blue-gray and weathered." So begins a recent New York Times article - From a Maine House, a National Foreclosure Freeze on the small home in Maine that was the epicenter of the latest foreclosure crises. The owner of the the home contacted a nonprofit group, Pine Tree Legal Assistance, for help defending against foreclosure. Thomas A. Cox, a retired lawyer who formerly represented banks seeking to foreclose on properties but now works for Pine Tree trying to help owners avoid foreclosure, immediately noticed irregularities in the foreclosure documents. The article notes that Mr. Cox eventually won the right to depose the bank employee that signed the foreclosure documents, who "casually acknowledged that he had prepared 400 foreclosures a day for GMAC and that contrary to his sworn statements, they had not been reviewed by him or anyone else."
ALM has an interview with Mr. Cox about his experience at the center of the storm.
Ratings agency Fitch Ratings issued a statement predicting that "procedural defects in the judicial foreclosure process implemented by U.S. mortgage servicers may stall the foreclosure process in some states and ultimately lead to increased [losses for residential mortgage backed securities]."
The Washington Post ran an article For foreclosure processors hired by mortgage lenders, speed equaled money casting blame for the most recent foreclosure crisis on lenders who emphasized speed over accuracy during the foreclosure process. The article points out that large mortgage companies rewarded law firms and other companies for moving cases quickly through the foreclosure process, and imposed penalties for those that moved too slowly.
The Wall Street Journal article Niche Lawyers Spawned Housing Fracas reports on the lawyer who is being credited with first devising the strategy of defending against foreclosure by aggressively challenging the paperwork relied upon by lenders, and seeking discovery from lenders regarding this documentation.
Finally, Chief Judge Jonathan Lippman of the New York Court of Appeals, in his role as administrator of the New York court system, issued an edict requiring lawyers to file an affirmation that they have taken reasonable steps to verify the accuracy of papers they file to support residential foreclosures. Read the law.com story on the issue N.Y. Courts to Require Attorneys to Verify Foreclosure Papers.
Pete's Take 