Shattered Dreams: Homeowner Protection

Sept. 14: A foreclosed home sits empty in a Homestead, Fla., neighborhood where half of the houses are empty and up for foreclosure.

Judge Jonathan Lippman, the Chief Judge for New York state was aware of the skyrocketing number of home foreclosures and the way banks were handling loan default files and wanted to do something about it. An increasing number, including the largest lender Bank of America, use robo-signers to designate which loans would be foreclosed.

“I thought it was astonishing, says Judge Lippman, “that when you are dealing with the roof over someone's head that this could be done so cavalierly...the consequences of the systemic failures is someone loses their home. This is very, very serious”.

According to Judge Lippman, the robo-signers often did not review documents in a file but signed off routinely without proper review. Attorneys General in all fifty states are investigating this and Judge Lippman wants to prevent it all together.

So with eighty thousands homes in foreclosure in New York state alone, Judge Lippman developed a new procedure requiring attorneys to sign a form confirming that they have personally reviewed the paperwork, including a loan file where a client, the lender, is claiming a homeowner is behind on their payments and in default. Without this document included in a court file, a foreclosure action can no longer be filed in New York. Other states have taken notice, and some have contacted the Judge and may soon implement the same or a similar requirement to better protect homeowners.

How did we get here in the first place?

Bert Ely is an analyst for the banking industry, and he says, “essentially what we have is a lot of sand in the gears right now, and what the mortgage servicers and lawyers are trying to do, along with the Court, is try to clean this mess up so that foreclosures that are inevidently going to happen will forward in a smoother manner that they have recently”.

Judge Lippman believes “as a court system we think we have an obligation to at least turn it around and say it to the people bringing these proceedings, make sure they are real, make sure they are credible and then we will determine who wins and who loses”.

Attorneys file the form under penalty of perjury which could mean disciplinary charges if they are found to have filed foreclosures that don't meet the requirements under the law.