"Lawyers around the country are now looking at this case as a model for further litigation," writes Mr. Streitfield."
Billion-Dollar Foreclosure Mess Took Root at $75K House - Developments - WSJ
How much will the foreclosure mess cost? Estimates are still forming, writes Mark Gongloff in Friday’s WSJ.
Some $154 billion in mortgages could be affected by foreclosure delays, according to an estimate this week by Laurie Goodman, senior managing director at mortgage-bond trader Amherst Securities Group LP in New York.
Morgan Stanley trading-desk analyst Greg Gore estimated in a conference call on Tuesday that as much as $134 billion of mortgage bonds held by the nation’s four biggest banks could ultimately be affected by foreclosure delays.
That’s a lot of money for a problem that the NY Times traces back to a $75,000 house in Denmark, Me. The article, by David Streitfield, looks at a home Nicolle Bradbury bought seven years ago; a tiny little house near the New Hampshire border.
A couple of years ago, Ms. Bradbury lost her job and could no longer make the $474 monthly payments. But her run-of-the-mill foreclosure became anything but when it landed in front of a lawyer at a nonproift group who had worked in the foreclosure industry for years–helping to foreclose on homes that small business owners had put up as collateral.
The lawyer, Thomas Cox, succeeded in getting the deposition of a GMAC ‘robo-signer’ who admitted that he didn’t read through the 400 foreclosures he signed each day.
Mr. Cox then laid out in a court filing what he’d heard from robo-signer Jeffrey Stephan:
When Stephan says in an affidavit that he has personal knowledge of the facts stated in his affidavits, he doesn’t. When he says that he has custody and control of the loan documents, he doesn’t. When he says that he is attaching ‘a true and accurate’ copy of a note or a mortgage, he has no idea if that is so, because he does not look at the exhibits. When he makes any other statement of fact, he has no idea if it is true. When the notary says that Stephan appeared before him or her, he didn’t.
The judge hearing Ms. Bradbury’s foreclosure case was persuaded. He rejected GMAC’s request for a foreclosure without trial. Even when given the chance to file amended documents, the judge noted, GMAC still didn’t even include the actual street address of the Maine house.
Lawyers around the country are now looking at this case as a model for further litigation, writes Mr. Streitfield.
Don Saunders of the National Legal Aid and Defender Association tells the New York Times: “This ammunition will be front and center in thousands of foreclosure cases.”
A $75K bullet to take down a billion-dollar industry?
Hold on to your seats! We are in for ONE long ride!