GMAC: Spectral Hand of "Robosigning"


On Friday, January 14, 2011, GMAC decided to cancel certain foreclosure actions in Maryland.

In a move that should place renewed emphasis on loss mitigation and further curtail the headlong rush to foreclosure processing, GMAC has decided to cancel foreclosure proceedings on 250 properties in Maryland. There have been reports of perhaps 1,000 foreclosures affected and possibly many more.

The ostensible cause of this retreat is due to defective affidavits, executed by one Jeffrey Stephan, a GMAC "robo-signer" who has attested to, among other things, the authenticity of foreclosure documents without having had any knowledge about them.

At a time in which foreclosure actions are expected to accelerate 20% in 2011, and 2.87 million properties were the subject of default notices, auctions, or repossession in 2010 (a 2% gain from 2009), and banks seized more than 1 million homes in 2010 (up 14% from 2009), the impact of the spectral hand of so-called "robosigning" has now apparently reached a new threshold.

One remedy for the servicing and foreclosure gridlock: a suggestion from FDIC's Sheila Bair to create a Foreclosure Claims Commission.

The article outlines aspects of the "Opening Address by FDIC Chairman Sheila C. Bair" at the "Summit on Residential Mortgage Servicing for the 21st Century," an event sponsored in DC by the Mortgage Bankers Association on January 19, 2011.

Mrs. Bair asserts a rather bold suggestion - one I have heard much about over the last few years, but now note that it has made its way into quotidian discourse: the creation of a foreclosure claims commission.

According to Mrs. Bair, this commission would be "modeled on the BP or 9/11 claims commissions, [and] could be set up and funded by servicers to address complaints of homeowners who have wrongly suffered foreclosure through servicer errors."

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Jonathan Foxx, Lenders Compliance Group | Attorney Advertising

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