Thursday, September 23, 2010

Dysfunctional US Legal & Property System

You think you own what you "own". You think that when you pay for something and do all the paperwork it is "yours". But not in the US. Not with a legal and banking and government title system in disarray. The banking system collapsed in October 2008. And the government title system is teetering on collapse. Evidence? Read this bit from the Sun Sentinel:
When Jason Grodensky bought his modest Fort Lauderdale home last 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?"

Bank of America has acknowledged the error and will correct it at its own expense, said spokeswoman Jumana Bauwens.
And there is a bit more detail here:
Grodensky said he spent months trying to figure out what happened, but said his questions to Bank of America and to the law firm Florida Default Law Group that handled the foreclosure have not been answered. Florida Default Law Group could not be reached for comment, despite several attempts by phone and e-mail. Grodensky said he has filed a claim with his title insurance company, but that, too, has not resulted in any action.

It wasn't until last week, when Grodensky brought his problem to the attention of the Sun Sentinel, that it began to be resolved.

"It looks like it was a mistake in communication between us and the attorneys handling the foreclosure," said Bauwens.

Court records show Countrywide Home Loans filed a foreclosure case in Broward County civil court against the former owner of the home on Southwest 14th Street in 2008. Bank of America took over Countrywide at the end of that year.

The following year, Grodensky and his father Steven bought the house for cash as an investment property. Jason Grodensky's brother Kenny Sloan lives in the house now. They negotiated a short sale, which means the lender agreed to accept less than the mortgage amount. Documents show the sale proceeds were wired to Bank of America. The sale was recorded in December 2009 at the Broward County Property Appraiser's Office.

But in court, the foreclosure case continued, the records show. There was a motion to dismiss the case in July, followed the next day by a motion to re-open it. A court-ordered foreclosure sale took place July 15. The property appraiser's office recorded the transfer of the title to the Federal National Mortgage Association (Fannie Mae) the same day.

Bauwens said the lender would go back to court to rescind the foreclosure sale.

Broward Chief Judge Victor Tobin, who set up the county court's foreclosure system, said this is the first he's heard of this type of mistake. "From the court's point of view we have no way of knowing that someone sells a house unless they tell us," said Tobin. "The bank would first have to tell the lawyers and the lawyers would presumably ask the court for an order dismissing the case."
Considering that a house purchase is the largest purchase anyone does in their lifetime, it isn't reassuring to know that the state bureaucracy doesn't keep accurate records of who owns what and that you can have your house "sold" out from under you without your knowledge!

The root problem isn't just incompetence. It is an archaic system that has rules that are simply ignored by those "empowered" by the system to transfer ownership. Because of the large number of foreclosures, many are being done without due care or proper procedure:
Florida Attorney General Bill McCollum is investigating Stern's firm, Florida Legal Default Group, based in Tampa, the Law Offices of Marshall C. Watson in Fort Lauderdale and Shapiro & Fishman, which has offices in Boca Raton. Officials have said the investigation centers on whether foreclosure documents submitted by these firms were false, misleading or inaccurate.

In announcing its decision this week to halt evictions and suspend sales in foreclosure cases, GMAC cited a deposition by Jeffrey Stephan in a Palm Beach foreclosure case in which Stephan said he did not verify all the documents and did not sign them all in the presence of a notary. Stephan said he signed as many as 10,000 documents a month.

Some foreclosure defense attorneys have questioned whether similar practices involve other lenders as they push huge numbers of foreclosures through the courts. In one South Florida foreclosure case, Chase Home Finance executive Beth Cottrell said in a deposition in May that her team of eight supervisors signs 18,000 documents a month. Chase's spokesperson did not comment.
And the following is still more on this slipshod "paperwork industry" in the US. The following is from an article in the Washington Post entitled "'Robo-signer' played quiet role in huge number of foreclosures". I've bolded the key bit:
Their actions are leading lawyers representing foreclosed homeowners to claim that lenders have no legal standing if the filings weren't reviewed and verified, and to argue that the cases should be thrown out.

For nearly six years, Stephan - who declined to talk to a reporter - has made the daily commute south along Route 309, past cornfields and big-box stores, to an office park in Fort Washington.

From his cubicle inside a sprawling beige stucco building, Stephan works as the leader of the document execution team for GMAC Mortgage. He has signed off on as many as 10,000 foreclosures in a month, according to court documents. That's barely a minute per case, assuming he works a normal eight-hour day.

His signature indicated that the information in the cases was accurate to the best of his knowledge, and that he had signed in the presence of a notary. The problem was, that didn't always happen, according to depositions that Stephan gave in December and June for court cases involving families trying to keep their homes.

He stated that he would glance at a borrower's name, the debt owed and a few other numbers, but simply assumed most of the information in the files was correct. Stephan, who has more than a dozen people working under him, told attorneys that he had three days of training for the position and that he didn't know how the "summary judgment" affidavits he signed were used in judicial foreclosure cases.

Stephan's admission has cast into doubt thousands of mortgage foreclosure filings. Ally Financial, the nation's fourth-largest home lender and GMAC's parent company, halted evictions of homeowners this week in the 23 states that mandate a court judgment before a lender can take possession of a property.
You would think that less than two years after massive fraud had collapsed the banking industry and brought the entire economy to its knees, that business would be on "good behaviour". But no. They are back to their old tricks of playing fast and loose with papers, faking the paperwork, and treating the legal system as a joke.

I think the US deserves the economic collapse it is suffering from. It has corrupt business practices. It elected a new government, Obama, to clean out the mess and Obama has dithered and come up with a "financial regulation" bill that is next to worthless. The US is going to fully deserve the ten years of continued economic crisis as the Great Recession drags on and on. The elite in the US has complete contempt for the law, for ethics, for duty, for responsibility, for honesty, or the dignity of work. Instead it is a banana republic run by thieves only interested in passing off financial "tricks" as if it were an engine on which an economy can be built. Worse, the lunatics who run this asylum think they can continue to play "musical chairs" and pretend that it is an economy. This after the music stopped and 14 million lost their "chairs" (employment) and many millions have had their homes foreclosed and poverty is back to levels unseen since the early 1960s. What a tragedy!

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