Reps. Conyers, Gutierrez, Capuano and Sens. Franken, Menendez Release GAO Report Investigating Foreclosure “Robo-signing”

**Follow us on Twitter @HouseJudDems**

Contacts: Nicole Triplett, 202-226-5543                                                                                             Date: Thursday, May 5, 2011                   

Ed Shelleby (Franken) (202)-224-1868
Menendez Press Office (202) 224-4744
Nicole Triplett (Conyers) (202) 226-5543
Douglas Rivlin (Gutierrez): (202) 225-8203
Alison Mills (Capuano) (617) 621-6208

Reps. Conyers, Gutierrez, Capuano and Sens. Franken, Menendez Release GAO Report Investigating Foreclosure “Robo-signing”

Legislators Push for Nat’l Standards to Avoid Unfair Treatment and Wrongful Foreclosure on Homeowners

(Washington)—Today, Reps. John Conyers, Jr. (D-Mich.), Luis Gutierrez (D-Ill.), Mike Capuano (D-Mass.) and Sens. Al Franken (D-Minn.) and Robert Menendez (D-N.J.) released a GAO report confirming reports that mortgage servicers had been fraudulently signing or notarizing affidavits allowing the completion of foreclosures without any personal knowledge of the cases, a process more commonly referred to as "robo-signing." 

The legislators commissioned the report, entitled Mortgage Foreclosures: Documentation Problems Reveal Need for Ongoing Regulatory Oversight, to investigate news accounts that homeowners were being improperly foreclosed on.  In an effort to prevent future wrongdoings by mortgage servicers, the legislators today pressed banking regulators to implement safeguards recommended by the report that would ensure homeowners do not wrongfully lose their homes.

“We write today to urge you to develop a coordinated plan to ensure comprehensive oversight of federally regulated mortgage servicers and to reiterate our calls for national servicing standards that specifically address the foreclosure process,” the legislators wrote in a letter to banking regulators. “We have seen countless examples of servicers giving borrowers the run-around and continuing the foreclosure process when a loan modification has already been obtained.  Perhaps the most egregious cases of servicer wrongdoing have been violations of the Servicemembers Civil Relief Act by wrongly foreclosing on active-duty servicemembers.  Correcting these problems and ensuring they do not reoccur should be a priority for all of your agencies."

The GAO report concluded that:

• Despite various federal agencies’ having the authority to oversee mortgage servicers, past oversight of mortgage servicers’ foreclosure activities has been limited and fragmented;
• It remains unclear how regulators and the new Consumer Financial Protection Bureau will share the responsibility of overseeing servicers, continuing the potential for poor and inconsistent oversight; and
• National standards for mortgage servicers that address expectations for the foreclosure process could improve the ways servicers do business.

GAO recommends that banking regulators and the Consumer Financial Protection Bureau:

·         Develop plans for overseeing mortgage servicers; and

·         Include foreclosure practices in any servicing standards that are developed.

The letter from the legislators to Ben S. Bernanke, Chairman of the Board of Governors of the Federal Reserve System; John G. Walsh, Acting Comptroller of the Currency Office of the Comptroller of the Currency; Sheila C. Bair, Chairman of the Federal Deposit Insurance Corporation; John E. Bowman, Acting Director of the Office of Thrift Supervision, and Elizabeth Warren, Special Advisor for the Consumer Financial Protection Bureau can be read here.

GAO Letter Banking Regulators

GAO Mortgage Foreclosure Report

Judge fines anti-foreclosure lawyer

Judge fines anti-foreclosure lawyer Attorneys Jerry Goldberg and Vanessa Fluker on their way to court in the Coleman A. Young Municipal Center Court sanctions attorney for linking foreclosure to Charter One discrimination caseBy Eric T. CampbellThe Michigan Citizen DETROIT — Third District Court Judge Robert J. Colombo recently received three home loan modifications from Charter One Bank. Colombo ruled, however, he did not need to recuse himself from a mortgage foreclosure case involving the same bank. Nor did it stop him from levying a $12,000 fine on the attorney and client fighting the bank’s foreclosure when the attorney attempted to link the foreclosure case to a discrimination lawsuit now pending against Charter One. Attorney Vanessa Fluker has devoted her legal career to defending victims of foreclosure and predatory lending in Detroit. On March 1, Fluker’s colleague, Jerry Goldberg, defended her against a court sanction handed down by Colombo. Colombo’s decision included the $12,000 judgment against Fluker and foreclosure victim Asha Tyson. “She’s a tireless and committed advocate on behalf of people that have been victimized by the banking interests — she deserves the respect of the legal community,” Abayomi Azikiwe said. Azikiwe, a member of Michigan Emergency Committee Against War and Injustice (MECAWI), was one of Fluker’s many supporters who filled the courtroom to capacity. Colombo’s legal reprimand stems from Fluker’s effort to stop eviction proceedings on Tyson. Tyson’s home mortgage was held through the Charter One Bank, subsidiary of Royal Bank of Scotland (RBS) and CCO Mortgage. In November 2008, Judge Colombo denied a stay of eviction, only to have the case sent back to him by the 36th district court in March 2010. Fluker then filed an appeal seeking an indefinite stay in Tyson’s case, pending a federal lawsuit initiated against RBS/CCO by the Center for Community Justice and Advocacy in November 2009. That suit alleges Charter One violated the Federal Housing Amendments Act, the Equal Credit Opportunity Act and the Civil Rights Act (see Michigan Citizen Newspaper, 2/27/11) by treating African American mortgage holders inside Detroit differently than their white suburban counterparts. Fluker argued that Tyson’s case would be affected by the outcome of the suit. “He was angry that the case came back to him,” Goldberg says. In the courtroom, Colombo rebuked every effort by Goldberg to dismiss the sanction hearing. In sanctioning Fluker, Colombo delivered a lengthy rant for what he called a poorly written brief and a procedural error in filing the appeal. He also admonished her for attempting to introduce the Federal Housing Act to Tyson’s eviction defense. Colombo based the amount of the judgment against Fluker and Tyson on hours billed by the bank’s lawyers, at $235 an hour, to fight the appeal. Attorney Goldberg told the Michigan Citizen that in his opinion, Colombo failed to make the necessary case that Fluker’s filing was frivolous and the judges actions were, in effect, retaliatory. He says Colombo was displeased with Fluker’s desire to incorporate the federal lawsuit into the Tyson case and that he implied he would sanction her if she did. “I thought she effectively argued that because the federal case wasn’t brought up in the first case, she had a legal basis. It was a decent brief with a cogent argument. For a sanction to be carried out, it has to be against a very high standard. The court has to prove that what she did was frivolous,” Goldberg said. An appeal will be filed in the matter of Fluker’s sanction, Goldberg said. He suggested during his final statements that Judge Colombo recuse himself from any further involvement in the case, citing Colombo’s receipt of three recent home loan modifications by Charter One Bank. During opening statements, Goldberg emphasized the effects of unfairly sanctioning one of the few attorneys who defend homeowners victimized by predatory lending and subsequent evictions. “To put a damper on attorneys to even raise these issues has a negative impact on society,” Goldberg said. Azikiwe agrees the ruling, if allowed to stand, could have great political consequences for Detroiters faced with eviction proceedings. “It jeopardizes the rights of the people that have been victimized by the banking industry,” Azikiwe said.

Bing to crack down on absentee landowners of blighted properties

Bing to crack down on absentee landowners of blighted properties

From The Detroit News: 

Last Updated: February 05. 2011 3:37PM

"Under the Bing administration, the city of Detroit is cracking down on absentee property owners and working to address issues resulting from predatory speculators," wrote Dan Lijana, a Bing spokesman.

The promise followed a two-day series in The Detroit News about land speculation and its potential impact on Bing's signature initiative, the Detroit Works Project. The plan, which Bing is expected to unveil in the next few months, could include using incentives to consolidate residents in seven to nine neighborhoods and abandon underpopulated ones.

Public input on the proposal continues from 10 a.m. to 2 p.m. today during a forum at the American Siberian Hall, 19940 Van Dyke.

The News' investigation found that 10 private landowners — all but two of whom live outside Detroit — own more than 5,000 city parcels. Included in the total are scores of empty lots and vacant buildings that investors bought for as little as $500 after they were foreclosed for back taxes.

The largest private property owner, Michael G. Kelly of Grosse Pointe Woods, has used the tax auctions to amass 1,152 parcels throughout Detroit, according to city and Wayne County records. Much of his portfolio is vacant, and city records indicate he has owed nearly $100,000 in blight fines since 2005.

Kelly has disputed the fines and city records showing he's the top landowner, has questioned why the city is sitting on nearly 39,000 publicly owned parcels and said he has a vested interest in the city's comeback.

But Council President Charles Pugh said he worries that speculators could complicate the Detroit Works Project, potentially by demanding high prices for their properties or challenging the effort in court.

"We need to be spending our money on incentives to help people move, not (on) speculators," Pugh said. "It really angers me that people are taking advantage of the city right now."

Karla Henderson, group executive in charge of the Detroit Works Project, has said part of the city's strategy will be to use the newly formed Detroit Land Bank to acquire key properties before speculators have the chance to buy them. But the land bank hasn't started to acquire city or tax reverted properties yet.

The city has often struggled to hold owners of blighted land accountable. As of last year, the city Department of Administrative Hearings, or blight court, was owed nearly $41 million in fines. And buyers are flocking to the annual Wayne County tax auction. In October, the auction set a record, selling more than 4,300 properties with opening bids of $500.

But critics have said the city controls more blighted properties than any other landowner.

Sheila Cockrel, a former councilwoman, said there needs to be a more coordinated effort — through city and Wayne County government — to deal with Detroit's vacant land.

"There needs to be one strategy and not separate silos," Cockrel said.

"We need to find the most nimble real estate vehicles that are transparent and fair."

cmacdonald@detnews.com

Timeline shows Bush, McCain warning Dems of financial and housing crisis; meltdown

Timeline shows Bush, McCain warning Dems of financial and housing crisis; meltdown