In a major ruling Friday, a coalition of nonprofit defense lawyers and consumer protection advocates in Maryland successfully got over 10,000 foreclosure cases managed by GMAC Mortgage tossed out, because affidavits in the cases were signed by Jeffrey Stephan, the infamous GMAC “robo-signer” who attested to the authenticity of foreclosure documents without any knowledge about them, as well as signing other false statements.
The University of Maryland Consumer Protection Clinic and Civil Justice, Inc., a nonprofit, filed the class action lawsuit, arguing that any case using Jeffrey Stephan as a signer was illegitimate and must be dismissed. In court Friday, GMAC agreed to dismiss every case in Maryland relying on a Stephan affidavit. They can refile foreclosure actions on the close to 10,000 homes, but only at their own expense, and subject to new Maryland regulations which require mandatory mediation between borrower and lender before moving to foreclosure. Civil Justice and the Consumer Protection Clinic also want any cases with affidavits from Xee Moua of Wells Fargo, who has also admitted to robo-signing, thrown out, but that case has not yet been settled.
This was not the plan of GMAC and other banks caught using robo-signers last year. They hoped to undergo a pause in proceedings, run a quick “double-check” and then issue substitute documents in the same cases. That would have been a much more rapid solution for the banks and would have resulted in many more foreclosures. Now GMAC has to go back and basically file the entire case all over again, meaning they have to give notice of foreclosure to the borrower, engage the borrower in modification options, and basically run through the whole process from the beginning. They cannot use the shortcut solution, thanks to the class action suit filed. GMAC’s dismissal of every foreclosure in Maryland shows their doubts they would have won the class action.
The Consumer Protection Clinic at the U. of Maryland is a class taught by Peter Holland. Rather than just read and lecture about foreclosure fraud and consumer protection law, Holland has the class join motions, prepare cross-examinations and legitimately get involved in the cases. It reminds me of the class of Alan Dershowitz depicted in the film Reversal of Fortune, or the Medill Innocence Project investigating wrongful convictions at Northwestern. Given the national scope of foreclosure fraud, you can imagine classes like this springing up all over the country.
As I said, this doesn’t mean that GMAC cannot refile foreclosures in these cases. But they have to spend a lot of time and money to go back to the beginning and redo every case, and must adhere to Maryland law of allowing mediation. Maryland is a judicial foreclosure state which has produced some of the better rulings during this crisis. But we’re starting to see challenges even in non-judicial foreclosure states, like Massachusetts, where the Ibanez case has thrown every foreclosure in the state into turmoil. The rates of moving properties through foreclosure have dropped dramatically, in all 50 states, by an average of 50%. It just seems inevitable that lawyers in other states will follow the Maryland action and attempt to get everything which used a robo-signer thrown out.
And if the Ibanez case, which questions the right for banks to foreclose at all, can be broadly applied, those rates will drop even further. And Georgetown Law Professor Adam Levitin thinks may be the case.
In Ibanez, the Massachusetts Supreme Judicial Court noted that PSA was insufficient to serve as an assignment of the loan because what was presented as the affiliated loan schedule:
“did not include property addresses, names of mortgagors, or any number that corresponds to the loan number or servicing number on the LaRace mortgage. Wells Fargo contends that a loan with the LaRace property’s zip code and city is the LaRace mortgage loan because the payment history and loan amount matches the LaRace loan.”
So how do other PSAs fare under the Ibanez metric? I’ve been looking at them, and it seems that there are lots of RMBS deals where the schedules in the PSAs are possibly insufficient to meet the Ibanez standard. And that means that there are lots of RMBS trusts that might not be able to successfully foreclose in Massachusetts or maybe in any other title theory state.
Read the whole post from Levitin for the explanation. Here’s a list of title theory states. There are about 30 of them, including the sand states of California, Arizona and Nevada.
Jamie Dimon and his banker buddies may be saying in public that they aren’t worried about the consequences from future foreclosure fraud cases and repurchases, but in private, they must be going nuts over this.




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Was this a settlement or a ruling? Is there a link to either?
How soon before SCOTUS shuts down class action lawsuits?
Peter Holland’s Consumer Protection Clinic is performing a heroic and extraordinary public service and they deserve to be honored.
IIRC, Congress restricted them a few years ago. (again, IIRC: some forced into federal courts to prevent forum shopping, and tighter requirements re: commonality of interest for the class)
I have a vague memory of those also.
But I also saw somewhere more recently that there’s a movement afoot to shut class action down altogether. I can’t remember where I saw it, which is why I put the Q into the thread.
Soon this should go to the Courts attention real soon emergency soon 10,000 Foreclosures stopped? WallStreet types will see that number panic and sell Monday if they don’t then they assume a Fix is in.
If the Market takes this seriously we maybe looking at the start of a market meltdown and the next bank bailout.
http://www.google.com/finance?cid=10166104
My bold The Government’s Bank bailout get hurt with this one lose GMAC.
The right wing hates activist law professors who form legal clinics at the schools where they teach because they function like aggressive armies for legal and social justice. Barry Scheck and Peter Neufeld created the Innocence Project at the Cardozo School of Law. The Northwestern Law School has the Center on Wrongful Convictions and Northwestern University has the Medill Innocence Project. There are now 68 innocence projects in the United States, including Innocence Project Northwest that I co-founded with Professor Jackie McMurtrie at the University of Washington School of Law in Seattle in 1997 when I was still practicing law. The Cardozo Innocence Project, the Center on Wrongful Convictions, Centurion Ministries in Princeton, NJ, and Innocence Project Northwest were the Big Four that kicked off the movement.
I’m absolutely delighted to see our movement spreading into the real estate forfeiture crisis and Peter Holland’s clinic accomplishment is a major victory against the criminal banks that are literally stealing millions of homes with their fraudulent forfeiture proceedings as our useless president aided and abetted by the equally useless Congress stand by and let it happen. Instead of helping the distressed homeowners whose lives are being ruthlessly and systematically ripped apart by the criminal banks, the President had the unmitigated gall to accelerate and facilitate the unlawful forfeitures by the banks with his incredibly bogus HAMP program and then topped that disgraceful act by blaming the victimized homeowners for causing the crisis. Not to be outdone, Secretary of the Treasury, Tim Geithner, did what he could to prevent the financially distressed homeowners from obtaining assistance from lawyers by refusing to allow unspent HAMP funds to be used to pay the lawyers. I believe he has finally relented after being pressured into it by public opinion.
What kind of a man is Obama who would dare to use a nine-year-old dead girl as a stage prop to make a point about the need for civility in our dealings with others during a national speech, when he is assisting the criminal banks to steal millions of homes in the United States and slaughtering thousands of innocent women and children with predator drones in Afghanistan and Pakistan?
What kind of a society are we when the only people fighting for justice are law professors and their students working for free?
Don’t forget FDL:)
How will Obama and the banks try and stop this ruling an emergency Supreme Court hearing? An injunction of some kind another bailout, Funny Accounting if this ruling is taken serious all companies with home loans and that includes hedge funds, Banks etc all should drop like a stone Monday.
The WH will be up all night planning for monday.
Look for (bought) pressure from the state legislature to shut him down. It happened to a prof at Tulane whose classes were helping people fight the chemical industry that poisons them.
U.S. stock markets are closed Monday.
Sorry, you’re right. I painted with too broad a brush. There are others fighting for justice, but they are scattered all over the country and mostly fighting alone.
This grim situation presided over by an uncivil, hypocritical, and actively hostile, if not indifferent president just overwhelms me at times.
We are a society awash in corruption. We have a President that likes to talk about empathy, but demonstrates callouness in his actions. If it were not for the people you mention, the social justice advocates and the whistle blowers, we would have little reason left to hope.
isn’t about time for our “conservative” supreme court to find / invent “law” to return dred scott …
why do people need 3 years of law school to write 20 and 200 page opinions which just amount to:
rule BAD for rich pig scum = rule illegal.
rule GOOD for all us bottom feeding serfs, doormats and cannon fodders = rule illegal.
rmm.
Thanks for the link. For those of us who aren’t lawyers, this is a very important and basic distinction to know about. I noted with interest that Wisconsin, where my wife and I are thinking of moving and buying a house, is a lien state, while California, where we currently live (and rent rather than own!), is a title state.
In the past, it often has indeed been about that simple (e.g., the Lochner decision, which is an even better example than Dred Scott). Unfortunately, it isn’t just a matter of “conservative” versus “liberal” either. I used to refer to the Supreme Court as the Nine Liars, because all nine “Justices” (not just the conservative majority) had engaged in extreme intellectual dishonesty in at least one decision each. Bush v. Gore accounted for five of them, but there were other decisions that implicated all of the other four as well, notably on medical marijuana. Sotomayor and Kagan don’t yet have records sufficient to justify current use of the term, but I don’t trust them to be any better in the long run, especially Kagan.
No need to apologize Mason. It’s an excellent rant. You seem to be cursed with clear vision and an inability to escape your conscience.
Obama is a cold blooded monster like his predecessor. The times we live in accommodate such creatures. I too wish it were otherwise.
Thanks, Mason, and thanks for your prior work on Project Northwest.
I’d been thinking of the same issue you raise: clinics at universities. It drove Ronald Reagan crazy when he was CA governor, as did OEO [Office of Economic Opportunity, headed by . . . wait for it . . .Donald Rumsfeld in the late 60s - early 70s].
I’m anticipating a full frontal attack on these clinics via a “use of public funds to promote lawsuits” argument, to complement the attacks that have already been made on class action suits.
Do you know if clinics similar to Professor Holland’s [dealing with foreclosure fraud] have been set up in other jurisdictions? CA, NV and FL could use a few.
With law jobs being so scarce, maybe some enterprising graduates will contact Professor Holland.
Wouldn’t it be a delicious irony if some of those graduates who’ve been told by their high-flying firms, “sorry, we don’t have that $160K place for you right now, but here’s $70K. Go travel or do some public interest work and come back in a year.” I know that NRDC has made use of several of these folks.
But isn’t Tulane a private school?
State legislatures would have more sway over clinics at public universities. Yes, you can be sure they’ll be cranking up that threatening fund cut-off legislation right now.
I think “actively hostile” is a more accurate description than “indifferent.”
See his speech attacking DFHs.
Great post Mason and GO! Symsonia Roughriders.
Indeed. There is a big difference, as I have pointed out elsewhere, between the law (interpreted in accordance with the Constitution) and the fraudulent case law that attempts to aid and abet bankster larceny. Case law has been so perverted that simply attempting to get it right is a radical act.
I have little doubt that without the legal-clinic action you refer to, foreclosure fraud would have been sanctioned by the courts. And with the kind of federal judges and Supreme Court “Justices” we have, it may yet be, for all the noble efforts of those activist law professors.
How come Firedoglake is the only site reporting this? How did he get the scoop ahead of AP, NYT, Washington Post, etc. who have posted nothing I can find about it. Apparently GMAC doesn’t even know about it, as there is nothing posted on their news log.
The Mass Ibanez case involved two cases, and was headline news before the judge had even finished speaking. This, if true, is 5,000 times bigger than that, but FDL is the only one who knows about it?
Can someone send me a link to verify this, because I really, really hope this is true, but it seems too good to be true. Two months to settle a class action lawsuit must be a record.
Good to know that my alma mater has someone who is actually doing some good work.
Last year the Baltimore Sun did a major article about the robo-signer problem. They may pick up the story about Holland. I’ll have to see if the Wash Post thinks it’s worth their notice.
Finally:
UN investigator accuses US of shameful neglect of homeless
UN special rapporteur says wealthy US ignoring deepening homeless crisis while pumping billions into bank rescues
LINK.
It’s kinda weird, right? FDL is *literally* the only site in the world that is reporting this. Nothing on blogs, nothing in the news.
“What kind of a man is Obama who would dare to use a nine-year-old dead girl as a stage prop to make a point about the need for civility in our dealings with others during a national speech, when he is assisting the criminal banks to steal millions of homes in the United States and slaughtering thousands of innocent women and children with predator drones in Afghanistan and Pakistan?”
Thank you. And for all your good work.
This story seems to be a hoax. After 36 hours not one other blog or media channel has picked up this story. I follow half a dozen blogs that are very interested in this subject — Naked Capitalism especially.
Agreed.
Not exactly a hoax, professor, but the story did get a lot of stuff wrong. Bloomberg has a more accurate take on it here: http://www.bloomberg.com/news/2011-01-19/ally-s-gmac-dismisses-250-maryland-foreclosures-update2-.html
There, the answer to jpe12′s question @1 appears: it was a deal that had the class action suit withdrawn in exchange for withdrawal of the foreclosure actions.