Latest Bank Effort in Foreclosure Cases Met with Skepticism by Homeowners' Attorneys

Published: Thurs., October 28, 2010 in CT Post, Stamford Advocate & Greenwich Time

Two of the nation's largest banks said they are reissuing affidavits in foreclosure cases after news reports revealed the original filings ran afoul of the law in 23 states, including Connecticut.

Bank of America announced it was moving forward on more than 100,000 cases it froze in the 23 states requiring a court case to take a home. The move comes after several weeks of review that included a freeze on foreclosure cases. The bank said it found some issues but would reissue affidavits in cases where it found problems. Wells Fargo & Co. Wednesday said it found problems in its affidavit process and would reissue affidavits for about 55,000 cases nationally.

These two banks were caught employing "robo-signers," employees of the banks or third parties who filled out thousands of affidavits in foreclosure cases without reviewing the actual cases. The affidavits of debt are required for a foreclosure in Connecticut to move forward, and they require the person signing them to swear that he or she has knowledge of the debts and the particulars of the case involved.

The move by the banks was greeted with skepticism from attorneys defending homeowners.

"It's only been a couple of weeks," said attorney Mark Sank, of the firm Mark Sank and Associates. "There's a credibility factor they're going to have to overcome."

Sank, who has more than 40 clients he's defending in foreclosure actions, said given all the mistakes the banks have made over the years on paperwork, their latest mea culpa might not find a ready audience and the financiers will actually have to prove their cases. He pointed out if the banks made mistakes on these affidavits, and the record of mistakes the banks have racked up during the last few years, there's reason to be suspicious that other filings might also contain errors.

David Scalzi, another Stamford attorney with his own firm, said he believes the banks will actually have to prove their cases. He, too, has a client trying to save her home from foreclosure by calling attention to errors in the Bank of New York's suit against her.

There have been accusations in Connecticut that some banks filed foreclosure suits without actually owning the note and in some cases, would have a difficult time proving they do have it. This has become a problem in other courts as well, and some of the accusations against the big banks in other jurisdictions are that they employed firms that might have falsified documents to make it look like the bank had the note when it didn't.

"It's important when you're litigating these matters that the person who is suing you has the standing to sue you," Scalzi said, and homeowners facing foreclosure have the right to make sure the bank suing them is entitled to do so.

While this controversy is far from over, the state judiciary has decided to deal with the issue on a case-by-case basis, rejecting Attorney General Richard Blumenthal's request for a 60-day moratorium on all foreclosure cases.

Scalzi and Sank both said they agreed with the judiciary's move.

Blumenthal said in a prepared statement that he was disappointed by the state court's decision but glad the judges have promised exceptional scrutiny.

He also issued a statement Wednesday on Bank of America restarting its foreclosure process, questioning whether the bank could have actually reviewed the cases and its procedures, given the fact that the bank has a record of sloppiness with paperwork, given the growing number of complaints piling up against it from borrowers who have applied to loan programs with the bank.

Blumenthal said his office receives daily complaints from customers of Bank of America who say the bank keeps losing information and paperwork as part of a modification application. Bank of America and Wells Fargo both said their reviews indicate all of these foreclosures should have occurred anyway.

Blumenthal is leading a 50-state investigation into potential fraud related to affidavits and foreclosure procedures by the nation's largest banks.

His office could not name the banks being investigated, but GMAC/Ally, JP Morgan Chase and other major banks have been implicated in the robo-signing scandal.