From the NY Times:
GMAC Mortgage, one of the country’s largest and most troubled home lenders, said on Monday that it was imposing a moratorium on many of its foreclosures as it tried to ensure they were done correctly.
The lender, which specialized in subprime loans during the boom, when it was owned by General Motors, declined in an e-mail to specify how many loans would be affected or the “potential issue” it had identified with them.
GMAC said the suspension might be a few weeks or might last until the end of the year.
States where the moratorium is being carried out include New York, Connecticut, New Jersey, Illinois, Florida and 18 others, mostly on the East Coast and in the Midwest. All of the affected states are so-called judicial foreclosure states, where courts control the interactions of defaulting homeowners and their lenders.
Since the real estate collapse began, lawyers for homeowners have sparred with lenders in those states. The lawyers say that in many cases, the lenders are not in possession of the original promissory note, which is necessary for a foreclosure.
Matthew Weidner, a real estate lawyer in St. Petersburg, Fla., said he interpreted the lender’s actions as saying, “We have real liability here.”
Mr. Weidner said he recently received notices from the opposing counsel in two GMAC foreclosure cases that it was withdrawing an affidavit. In both cases, the document was signed by a GMAC executive who said in a deposition last year that he had routinely signed thousands of affidavits without verifying the mortgage holder.
Nerissa Spannos, a Fort Lauderdale agent, said GMAC represents about half of her business — 15 houses at the moment in various stages of foreclosure.
“It’s all coming to a halt,” she said. “I have so many nice listings and now I can’t sell them.”
The lender’s action, she said, was unprecedented in her experience. “Every once in a while you get a message saying, ‘Take this house off the market. We have to re-foreclose.’ But this is so much bigger,” she said.
From the Palm Beach Post:
Foreclosure defense attorneys say the affidavits withdrawn by the Florida Default Law Group center on foreclosure documents signed by a GMAC employee. The employee, in deposition questioning by West Palm Beach-based law firm Ice Legal, said he did not have personal knowledge of the accuracy of each of the 10,000 foreclosure-related affidavits he signed each month, they say. Some of the documents include assignments of mortgages on which the GMAC employee signed as vice president of Mortgage Electronic Registration Systems. MERS is a company created by the nation’s leading banks to ease the process of transferring and selling of home loans.
The legality of whether the nationwide electronic system can determine the owner of a mortgage and then assign it to a bank or investor is being questioned by some attorneys. It’s become especially complicated by the real estate boom-time practice of bundling home loans and selling them as securities.
Ice Legal attorney Christopher Immel, who deposed the GMAC employee, said after he posted the deposition online, legal teams from other states picked up on it and did their own depositions.
Immel said GMAC isn’t the only company that has a single employee signing off on thousands of foreclosure documents each month that he or she is supposed to have personally verified.
“To keep up with the foreclosure volume they need certain documents executed and they don’t have time to review them because it’s just an assembly line,” Immel said. “They’ve set this up as just part of their business practice.”