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Mistakes widespread on foreclosures, lawyers say
Paperwork mistakes that led one of the nation's largest mortgage servicers to halt foreclosure evictions in 23 states last week have happened elsewhere and affect tens of thousands of foreclosures, say lawyers for homeowners.
Ally Financial's GMAC Mortgage acted after manager Jeffrey Stephan gave a statement to opposing lawyers that he had signed off on legal documents for 10,000 foreclosure papers a month without following verification procedures. Those lawyers say they've obtained similar statements from employees at JPMorgan Chase and OneWest Bank — formerly IndyMac Federal Bank— that court papers weren't properly verified before being filed.
"We've taken depositions at other servicing companies that take these documents without reviewing them," says Christopher Immel, a lawyer at Ice Legal in West Palm Beach, Fla. "They were filing fraudulently. It's rarely done correctly."
In one case, Erica Johnson-Seck, a vice president at OneWest, said she signed 750 foreclosure documents a week and didn't read each document before signing it, according to a 2009 deposition obtained by Ice Legal. She also said they were signed without a notary present.
In a May 17 deposition, also taken by Ice Legal, Beth Cottrell, a supervisor at Chase Home Finance, a division of JPMorgan Chase, said she was among eight managers who signed off on about 18,000 foreclosure papers a month.
Cottrell said she only reviewed the entire foreclosure document if another employee raised a question about it.
JPMorgan Chase declined to comment.
"How can a judge rely on something when the person who is signing it doesn't even know what they're signing?" says Ice Legal lawyer Dustin Zacks. "I find it very hard to believe it's limited to the few depositions we've taken."
In many states, servicers must file a motion in court to take possession of a home in a foreclosure. To support their motion, a representative has to verify they've reviewed the supporting documents, checked who owns the mortgage note and had a notary public witness their signature.
Ally Financial said Friday that delays in completing foreclosures should be resolved before year's end. It also said it's confident that processing errors did not result in any inappropriate foreclosures.
Fannie Mae and Freddie Mac are reviewing foreclosures on GMAC-serviced mortgages they own and have halted evictions on them until the review is done. Fannie Mae says it is also reminding servicers to follow proper procedures.
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