Foreclosure Fraud Crisis – How did we get here, and what can homeowners do to protect themselves?

Banking executives have admitted under oath to large-scale fabrication and falsification of documents necessary to foreclose on homeowners

In recent weeks, several banking executives have admitted under oath to large-scale fabrication and falsification of documents necessary to foreclose on homeowners.  This gave birth to the term “robo-signers,” because many bank executives admitted to signing up to 20,000 sworn affidavits a month (up to 1,000/day!) without determining whether the bank really has the right to foreclose.

The number of foreclosure cases that could be affected nationally are in the hundreds of thousands, perhaps in the millions.  In response to these revelations, Bank of America, Chase, GMAC and some of the largest mortgage servicers have enacted voluntary foreclosure moratoriums to investigate their own practices.

In response to these revelations, federal and state regulators have taken historic and unprecedented actions.  At this moment, Attorneys General of all 50 states are conducting a joint investigation of the practices of the mortgage servicing industry to determine whether state consumer protection laws have been broken.  The federal government has created a high-level investigatory agency called the Financial Fraud Enforcement Task Force to look into possible violations of law by the banking industry, the most common of which would be fraud and perjury, which are felonies in every US jurisdiction.

What should consumers do to protect themselves from their banks committing fraud in the foreclosure process?

First, they should obtain all the publicly recorded documents filed against their property at the local county recorder’s office.  This will allow us to look for signs of fraudulent documents that homeowners could use in court to challenge the bank’s alleged right to foreclose on their property.

In my office, we have electronic access to most county records that make these documents available online.  This allows us to easily check for the existence of these fraudulent documents.

Homeowners should be aware that not every lawyer has the required training, skill and experience in identifying these false documents and using them in the proper venue and in the proper manner.   Because of my litigation background, I know how to raise these issues in the proper venue.

California is a so-called non-judicial foreclosure state.  This means that a bank does not have to file a lawsuit in court to conduct a foreclosure sale.  This presents a problem for homeowners, because they don’t have the protection of the judicial system to bring these issues in front of a judge to determine whether the bank has acted legally.  That’s why my office takes an aggressive role in filing lawsuits to bring these documents and issues to the attention of a court, to obtain the maximum legal protection for our clients.

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