The Post's articles focus on Ally Financial, the nation's fourth largest mortgage lender. Although you may not have heard of Ally, you've probably heard of its predecessor -- GMAC, which was originally established for the purpose of making automobile loans but which over time became a major player in the mortgage industry as well.
(In a mind-bending twist to a mind-bending tale, Ally is owned by you -- the US taxpayer -- courtesy of the financial industry bailout. Although there are private-sector stockholders as well, the majority stake in Ally is owned by the US Treasury.)
According to the Post's Ariana Cha, Ally's foreclosure document processing team was responsible for swearing out affidavits -- to be used later in judicial foreclosure proceedings -- which attested to the accuracy of lenders' allegations that homeowners had defaulted on their loans.
Alas, Ally's team was so overloaded with cases (one individual was hand-signing 10,000 documents a month!) that they stopped verifying the documents or signing the affidavits in the presence of a notary public, as required by law. The fallout is that Ally has ordered a moratorium on evictions in 23 states until it sorts out whether its shortcuts were merely "technical" in nature -- or could provide legal grounds for challenging the foreclosures.
Ally's shortcuts raise the question of how important "dotting all the i's and crossing all the t's" is to achieving a truly just result in a dispute.
According to the Post, judges involved in foreclosure proceedings have expressed mixed opinions about the degree to which technical failures, like Ally's, could/should affect the legal result:
The judges' differing perspectives raise the question of how courts and society should respond to the ongoing crisis of all those outstanding "I.O.U.'s" that can't (or won't) be repaid.
Alas, Ally's team was so overloaded with cases (one individual was hand-signing 10,000 documents a month!) that they stopped verifying the documents or signing the affidavits in the presence of a notary public, as required by law. The fallout is that Ally has ordered a moratorium on evictions in 23 states until it sorts out whether its shortcuts were merely "technical" in nature -- or could provide legal grounds for challenging the foreclosures.
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Ally's shortcuts raise the question of how important "dotting all the i's and crossing all the t's" is to achieving a truly just result in a dispute.
According to the Post, judges involved in foreclosure proceedings have expressed mixed opinions about the degree to which technical failures, like Ally's, could/should affect the legal result:
Arthur M. Schack, a Kings County Supreme Court judge in Brooklyn, said it's clear those involved in the foreclosure process are taking the legal requirements too lightly. They forget, he said, that there's a bigger picture to think about: People are losing their homes. Schack has become infamous among some of the nation's most powerful banks for rejecting foreclosure motions that come across his courtroom - about half of the hundreds of files that he has reviewed over nearly three years. He said Ally's document-processing violations shouldn't be dismissed lightly. "There are procedures to be followed in order to get a foreclosure, and you either get it right or not. Either you're pregnant or not. There's no in-between," he said.
But Judge Isaac Garb, a retired trial judge in Bucks County, Pa., who has heard many foreclosure cases and still oversees mortgage mediations, had a different view. He said that because foreclosure files contain standard language, document processors such as Stephan do not need to review every page. He added that the signers are verifying only that the information in the file is "true and correct to the best of his/her knowledge, information and belief." Often, homeowners are using minor problems in the documents simply to stall the foreclosure process as long as possible, Garb said.The difference in opinion between Judge Schack and Judge Garb is striking. Judge Schack, emphasizing how much is at stake for the homeowners, is critical of Ally's willingness to take shortcuts. Judge Garb, on the other hand, seems willing to forgive administrative shortcuts so long as "justice" is ultimately served.
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The judges' differing perspectives raise the question of how courts and society should respond to the ongoing crisis of all those outstanding "I.O.U.'s" that can't (or won't) be repaid.
