More On "Hijacking" Of Foreclosure Process By Mortgage Lenders

(original post 11-17-07)
Cuyahoga County, Ohio (Cleveland and surrounding municipalities) is one area that is reportedly taking a tremendous beating when it comes to its residents losing their homes to foreclosure. So when word got out that Federal Judge Christopher Boyko slammed Deutsche Bank National Trust Co. in a court ruling recently for attempting to foreclose on Cleveland-area homes without being able to provide the legal documentation demonstrating that it actually owned the mortgages, the Cleveland Plain Dealer chimed in with several pieces that ran in its publication. For those interested, see:

• Federal judge accuses mortgage lenders of hijacking foreclosure system for profits (Criticism joins wave of dismissed cases ),
• Judge's order trips up banks trying to foreclose (Judge insists on key document),
• Excerpts from Judge Boyko's comments on mortgage lenders,
• Judges are right to make lenders follow the rules before foreclosing on peoples' homes (an editorial) (Cleveland federal judge's ruling puts lenders on notice that the rules apply to them as well as to borrowers).

Some of the highlights from the Plain Dealer coverage:

• Boyko's colleague, Judge Kathleen O'Malley ... , threw out 32 foreclosure cases this week for the same reason.

• Stephen Bucha, chief magistrate of Cuyahoga County Common Pleas Court, has dismissed hundreds of foreclosure cases for not having paperwork. He said it can be time-consuming and expensive for lenders to produce and record the documents, adding, "They wait until they have to do it." Bucha said judges in his court, which has about 10,000 pending foreclosure cases, are studying ways to adopt the federal court's rule.

• In an interview Friday, U.S. District Judge Dan Polster said he expected more foreclosure cases dismissed in federal court, including from his own docket. [...] Polster said the court has become more vigilant in foreclosure cases because they are too one-sided. Many homeowners do not contest the foreclosure, so the lenders face no defense lawyers in court proceedings. "It's up to us to supervise it," said Polster. "When you're taking people's homes, it falls to the integrity of the court."

• It's true, even now, that the banks are free to refile the cases. But the symbolism of Boyko's well-reasoned and well-written ruling is huge. It puts investment banks on notice that although many of them suspended careful lending practices and other rules in the rush to buy and pool subprime loans into junky bonds and drive up profits at almost any cost, the courts won't be taking such holidays from their rules.

• In the frenzy to underwrite and sell these bonds, lenders got sloppy. It's inevitable that some won't be able to hand over the proper documentation showing which mortgages they legally hold. That means thousands of foreclosure suits stand a good chance of getting tossed out or at least delayed.

Go here to view Judge Boyko's Court ruling.

For other posts that reference the failure of some mortgage lenders and their attorneys to file the required loan documents when starting foreclosures, Go Here, Go Here, Go Here and Go Here. missing mortgage foreclosure docs alpha