Tuesday, November 16, 2010

NY F'closures Screech To A Halt? Lender Lawyers Reluctant To Risk Bar Ticket By Filing Crappy Paperwork In Violation Of State High Court Directive

The New York Post reports:
  • Bank lawyers prosecuting the 80,000 foreclosure cases in New York are all but admitting that the cases they have filed over the past number of years have been riddled with fraud.

  • In the three weeks-plus since New York State Chief Judge Jonathan Lippman put the foreclosure lawyers on notice that any fraud in foreclosure paperwork would be met with severe penalties -- he is making lawyers sign affirmations promising they took "reasonable" steps to make sure the legal papers are true -- practically no new foreclosure cases have been filed, The Post has learned. And existing cases have ground to a halt, a source close to the state's foreclosure practice said.

  • "Banks do not want to be the first to test the new rules," the source said. The virtual shutdown of New York's foreclosure business comes despite chest-thumping, bravado-filled statements made by some banks in October that they had nothing to be afraid of when it came to foreclosure fraud and that the lawsuits aimed at kicking delinquent homeowners from their houses would continue shortly.

  • It seems lawyers pressing the foreclosure cases are not willing to bet their law licenses on such claims. [...] While many banks are not prosecuting foreclosures, they are still preparing those cases by sending paperwork to law firms on new homeowners who are behind on payments. The cases are just not being filed in court. "The spigot has not been shut off much, to my surprise," a foreclosure industry insider told The Post, of the bank's sending of the foreclosure paperwork to their lawyers.

For more, see Fraud-closure biz fizzles out.