After GMAC, Ally, JPMorgan Chase, and Bank of America publicly admit they have a credibility gap (to put it nicely), they only agreed to stop foreclosures in the minority of states where foreclosures require judicial approval. As long as they can hide their problems, they don’t exist? More like they don’t think their massive document fraud will come to light in non-judicial states. Well even the Texas Attorney General has a problem with the servicers on their arbitrary distinction between judicial and non-judicial states:
We are aware that [these companies service] a significant number of mortgage loans in the State of Texas. It is likely that affidavits and other documents, such as assignments of deeds of trust and appointments of substitute trustees with [false statements or other defects] may have been used in connection with foreclosures in the State of Texas. Regardless of whether the foreclosure was a nonjudicial one or a judicial one … if any of the practices described above were utilized in establishing [the servicer's] authority to conduct the sale or obtain a court order for a sale, such use would have been a violation of the [Texas Deceptive Practices Act, Texas Debt Collection Act, Texas Penal Code, Texas Property Code, Texas Government Code, Texas Constitution and Texas Rules of Civil Procedure] and the document and therefore the foreclosure sale would have been invalid.
A list of loan servicers that were sent a letter is here.
Of course, if loan servicers were cutting all the corners in judicial states, they almost certain to be doing anything they wanted in non-judicial states. Time might tell, but investigation and lawsuits will make sure this is stopped. Of course, given the lack of respect the financial industry has about everyone, I have doubts loan servicers will stop foreclosures without a court order, or take serious measures to address the underlying problems with their systems — their fraudulent practices are just too deep and extensive. But the Texas Attorney General’s demand is clear:
The State of Texas hereby demands that in the State of Texas, [Chase, Bank of America, etc.] immediately suspend all foreclosures, all sales of properties foreclosed upon, and all evictions of persons residing in previously foreclosed upon properties until [the servicer] has done the following:
1. Identify all [servicer] employees or agents who “robosigned,” … affidavits and other documents which were recorded in the State of Texas;
2. Identify all foreclosures in the State of Texas in connection with which an affidavit or other document with the characteristics listed above was used as part of the foreclosure process;
3. Describe the measures taken by [the servicer] to ensure that affidavits and other documents are executed in compliance with Texas law;
4. Describe the measures taken by [the servicer] to comply with the Servicemembers Civil Relief Act in connection with foreclosures;
5. Identify all other loan servicers and/or MERS for whom the above described employees or agents signed affidavits;
6. Provide assurances that all [servicer] foreclosures of properties in the State of Texas which relied upon documents with the characteristics described above will be rectified and the procedures by which they will be rectified;
7. Provide assurances that all future [servicer] foreclosures of properties in the State of Texas will be done with legally correct documentation; and
8. Identify all [servicer] employees or agents who are or who signed as officers of other non-related entities.
Please provide your response on or before October 15, 2010.
Paul D. Carmona, Chief, Consumer Protection and Public Health Division, Attorney General of Texas
It is kinda sad that the feds are unwilling to do anything but watch Attorneys General attempt to defend their homeowners from fraudulent practices by the financial industry – again.