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Robo-Signing Update and Foreclosure Prevention Resources

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					         Robo-Signing:
Update and Foreclosure Prevention
           Resources
Overview
•   Ohio Attorney General’s Office
•   Consumer Protection Section
•   Robo-Signing
•   Foreclosure rescue scams
•   Resources
Ohio Attorney General’s Office
• Attorney General Mike DeWine
  – Ohio’s 50th Attorney General


• Duties of the Attorney General
  – Attorney for state of Ohio
  – Support local law enforcement
  – Enforce laws
What is Consumer Protection?
• Ensures a fair and safe marketplace
• Enforces laws related to consumer transactions:
     − Buying a used car
     − Shopping online
     − Mortgage issues
     − Debt collection
     − Debt settlement
Top Complaints (2010)
•   Auto
•   Collections, credit services
•   Internet or phone
•   Home improvement
•   Mortgage
•   Shopping, food or beverage
•   Professional services
•   Sweepstakes or prizes
Robo-Signing: Timeline
September 17, 2010 GMAC sends out a memo to “GMAC Preferred Agents”
   directing these agents that GMAC Mortgage “may need to take corrective
   action” in connection with some foreclosures in 23 states, including Ohio.
   GMAC directed the agents to “not proceed with evictions, cash for keys
   transactions, or lockouts” and “not proceed with REO sale closings.”
Deposition of employee GMAC Jeffrey Stephan in which he stated:
• he had signed thousands of affidavits without personal knowledge.
• he signed approximately 10,000 affidavits and assignments in a month
• he and his team did not verify the accuracy of the information
• he executes assignments of mortgages and notes without ascertaining who the
   current promissory note-holder
• he bundles the affidavits for notarization outside of his presence
Robo-Signing: Timeline
• September 29, 2010 Chase announces that it is delaying foreclosures in the
  same 23 states. Press reports indicate that this will impact up to 56,000
  foreclosures nationwide.
• October 1, 2010 Bank of America announces that it is delaying foreclosures
  in the same 23 states.
• October 27, 2010 Wells Fargo announces “the company has identified
  instances where a final step in its processes relating to the execution of the
  foreclosure affidavits … did not strictly adhere to the required procedures.”
  Wells Fargo further stated it was “electing to submit supplemental affidavits
  for approximately 55,000 foreclosures.”
• By the end of October 2010, similar announcements by PNC and OneWest
Robo-Signing: Timeline
• October 6, 2010 Ohio Attorney General Files
  suit against GMAC mortgage for the filing of
  alleged fraudulent affidavits in Ohio foreclosure
  actions.
• October 13, 2010 Attorneys General from all 50
  states announce a joint investigation into
  mortgage servicing practices.
 State of Ohio v. GMAC - Case No
 3:10-cv-02537
• Allegations (First Amended Complaint):
   – ¶1.        ….GMAC Mortgage LLC (“GMAC”) and Jeffrey Stephan
     (“Stephan”)…have committed frauds and unfair, deceptive and
     unconscionable acts and practices on Ohio consumers and the courts
     of Ohio through, among other ways, the signing of and causing the
     filing in Ohio courts of hundreds of false affidavits and assignments
     of notes….
   – ¶26.       ....GMAC continued to have Stephan swear in the hundreds
     of affidavits he signed…for Ohio foreclosures filed in Ohio courts
     from at least February 17, 2009 until at least June 30, 2010, falsely
     stating that “I have personal knowledge of the facts contained in this
     affidavit,” or “personal knowledge of the accounts of said company”
     or equivalent words…..
   – ¶27.       Stephan…signed for many Ohio foreclosure cases
     Assignments of Mortgage falsely claiming that he assigned a
     borrower’s mortgage and note from MERS to the plaintiff…even
     though he did not have the authority of MERS to assign a note to any
     party.
State of Ohio v. GMAC - Case No
3:10-cv-02537
  – ¶28.       ….The affidavits of GMAC employees, including Stephan,
    executed in Ohio foreclosures falsely represented that appropriate
    notice and other steps had been taken to accelerate these loans.
  – ¶29.       Stephan signed hundreds of affidavits outside of the
    presence of a notary public and without being sworn. He and his
    “team” followed the same procedures in Ohio…and filed hundreds of
    false affidavits in Ohio foreclosure cases….
  – ¶37.       GMAC knew or should have known that….the outsourced
    computer systems and document preparation would lead to errors and
    inaccuracies that would violate GMAC’s duty to consumers in
    connection with both its servicing of residential loans in Ohio and
    related Ohio foreclosures to accurately account for payments received
    by consumers and payments owed by consumers.
State of Ohio v. GMAC - Case No
3:10-cv-02537
  – ¶53.       Because of GMAC’s improper foreclosures, Ohio
    consumers have been required to upend their families and move to
    other locations, not only causing them to spend money they could
    not afford to spend but disrupting their family life, at least
    prematurely and sometimes unnecessarily altogether….
  – ¶56.       Defendant GMAC has engaged in a pattern and practice
    of unfair, deceptive, and unconscionable acts….by proceeding to
    foreclosure judgments in spite of the false affidavits, assignments
    and other documents, and causing Ohio consumers to have their
    most important personal investment – their homes – improperly
    taken from them in foreclosure proceedings in which no admissible
    evidence was presented to the Court.
State of Ohio v. GMAC - Case No
3:10-cv-02537
• Currently Pending in Federal District Court: Northern
  District of Ohio – Western Division (J. Zouhary)
• Motion to Dismiss Pending
   – (a) Does the common law doctrine of witness immunity
     raised by GMAC preclude both the OCSPA and fraud
     claims?
   – (b) does the FAC allege facts supporting a violation of the
     OCSPA, and
   – (c) does the FAC allege facts supporting the claims of fraud?
State of Ohio v. GMAC - Case No
3:10-cv-02537
• Related Case
   – Anderson v. Barclays Capital Real Estate Inc. dba HomeEq Case
     No 3:09-cv-2335 (Pending Northern District of Ohio –
     Western Division (J. Carr))
   – Judge Carr has stated that he will be certifying the following
     questions to the Ohio Supreme Court
      • (a)    Does the servicing of a borrower’s residential mortgage loan
        constitute a “consumer transaction” as defined in the Ohio
        Consumer Sales Practices Act, O.R.C. § 1345.01(A)?
      • (b)    Are entities that service residential mortgage loans “suppliers
        … engaged in the business of effecting or soliciting consumer
        transactions” within the meaning of the Ohio Consumer Sales
        Practices Act, O.R.C. § 1345.01(C)?
Typical Foreclosure Rescue Scam
• Scam artist contacts victim
   – Direct mail
   – Telephone call
   – Home visit
• Makes appealing claims and guarantees
• Alleges affiliations with the government
• Fails to deliver services
   – No contact with lender
   – No negotiated deals
Warning Signs
•   Upfront fees
•   Promises for help that is too good to be true
•   Promises for “special bailout funds”
•   Hints of government affiliation
•   Use of high pressure tactics
    – Must act “right away”
Typical Claims
•   We’ll help regardless of your financial situation
•   Don’t call your lender or the court
•   An attorney will “look over” your loan
•   We are faster than nonprofit agencies
Statewide Foreclosure Prevention
Resources
• AG Foreclosure Resources Link
  – www.OhioAttorneyGeneral.gov/Foreclosure
• Ohio’s Hardest Hit Fund (HHF)
  – Ohio received over $570 million from the U.S. Department
    of Treasury’s Hardest-Hit Fund (HHF) program in three
    funding rounds.
  – Average assistance level is $15,000 per homeowner.
  – Projected to assist between 46,000 – 53,000 Ohio
    homeowners depending on level of assistance.
  – Ohio is one of 18 states receiving funds in the HHF program.
Ohio’s Hardest Hit Fund
• Five program options
   – Rescue Payment Assistance
       • To bring delinquent mortgages current
   – Partial Mortgage Payment Assistance
       • Up to 15 months assistance with mortgage payments for unemployed
         homeowners
   – Refinance Program
   – Modification Assistance with Principal Reduction
       • Incentive payment matched by investor to reduce mortgage principal balance
   – Transition Assistance
       • Incentive payment to lender and homeowner to assist with short sale or deed
         in lieu
• Ohio’s proposal is posted at www.ohiohome.org and
  administered by the Ohio Housing Finance Agency (OHFA).
OHFA Determines Ohio HHF
Eligibility
• Current household income below 115% of area median income
• Liquid assets, excluding retirement funds, equal to less than three
  months mortgage payment
• Total first mortgage debt below maximum FHA loan amount
• Hardship based on involuntary loss of income
• Homeowner may be at risk of imminent mortgage default,
  delinquent or in foreclosure up to sheriff sale.
• One- to four-unit, owner-occupied primary residence, including
  condominiums
                                                                   19
How can YOU help?
•    Be our eyes and ears
•    Refer consumers to the OAG
•    Encourage consumers to file complaints
    – Three ways to file:
       • Online: www.OhioAttorneyGeneral.gov
       • By phone: 800-282-0515
       • By mail: hard-copy form available
•    Inform consumers that FREE help is available
     – www.savethedream.ohio.gov or call 888-404-
     4674
How WE can help
• Education
   – Consumer awareness workshops
      • www.OhioAttorneyGeneral.gov/ConsumerWorkshops
   – “Consumer Advocate” e-newsletter
      • www.OhioAttorneyGeneral.gov/ConsumerAdvocate
   – “Consumer Law Advisor” e-newsletter
      • www.OhioAttorneyGeneral.gov/ConsumerLawAdvisor
• Informal Dispute Resolution
   – Generally takes 30-90 days
• Investigation
   – Confidential
• Enforcement
Contacts at OHFA for HHF
For information contact:  OHFA website:
Stephanie Casey Pierce    www.ohiohome.org
spierce@ohiohome.org      Partner Website:
614-728-4275              http://www.ohiohome.o
                            rg/restoringstability/p
Cindy Flaherty              artners.aspx
Director of Homeownership Save the Dream:
cflaherty@ohiohome.org    www.savethedream.ohio.go
614-466-6886                v                     22
AG Contacts & Resources
• Ohio Attorney General’s Office
   –   www.OhioAttorneyGeneral.gov
   –   www.OhioAttorneyGeneral.gov/Foreclosure
   –   800-282-0515
   –   Consumer Protection Section
        30 E. Broad St, 14th Fl.
        Columbus, Ohio 43215
   – Jeff Loeser, Assistant Attorney General
     (Jeff.Loeser@OhioAttorneyGeneral.gov)
   – Susan Choe, Assistant Attorney General
     (Susan.Choe@OhioAttorneyGeneral.gov)

				
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