Chief Judge Finally Addresses Foreclosure Fiasco

Judge bites banks
The New York Post by Catherine Curan  -  April 15, 2012
New York’s top judge is not done smacking around foreclosure mills for their bad behavior.

Chief Judge Jonathan Lippman, faced with thousands of stalled foreclosure cases clogging his courts, is expected to soon start a pilot program that will force these foreclosure mills and their bank clients to the bargaining table in an attempt to modify the muddled mortgages.  Homeowners across the state — including as many as 5,000 in Brooklyn and Queens alone — have been victimized by these mills, which file lawsuits and then, fearful of swearing to the truthfulness of the claims in the suit, let them lie dormant in the courts.  Meanwhile, the homeowners are forced to live in a legal limbo — unable to work out a modification because of the missing paperwork but still on the hook for a boatload of fees.  In June, Lippman will start a pilot program in Brooklyn that will force banks to the bargaining table. A judge will oversee the meeting with the aim of keeping the families in their homes.  “Losing your home is probably one of the greatest traumatic events a family or a person could have and they are in our courts, and we have to ensure that their cases are handled appropriately and expeditiously,” Lippman told The Post.  This program follows on the heels of another effort, announced earlier this spring, requiring banks to send executives empowered to modify loans to settlement-conference meetings. New York expects Citigroup, JPMorgan Chase, Bank of America and Wells Fargo to participate in this program.  All too often, homeowners, after weeks and months of trying to schedule a modification hearing, would show up at the hearing only to find the bank had sent a low-level employee unable to sign off on a deal.  “We hope there will be a greater chance of modifying the loans earlier on,” said Judge Judy Harris Kluger, Chief of Policy and Planning for New York’s courts. “Certainly this will at least give the parties an opportunity to look at options for modification.”  These new rules follow unintended fallout from a rule Lippman imposed in the wake of the robo-signing scandal in the fall of 2010. To stanch the flow of faulty documents in New York’s courts, Lippman issued an order requiring foreclosure lawyers to verify the accuracy of their filings.  But instead of cleaning up their act, the foreclosure mills simply refused to file the affidavits, choosing to let cases languish instead.  The legal community appears split on Lippman’s plan.  Some lawyers told The Post that the judge’s force-them-to-the-table plan may benefit homeowners by connecting them with housing counselors early in the foreclosure process, when the benefit is greatest.  Others raised concerns that this could be another back-door victory for banks and their lawyers, who will avoid verifying the accuracy of their documents before negotiating with homeowners.  “This is supposed to be the foreclosure firms’ work, but is being borne by the taxpayers and the court system,” said Elizabeth Lynch, staff lawyer at MFY Legal Services.  “Other people don’t game the justice system like foreclosure firms have done by evading the affirmation requirement.”