HUD: Banks Will Be Held Responsible

October 22 2010 (Jeff Alan)
HUD secretary donovan
Just as Bank of America and GMAC Mortgage were ending their foreclosure freezes, U. S. Secretary of Housing and Urban Development (HUD) Shaun Donovan said Wednesday that the onus is on banks to fix whatever foreclosure related problems are found.

Donovan, who made the statement during a White House briefing about the matter, said problems found thus far haven’t appeared to be very serious, but the full investigation won’t be finished until the end of the year. If more serious problems are found, possible penalties could include fines and a ban against writing mortgages for more serious violations, he added

Bank of America and GMAC Mortgage have ended their foreclosure freeze because they didn’t find significant problems. Donovan said the government wasn’t involved in those decisions.

Meanwhile on Wednesday, the New York State court system instituted a new rule regarding residential foreclosures in light of the ongoing robosigning accusations against lenders such as Bank of America and GMAC.

The issue focuses on the use of so-called “robosigners,” employees and agents who signed off on hundreds or thousands of foreclosure documents in a short amount of time on behalf of mortgage lenders nationwide, essentially proving they didn’t do their due diligence or follow protocol.

Going forward, plaintiffs will be required to file an affirmation form certifying that they have taken “reasonable steps – including inquiry to banks and lenders and careful review of the papers filed in the case – to verify the accuracy of documents filed in support of residential foreclosures.”

“We cannot allow the courts in New York State to stand by idly and be party to what we now know is a deeply flawed process, especially when that process involves basic human needs – such as a family home – during this period of economic crisis,” said Chief Judge Jonathon Lippman, in a statement.

“This new filing requirement will play a vital role in ensuring that the documents judges rely on will be thoroughly examined, accurate, and error-free before any judge is asked to take the drastic step of foreclosure.”

The affirmation form must be submitted for both new and pending cases, so it could lead to the overturning of foreclosure decisions or simply delay the inevitable for others.