The Great American Foreclosure Story: The Struggle for Justice and a Place to Call Home
The story of how one woman went from a three-bedroom home to a tent is the story of how America ended up in a foreclosure crisis that still drags down the economy.
Three and a half months later, she received a notice that her case was back on. Her hearing would be in 10 days. In response, she filed a five-page "Motion to Dismiss with Prejudice" and attached about 100 pages of everything she thought was relevant: news articles and court filings about Mortgage Lenders Network, letters from Wilshire and her emails to the governor and FBI about the misstatement of her income on her loan application. No one could mistake it for a filing by a lawyer, but she thought it was enough to show something was wrong. "I thought the court system would at least question it."
Her hearing, of which there is no transcript because the Citrus County courts don't transcribe foreclosure hearings, didn't last long. Ramos arrived with her neighbor, Dave Shea, but they say a court officer wouldn't let him in. She found herself in front of Citrus County Judge Carol Falvey, who was sitting by herself at the end of a long table. Wilshire's attorney was on the speakerphone. "I instantly felt intimidated," Ramos recalls.
At one point, Ramos objected that Deutsche Bank hadn't shown it owned the loan. The voice on the phone said the company had filed papers showing it had proper standing to sue. Ramos had never received them. She remembers the judge saying the attorneys should send her those documents. The voice agreed. Nevertheless, the judge signed a judgment of foreclosure.
Ramos' home would be sold. None of the accusations she'd made in her filings had been directly addressed, either in a written response from Wilshire's lawyers or in the judge's order. "It was like I'd never filed the paper," she says. The whole hearing had lasted a few minutes.
An address and a GPS
She emerged stunned and confused. She and Shea decided to see those documents themselves. The clerk's office was just downstairs, after all. They pulled her case file, a folder of about 200 pages, roughly half of which were Ramos' own submissions. What they found in the other documents was bewildering.
In October, Wilshire's lawyers had filed what they called the "Original Assignment of Mortgage." But the document purported to transfer her mortgage from a lender called Mortgage Lender's Acceptance Corp. to the Deutsche Bank trust. Her lender had been Mortgage Lenders Network. Who was Mortgage Lender's Acceptance Corp.?
The document gave an address in nearby Ocala. They decided to go check it out.
Following the directions from a GPS device, they found themselves at an office park. There was nothing like a Mortgage Lender's Acceptance Corp. to be found. Hoping to find the building's manager, they called the number on a sign advertising space for lease. "We get the guy who's been the manager of that building for five years," Shea says. He told them no business by that name had ever been there. Convinced they'd found still more fraud, the pair decided to go immediately to the authorities.
"We walked right in the front door of the state Attorney General's office," recalls Shea. Attorneys from the office spoke to them in the lobby for about 20 minutes. "I was hoping they would stop the fraud," says Ramos, but instead they asked her to send a written complaint. She says she did so but never heard back. Theresa Edwards, a former assistant attorney general in Florida, says the office was inundated with such complaints.
The assignment is unquestionably an error. Mortgage Lender's Acceptance Corp., to start with, was not her lender and never had any connection to her actual lender, Mortgage Lenders Network. The assignment even has an error in how the wrong company's name is written; the apostrophe is misplaced, presenting the name as Lender's instead of Lenders'. A company called Mortgage Lenders' Acceptance Corp. was once active in Florida, according to an incorporation filing, but not since the late 1990s.
Two parties are responsible for the mistake. The first is Wilshire, which employed the woman who signed the document. The other is the law firm working on Wilshire's behalf, Smith, Hiatt & Diaz, a large Florida firm that handles thousands of foreclosures a year — what critics would call a foreclosure mill. Generally, the servicer's attorneys prepare the assignments and send them to the servicer to be executed. Whoever actually entered in the wrong lender, Wilshire's employee signed off on it, and Smith, Hiatt & Diaz filed it with the court. Attorneys at Smith, Hiatt & Diaz did not respond to multiple calls and emails requesting comment.
That's who's responsible, narrowly defined. The real culprit, as with almost all servicing problems, is the bottom line. To save money, servicers usually do not document ownership of a mortgage until it's necessary to foreclose. Instead, servicers keep on file blanket authorizations for their employees to sign on behalf of the lenders whose loans they handle. As a result, a single servicing employee might sign hundreds of documents in a day on behalf of as many as a dozen or more different lenders. Often, that low-level employee will sign as a vice president of this or that bank.
The process has produced laughable errors, transferring the mortgage to "Bogus Assignee" or dating a document "9/9/9999." "People just aren't paying attention," says Edwards, the former Florida assistant attorney general who now defends borrowers from foreclosure. "They're running them through so quickly they make mistakes."
While working with the attorney general's office in 2010, Edwards and a colleague cataloged examples of the industry's documentation practices in a presentation for county officials titled "Unfair, Deceptive and Unconscionable Acts in Foreclosure Cases."*
At some servicers or companies working on their behalf, employees forged the signatures of other employees. The most famous of these is "Linda Green," an actual employee of DocX, a company that specialized in document production. Her name, with a signature obviously penned by many different hands, adorns tens of thousands of documents filed across the U.S. Green and other former employees of DocX, which was shut down in 2010, told 60 Minutes that management instructed them to sign on Green's behalf. Last year, one of the servicers that had hired DocX sued the company in a Texas court, alleging that more than 30,000 documents had been improperly executed. The servicer, American Home Mortgage Servicing, claimed it had been ignorant of what DocX termed "surrogate signing," and is suing for damages. Lender Processing Services, DocX's parent company, does not dispute that its employees were forging signatures but said the company had gone back to fix the affected assignments and is contesting the suit.
While servicers say employees shouldn't sign another person's name, the servicers insist there's nothing wrong with their employees signing on behalf of other companies as long as proper authorization has been granted.
But in some cases, servicers have filed documents without any authorization. Internal documents obtained by ProPublica show that the nation's fifth-largest servicer, GMAC Mortgage, did just that. GMAC, a subsidiary of Ally Financial, wanted to pursue foreclosure against a New York homeowner, but the original lender had gone out of business.
Banks and the government have fallen short in helping homeowners in danger of foreclosure.
The Story So Far
Systemic failures at the country’s banks and mortgage servicers have exacerbated the most severe foreclosure crisis since the Great Depression, and government efforts to limit the damage have fallen short. ProPublica created an unrivaled database of homeowners who have faced foreclosure, opened a Facebook page to encourage homeowners to share their stories, wrote profiles of some of them, and incorporated their experiences into our reporting. We also provided a comprehensive rundown of the numbers behind the crisis.
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