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Lawyers have a hand in foreclosure mess, judges say

As the nation continues to grapple with the continuing foreclosure crisis, judges in some states are looking at the culpability of lawyers in cases where counsel for the mortgage giants have cut corners and filed sloppy or fraudulent paperwork in courts.

The New York Times wrote about the trend this week.

But New York judges are also trying to take the lead in fixing the mortgage mess by leaning on the lawyers. In November, a judge ordered Mr. Baum’s firm to pay nearly $20,000 in fines and costs related to papers that he said contained numerous “falsities.” The judge, Scott Fairgrieve of Nassau County District Court, wrote that “swearing to false statements reflects poorly on the profession as a whole.”

But there are only 23 states in the country where judges oversee foreclosure proceedings and North Carolina isn’t one of them. Here, most foreclosures get handled by clerks of court instead of judges. And those clerks simply don’t have the same powers that judges do.

We called the N.C. State Bar, the state agency that licenses and monitors lawyers, to see if they’ve had an uptick in complaints about lawyers behaving badly in foreclosure cases.

They haven’t. In fact, they say they haven’t heard from anyone.

Katherine Jean, general counsel for the State Bar, said she’s not aware of any complaints about misconduct of lawyers representing lenders in foreclosure proceedings.

“To my knowledge, we have received zero complaints,” she said.

Foreclosures reached an all-time high in 2010, with 67,854 foreclosure proceedings started over the course of the year. Policy Watch’s parent organization, the N.C. Justice Center, released a report today that found those numbers could account for one out of every 63 housing units in the state.

That’s a lot of people, and a lot of lawyers filing those legal proceedings in the 100 county courthouses across the state. So does this mean that North Carolina has lucked out, and all the foreclosures here are being done by the book?

It’s a tough pill to swallow, especially considering that many of the problems we’ve heard about like robo-signing of affidavits and sloppy legal paperwork has popped up across the country.

What do you think? Is the situation just fine here in the Tar Heel state? Or are we just not hearing about problems?

15 Comments

  1. foreclosure sale next week

    January 13, 2011 at 12:28 pm

    I’m simply amazed that Brock & Scott, North Carolina’s large foreclosure mill hasn’t been exposed yet for assisting trusts for securitized mortgage pools & servicers who lack legal standing to foreclose. They are a big player in NC, TN, SC & GA. I’ve been fighting to try to save our family home in Charlotte where they continue to try to foreclose on behalf of a group of unidentified investors through Bank of New York Mellon, and a servicer First Horizon, (now as of Jan 1 2011 MetLife home loans who bought them) who’ve been absolutely unwilling to discuss any equitable solutions for us to save our home. Yet the servicer actually directed us nearly 24 months ago that we HAD to be 6 days “late” on our mortgage before they could discuss a loan modification with us. We then tried to work through 2 different HUD-approved housing counselors who could get nowhere with the servicer before they closed up shop DEC. 31st, 2011 and sold to MetLife. Brock & Scott was to foreclose 4 days later on January 4th, 2011. They’ve now postponed it the sale until next Tuesday, January 18th.
    Makes no sense at all that our courts are allowing these groups to work with law firms to steal our citizens homes in NC. Have interviewed the best legal counsel available to try to get justice and it is very very difficult to get anyone to challenge these entities on a contingency basis. Maybe the Mass. Ibanez case will change that as of last week. Where are the state and individuals property rights ?!

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  4. Donna

    January 13, 2011 at 4:36 pm

    Wells Fargo originated us a fraudulent mortgage loan and Wells Fargo attorneys committed fraud on the court and aiding Wells Fargo knowingly defraud homeowners.

    Here are the facts:

    Wells Fargo originated us a fraudulent mortgage loan in 2005.
    Wells Fargo’s fraudulent appraisal valued our home for $718,000.
    Wells Fargo’s review appraisal valued our home for $475,000.
    Wells Fargo promised to rescind its fraudulent mortgage loan and help us to recover all of our financial losses, if we prove that Wells Fargo made us a fraudulent mortgage loan based on inflated appraisal in 2006.
    Nevada Attorney General’s Office suspended the appraiser’s license for committing appraisal fraud on our home in 2008.
    Wells Fargo later on refused to carry out its promise to rescind its fraudulent mortgage loan. NRS205.372 states that committing mortgage fraud is a Category C felony, if proven, it also entitles us to rescind Wells Fargo’s fraudulent loan.
    We put $151,000 downpayment. Between 2005 and 2009 we paid Wells Fargo around $350,000.
    On June 15, 2010, Wells Fargo still foreclosed our home, knowing that it is a Category C felony to make a mortgage loan and foreclose our home based on a fraudulent appraisal.

    So Far, both Nevada 2nd Judicial Court and Nevada Supreme Court refuse to make rulings based on its state law and tort law or sanction Wells Fargo’s attorneys for committing fraud on the court.

    Please sign the petition on our website http://www.wellsfargomortgagefraud.com Let our voice to be heard.

    You can find all facts on our website. http://www.wellsfargomortgagefraud.com

  5. Sarah Ovaska

    January 13, 2011 at 4:43 pm

    I’d be interesting in hearing from North Carolina homeowners about their experience with foreclosures. If you’d like, you can contact me at sarah@ncpolicywatch.com.

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    January 13, 2011 at 11:51 pm

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  13. Barbara Ann Jackson

    January 18, 2011 at 11:09 am

    All across the country, judges need to cease allowing courtrooms to be used by foreclosure mill lawyers and mortgage servicers who commit fraud, and self-dealings that –RATHER than property returned to the lenders, enable lawyers or their straw buyer acquaintances to unlawfully acquire distressed property.

    There are lawyers actually engaged in real estate racketeering through intentional fraudulent pleadings that they file in civil courts and bankruptcy courts on behalf of purported lender-clients –and some are filed via names of defunct mortgage companies.

    For decades, it has been PROFITABLE, and FACILE to make use of judicial systems to accomplish multiple and various levels of foreclosure fraud, while also unlawfully rendering families homeless; and mortgage lenders and banks (that receive their with mortgage-default insurance and IRS write-offs), never get the homes. Ultimately, after repeated flips, the homes become sold to Freddie Mac.

    Lawyers who are engage in willful foreclosure fraud also unconscionably access “deficiency judgments” against homeowners even though the reason for the deficiency is because their straw buyer friends place unlawful “credit bids.” And the lawyers record worthless property deeds after sham foreclosure auctions that impedes title insurance. The list goes on!

    Anyone telling people to simply move out NEEDS a wake up call as to what’s really going on –including the cause of longterm blighted communities. Fraud foreclosed homes that ‘go back’ to lenders become put on the market and various channels and outcomes –always unlawful.

    Hopefully people continue signing and sharing the petition, “Request for Congressional Foreclosure Panel to Examine Foreclosure Lawyers” @ http://chn.ge/eU2zAm, who file foreclosure proceedings in civil as well as bankruptcy courts. And hopefully consumers will heap upon offices of Attorneys General, information / evidence about foreclosure-judicial wrongdoing. *SEE: “Commentary on: “Emerging Battleground on Mortgage Abuses: Foreclosure Mills” @ http://t.co/riJXgou.

  14. b

    March 27, 2011 at 10:33 pm

    Not sure what the Bar association based their information on when they claimed their were zero complaints, but I filed a complaint against a law firm and against an individual attorney in 2009.

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