GMAC Stops Foreclosures In Florida
Amidst investigations by state attorney generals into several law firms over alleged falsified foreclosure documents, GMAC is the first but may not be the only lender/servicer to take steps to look deeper into issues concerning illegal foreclosures. The Associated Press has reported that GMAC is going to cease foreclosures and evictions in numerous states amongst allegations and investigations into falsified documents in the foreclosure. Researching further into GMAC decision, it appears GMAC has decided to cease actions in 23 states, including Florida. In addition to ceasing foreclosures and evictions, GMAC is freezing closings on all REO closings.
The reason for the halt was not disclosed but I have my theories. First, if the foreclosures are obtained by fraud, the title issued following the foreclosure may not be marketable. Marketable title is a title that is reasonably free from defects and is readily transferable. It is a very important concept in real estate transactions in order to obtain title insurance. Marketability would be questionable if fraud was involved in the foreclosure as the judgment may be voidable.
Second, taking affirmative action against fraud may be helpful in any penalties that may arise from the investigations into the fraud allegations. I doubt the investigations will ever find a “smoking gun” showing the fraudulent activity was intended by lender/servicers and they will claim they were ignorant to its practice. By taking remedial measures, the lender/servicer can claim it took appropriate steps once it found out.
Publicly, only GMAC has made a statement that it is halting action in foreclosures until it can more closely review its cases. Given the theories and potential consequences referenced above, I would not be surprised to see more lender/servicers follow.
So what does this mean for people in pending foreclosures? Right now it probably only means the action is presently stalled. The alleged fraud being investigated involved affidavits that were filed in foreclosure cases to obtain judgments. You may be able to conduct your own investigation into your case by sending the plaintiff discovery into the affidavits filed in your case. If there has been a fraud on the court, the court can issue a range of sanctions to offending party from striking the fraudulent document to dismissing the case.
It is unfortunate that such reprehensible conduct may be occurring in the foreclosures filed across the country but it is good to see some affirmative remedial measures being taken even if the motivating factor may involve self-protection. Bottom line, the money may be owed and the loan may be in default but that does not mean anything goes to take the home back. Homeowners have due process rights and the plaintiffs should be held to their burden to properly show entitlement to foreclose. Hopefully courts will begin taking a closer look at issues raised by foreclosure defense attorneys in the proceedings to prevent fraud and potential nightmare title problems in the future.
This Blog was written by Attorney David Fineman, Esq. of The Dellutri Law Group, P.A. Mr. Fineman practices Bankruptcy Law, Fair Credit Reporting Act Law, Fair Debt Collection Practices Act Law and in other areas of Consumer Law.
