Six mortgage lenders argued this week that there’s no need for New Jersey to freeze their foreclosure actions, arguing that they have already taken steps to clean up questionable legal practices.
Chief Justice Stuart Rabner ordered the six lenders on Dec. 20 to show why their foreclosure actions should not be frozen in the wake of reports last year of "robo-signing" — bank employees signing legal documents in foreclosure cases without reviewing them for accuracy. Rabner also raised the possibility of appointing a special master to oversee foreclosures.
In court papers filed in Trenton, the six — Ally Financial (parent of GMAC Mortgage), Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and One West Bank — said they have improved their procedures. The lenders all said in court papers filed this week that a foreclosure freeze is not needed, because they have already addressed the problems. The lenders are due in court in Trenton on Jan. 19.
Among them, the six were responsible for 29,000 — or almost half — of the foreclosure cases in New Jersey last year. New Jersey foreclosures tripled from 2006 to 2010, reaching 65,000 last year, and foreclosures also have soared nationwide.
Citibank said only 210 of its 4,023 active foreclosures in New Jersey have problems with legal documentation, which it pledged to correct.
"An indiscriminate suspension of foreclosures, covering many foreclosures that rightfully should proceed, would result in protracted uncertainty and costs for both borrowers and lenders," Citibank said.
Several also said a review of their foreclosures found no examples of homeowners improperly losing their homes.
"There is no suggestion Chase foreclosed on any property where the borrower was not in default," said the papers filed by JPMorgan Chase, which nonetheless acknowledged "deficiencies" in some of its past documentation.
Wells Fargo questioned whether a freeze would be allowed under New Jersey’s constitution. GMAC Mortgage said it had added staff members and improved training to handle foreclosures.
Many lenders voluntarily halted foreclosure actions to check their procedures after the robo-signing questions arose in late September. RealtyTrac, a California company that follows the foreclosure market nationwide, recently reported that November foreclosures were down 43 percent in New Jersey, and 14 percent nationwide, compared with a year earlier.
Do you think it is reasonable for the chief justice to target these six lenders? Should the foreclosure moratorium in New Jersey be enacted?
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