Mounting Foreclosures Draw Panel's Attention

“Robo-signing,” a sketchy device intended to speed home-mortgage foreclosures, could also prove a pitfall for banks in court cases, a Washington-based housing advocate told his Mount Kisco audience Thursday.

The advocate, Robert Strupp, is a lawyer who called such wholesale production of potentially false documents “a total deviation” from legal norms. Strupp suggested the tainted forms could leave a fundamental question unanswered if a bank sued a defaulting homeowner.

While only a handful of cases have found that a borrower did not have to repay money, Strupp said, “That’s not the issue.” The question is whether a bank, suing on the strength of some hastily cobbled-up paperwork, “is entitled to the money that the borrower might not have repaid.”

Strupp, manager of the National Community Reinvestment Coalition’s systemic investigations in Washington, was part of a panel, convened by Westchester Residential Opportunities (WRO), to discuss the staggering rise in foreclosures since the nation’s housing fortunes began to unravel in 2006.

Another panel member, County Clerk Timothy C. Idoni, said his office felt the tremors of that economic tsunami long before economists began talking about the “housing bubble.”

“We saw things going a little south in 2006, 2007,” he said. “The real estate filings—the mortgages and deeds—started slowing down and the foreclosures started picking up.”

Any foreclosure papers filed in the clerk’s office were all stamped with Idoni’s name. “I started getting calls from people saying, ‘What am I supposed to do? Your name is stamped on these legal documents.’”

A third panelist, Scott Wilson, special counsel to state Attorney General Eric T. Schneiderman, discussed the joint federal/state civil settlement last month with the country’s five largest mortgage servicers—Ally Financial (the former GMAC), Bank of America, Citigroup, JPMorgan Chase and Wells Fargo—for “loan servicing and foreclosure abuses.” The federal government and every state but Oklahoma will share $25 billion, the largest settlement in history, with New York getting $136 million.

County Legislator Peter Harckham of Katonah moderated the evening’s discussion, before some two dozen people in the ballroom of the Mount Kisco Holiday Inn.

Among the audience members were Sebastian and Maria Adamo of South Salem. Carrying a milk-crate-sized box of envelopes, Sebastian Adamo came forward to describe a frustrating, multi-year fight with a succession of lenders. Calling all of it detailed by correspondence—the box he carried contained only last year’s letters—Adamo declared, “Believe me, I have better documents than Chase right now.”

He urged anyone in the audience embroiled in a foreclosure dispute not to give up, assuring them that he would not.  Still, he acknowledged, “If I hear one more time, ‘This is a call to collect a debt,’ I want to snap.”

Two other homeowners were represented through letters read by mortgage-default counselors at Westchester Residential Opportunities, a not-for-profit promoting equal and affordable housing in this area. Patricia Ossino described the highs and lows—as well as gratitude—of one woman, a single parent, as WRO first helped her buy a home and then, after she’d hit tough financial times through a downsizing, helped her keep it.

A second counselor, Caroline Pierre-Lys, read a homeowner’s appeal that loan modifications be completed in a few months instead of a few years.

Harckham, the 2nd District lawmaker, urged anyone with potential housing difficulties to act quickly. “Even if you [only] think you might have a problem . . . contact WRO or contact me,” he said. “The best [chance for] success is when you act early.”

For his part, Strupp, the Washington-based housing advocate, stressed the advantages of going into mortgage battle with a lawyer at your side. “I urge you to seek representation,” he said.

For every report on the news of a housing scam, about a homeowner who has lost a house, “there are dozens and dozens we’re not hearing about,” Strupp said. “So we need to be mindful, when we hear about something, that it’s just the tip of the tip of the tip.”