New York judge chastises banks for sloppy and flawed paperwork

Long Island Judge Jeffrey Spinner

A year ago, Judge Jeffery Spinner called the foreclosure of Diane Yano-Horoski “repugnant”. He forgave her family’s total debt of $525,000 including interest.

While the judgment is being appealed by the California bank, “Spinner and some of colleagues in the New York City area estimate they are dismissing 20 to 50 percent of foreclosure cases on the basis of sloppy or fraudulent paperwork filed by lenders.” (Washington Post)

“Their decisions illustrate the central role lower court judges will have in resolving the country’s foreclosure debacle. The mess came to light after lawsuits and media reports showed lenders were routinely filing shoddy or fraudulent papers to seize the homes of borrowers who had missed payments.”

“In millions of cases across the United States, local judges have wide latitude to impose sanctions on banks, free homeowners from their mortgage debts or allow the companies to proceed with flawed foreclosures. Ultimately, the industry is likely to face a messy scenario – different resolutions by courts in all 50 states.” Washington Post

The reality is resorting to the courts is beyond the means of many average Americans who are faced with monthly cash crises.

With so many Americans losing their homes while the Obama administration bails out the banks, people have no doubt the voters are trying to send the Democrats and Obama a message – do something about housing and jobs.

During the Chilean mine crisis, filmmaker Michael Moore asked on CNN “If 31 miners can be rescued after months 2,300 feet underground, why can’t President Obama help the 7 million homeowners who are losing their homes in the United States.”

Why not indeed?

The problem appears to be the banks can make more money by robo-stamping foreclosures.

ProPublica reports this week that the “The government’s foreclosure relief program has resulted in few permanent modifications, but the Treasury Department says it has at least spurred banks to do their own loan adjustments. The government program has “transformed the way the mortgage servicing industry treats borrowers in distress,” Phyllis Caldwell, a Treasury official, said in congressional testimony last week. The banks’ in-house modifications have come to outnumber the government modifications by four to one.” Despite Praise From Banks, Treasury, In-House Loan Mods Provide Less Help to Homeowners

President Obama is long on rhetoric but seems incapable of sorting out the financial crisis for average Americans.

For the banks, the red ink has yet to hit their financial statements. A new report by Weiss Ratings News says there “JP Morgan Chase, Wells Fargo and Bank of America Each Hold More Than $20 Billion in Foreclosures”  “Although only some portion of the past-due loans will ultimately go into foreclosure, these figures tell us that the biggest players are not only in deep, but could sink even deeper into the mortgage mayhem. Meanwhile, however, there are also some large banks that have done a relatively good job of avoiding the brunt of the crisis.” Weiss Ratings News

With stories from The Washington Post, ProPublica