Mortgage Company Bailed Out By Taxpayers Is Caught Forging Documents to Foreclose on Them
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GMAC, one of the nation's largest mortgage servicers, faced a quandary last summer. It wanted to foreclose on a New York City homeowner but lacked the crucial paperwork needed to seize the property.
GMAC has a standard solution to such problems, which arise frequently in the post-bubble economy. Its employees secure permission to create and sign documents in the name of companies that made the original loans. But this case was trickier because the lender, a notorious subprime company named Ameriquest, had gone out of business in 2007.
"The problem is we do not have signing authority—are there any other options?" Jeffrey Stephan, the head of GMAC's "Document Execution" team, wrote to another employee and the law firm pursuing the foreclosure action. No solutions were offered.
Three months later, GMAC had an answer. It filed a document with New York City authorities that said the delinquent Ameriquest loan had been assigned to it "effective of" August 2005. The documentwas dated July 7, 2010, three years after Ameriquest had ceased to exist and was signed by Stephan, who was identified as a "Limited Signing Officer" for Ameriquest Mortgage Company. Soon after, GMAC filed for foreclosure.
An examination by ProPublica suggests this transaction was not unique. A review of court records in New York identified hundreds of similar assignment documents filed in the name of Ameriquest after 2008 by GMAC and other mortgage servicers.
The issue has attracted growing scrutiny in recent months as bloggers, consumer attorneys and media outlets have identified what appears to be part of a pattern of questionable assignments filed across the country.
GMAC, whose parent company renamed itself last year as Ally Financial, was at the center of what became known as the robo-signing scandal. The uproar began last fall after revelations that mortgage servicing employees had produced flawed documents to speed foreclosures. GMAC and other banks have acknowledged filing false affidavits in which bank officials claimed "personal knowledge" of the facts underlying thousands of mortgages. But GMAC and other servicers say they've since tightened their procedures. They insist that their records were largely accurate and the affidavits amounted to errors of form, not substance.
The issues surrounding the Ameriquest loan and others like it appear to be more serious.
"This assignment of mortgage has all of the markings of GMAC finding that it lacked a needed mortgage assignment in order to foreclose and just making it up," said Thomas Cox, a Maine foreclosure defense attorney.
In New York, it's a felony to file a public record with "intent to deceive."
"It's fraud," said Linda Tirelli, a consumer bankruptcy attorney. "I want to know who's going to do a perp walk for recording this."
No criminal charges have been filed in the robo-signing cases.
Asked by ProPublica about the document, GMAC acknowledged Stephan did not have authority to sign on behalf of Ameriquest. The bank said it is still planning to push ahead with foreclosure on the homeowner, who remains in the property.
Company spokeswoman Gina Proia said an internal review last fall into "suspected documentation execution issues" had flagged the loan as problematic and that GMAC is "determining what needs to be done in order to receive the necessary authorization."
"We will determine and complete the necessary steps to remediate and proceed with foreclosure," Proia said.