Every once in a while we get a court opinion that spells out exactly what kind of fraud is happening in foreclosure cases, who is responsible, and how they do it. In Re: Wilson is one of those opinions. Read on and prepare to be shocked—unless you’ve read this kind of thing before.
An Abuse of Trust by LPS
This Bankruptcy Court order explains that employees of Lender Processing Services routinely swear under oath that certain facts are true, without confirming that they are, in fact, true, and explains the evil effects of those false affidavits:
Default affidavits are a lender’s representation as to the status of a loan. They are routinely accepted in both state and federal courts in lieu of live testimony. They are an accommodation to the lending community based on a belief by the courts that the facts they present are virtually unassailable. The submission of evidence by affidavit allows lenders to save countless hours and expense establishing a borrower’s default without the need for testimony from a lending representative. While they can be refuted by a borrower, too often, a debtor’s offer of alternative and conflicting facts is dismissed by those who believe that a lender’s word is more credible than that of a debtor. The deference afforded the lending community has resulted in an abuse of trust.
What did LPS do to abuse this trust? The Court explains:
Although the affidavit in this case purported to verify that Option One was the holder of the note owed by Debtors through an assignment, Ms. Goebel does not personally know this to be a fact and made no effort to verify her assertion. Similarly, the affidavit identifies the mortgage and note as exhibits to the affidavit, but Ms. Goebel neither checks the attachments nor verifies that they are correct. In fact, the affidavits she signs never have any attachments when forwarded to her for execution, and she never adds any.
Although the affidavit represents that it was executed in the presence of a notary and witnesses under oath, no oath is ever administered, and the signatures of the affiant, notary, and witnesses are separately affixed and outside the presence of each other. Ms. Goebel has no personal knowledge regarding the loan file save for the three (3) or four (4) facts read off a computer screen that she neither generates nor understands. he does not review any other information pertaining to the loan file, even information available to her. LPS Admitted that Ms. Goebel followed its procedures and that those procedures were used in all cases.
It’s no different than a witness in a criminal case saying: “I saw that guy fire the gun!” when in fact, the witness wasn’t even in the same city. It’s perjury, and it’s a crime. And as the Court explains, it undermines the entire judicial system:
The fraud perpetrated on the Court, Debtors, and trustee would be shocking if this Court had less experience concerning the conduct of mortgage servicers. One too many times, this Court has been witness to the shoddy practices and sloppy accountings of the mortgage service industry. With each revelation, one hopes that the bottom of the barrel has been reached and that the industry will self correct. Sadly, this does not appear to be reality. This case is one example of why their conduct comes at a high cost to the system and debtors.
In this case, the failure of LPS to verify its own affidavits resulted in a lender making false representations to the Court that a borrower had defaulted on the loan.
Fortunately, the Court caught on, and has imposed sanctions in an amount to be determined later.