NY to hold lawyers accountable on foreclosures

AP News
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Posted: Oct 20, 2010 2:53 PM
NY to hold lawyers accountable on foreclosures

The chief judge of New York's courts implemented a new rule Wednesday requiring every lawyer handling a foreclosure to sign a form verifying that all paperwork in the case is accurate.

The move comes amid an uproar over accusations that mortgage lenders nationwide cut corners on paperwork and legal procedure as they moved to seize millions of homes. It follows a slew of other state efforts to challenge the foreclosure debacle.

Attorneys general in all 50 states and the District of Columbia are jointly investigating whether mortgage companies have violated state laws. In Maryland, an emergency measure approved this week by the state's highest court outlines how state judges can review foreclosures and stop them if documents are invalid.

In New York, attorneys already have an obligation to ensure that the documents they present to the court are valid, but New York Chief Judge Jonathan Lippman said having them sign something affirming that all papers got a proper review will hold them accountable like never before.

"We want to make sure that everyone is focusing like a laser on these particular types of proceedings," he said. "It puts them on notice. That's what this is all about. We all have to make doubly sure that we are doing what we should be doing in the first place."

The rule requiring a signed affirmation applies to both new cases and the 78,000 foreclosure actions already under way in New York courts.

Lawyers handling pending foreclosure actions will probably need to go back to their clients and verify that all proper steps were followed, Lippman said. The form created by the court requires the lawyers to give the name of the bank employee who affirmed that the records were accurate and the date the conversation took place.

The president of the New York State Bar Association, Stephen Younger, issued a statement praising the new rule. "The chief judge has taken swift steps to address a nationwide problem in foreclosure actions," he said.

Some New York judges have complained loudly about rampant errors of varying severity in legal filings by banks seeking to foreclose on record numbers of homeowners.

In some cases, documents that were supposed to have been given an individualized review were signed by bank employees who never read them or checked them for errors.

A few major banks froze all foreclosures nationwide while they reviewed their filings for problems. Two of the biggest, Bank of America and GMAC Mortgage, resumed proceedings this week.

Lippman said he was convinced the courts were seeing "systemic structural failings" in the foreclosure process, and he said judges and lawyers have a responsibility not to close their eyes to paperwork errors _ even if they seem minor.

"You are talking about tremendous consequences. You are talking about taking people's homes," he said. "Those papers have to be accurate. They have to be credible."