Foreclosuregate: Bank and lawyers lie to a court in Pennsylvania and get caught

The characterization of people facing foreclosures should be revised to give them a presumption of innocence, as any court of law will agree. It just appears that the banks and the legal firms they have been hiring to perform forclosures are guilty of serious misdemeanors. In an article published in Daily Finance Abigail Fields reports (hat tip to Firedoglake for this):

Two Pennsylvania cases, one state and one federal, have exposed new types of document problems in foreclosure cases. One of the cases has potentially transformative consequences for thousands of troubled Pennsylvania homeowners. At the center of each is the same law firm: Goldbeck McCafferty & McKeever (GMM).

A lawsuit filed by Patrick Loughren against GMM details how the firm allowed — and perhaps still allows — nonlawyers in its firm to file and prosecute thousands of foreclosures.

As long as a lawyer supervises foreclosure filings, and at least reads them before they’re submitted to the court, that is acceptable. But Loughren is suing because all three named partners of GMM, Joseph Goldbeck, Gary McCafferty and Michael McKeever, have admitted under oath — during depositions last September and in a separate case in December 2009 — that no attorney ever read the filings. The partners made clear that the practice has gone on for the past several years…

What misconduct was at issue in the case Judge Agresti oversaw? He found that GMM and Countrywide/BofA “had not been honest with this Court” because they tried to foreclose on Pennsylvania homeowner Sharon Hill, even though she was current on her mortgage. They did so by relying on documents — specifically “payment change letters” — they knew weren’t real. As first reported by Roche in the Pittsburgh Tribune-Review article, Agresti issued the sanction of humiliation for all the involved parties, by detailing the misconduct in his orders and making the orders public.

While Hill was in a bankruptcy — which she ultimately completed successfully — Countrywide changed the amount that Hill owed per month three times, but it neglected to tell her, her attorney or the bankruptcy court of the changes. Hill and the bankruptcy trustee making payments on her behalf made every payment to Countrywide that they believed was due, but the mortgage lender said she was falling behind. When the bankruptcy was discharged, Countrywide lost the right to claim the “overdue” amounts. Countrywide nonetheless tried to foreclose on Hill for them.To stop the foreclosure, Hill reopened her bankruptcy. For that proceeding, a low-level Countrywide employee generated from scratch three “payment change letters” dated 2003, 2004 and 2007 that purportedly showed Hill’s attorney had been told the monthly payment was increased. The most recent letter was dated roughly six month before it was in fact created.

Those letters were part of the evidence submitted to the court, and even after both Countrywide and Countrywide attorneys at GMM were aware the letters were not real, no one informed Hill, her attorney or the Court. The documents were exposed to Hill only because the 2003 letter was supposedly sent to her attorneys at their present address, even though they had had a different one at the time. When you hear that everyone being foreclosed on is really a deadbeat, keep Hill in mind.

In a separate article the Pittsburgh Tribune-Review said:

Under Agresti’s [sanction] order last week, attorney Leslie A. Puida and the firm Goldbeck, McCafferty and McKeever must report to the Disciplinary Board of the state Supreme Court, which could impose penalties…

Agresti rejected a bankruptcy trustee’s recommendation to bar Puida from practice in federal court for a year and fine the law firm $50,000.

Agresti noted the Philadelphia firm lost $400,000 because of the case and Puida’s compensation was reduced considerably. He said a $50,000 penalty likely would not have “significant further deterrent effect.” If he imposed a greater penalty, it would risk putting the law firm out of business, the judge wrote.

The judge made nice with the lawyers in my opinion. He should have put them out of business for such a egregious trampling of ethics and the obvious perjury.

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