With the consent order delivered by federal regulators and a lull in the state Attorney General investigation, you would think that nothing is happening on the foreclosure fraud front. At least, that’s what the banks would like you to think. But the truth is that judges continue to edge toward accountability for acts of fraud. A case in point: South Carolina, where the chief justice of the state Supreme Court just stopped all foreclosures for the second time in as many years:
For the second time in two years, South Carolina’s chief justice on Tuesday ordered a stop to all pending foreclosures until the parties involved can complete an intervention process — a move with the potential to affect thousands of people struggling to hold onto their homes.
The injunction, which applies both to foreclosures still pending on May 9, as well as any filed after that date, is intended to give homeowners a chance to mitigate their losses, modify their loans and potentially alleviate the already strained court system processing the cases, Chief Justice Jean Toal wrote in the order.
“The number of unresolved foreclosure actions has increase, with a resulting burden on the resources of the Court before which the action is pending,” Toal wrote. “The trial courts report that such breakdowns are largely the result of difficulty in communication between lender-services and debtors, and the fact that foreclosure actions are proceeding to conclusion without regard to ongoing loss mitigation efforts by the parties.”
This is really aimed at forcing loan modifications or some other agreement between borrowers and lenders, and Judge Toal may be more concerned with cleaning up state court dockets than anything else. But she has always had as her foremost goal getting borrowers the help they need. Stopping foreclosures or other options by the banks is a good way to get that done.
This will stop foreclosure actions on as many as 23,500 homes, as those families get a chance at coming to an agreement. This kind of moratorium could be a model for the rest of the country.
In addition, state registers of deeds are looking at the faulty signatures uncovered by 60 Minutes’ report and the diligent work of foreclosure fraud activists over the years, and are starting to make their move. In Massachusetts, register of deeds John O’Brien of Essex found hundreds of questionable and potentially fraudulent signatures under his jurisdiction from Linda Green, a notorious robo-signer. He forwarded these on to the state Attorney General, Martha Coakley.
The fallout from foreclosure fraud is sure to last years.