Archive for the ‘Collections’ Category

Fannie, Freddie Give Some Relief to Foreclosed Homeowners

December 3, 2014 Leave a comment

Fannie, Freddie Give Some Relief to Foreclosed Homeowners

Agencies Will Allow Homeowners in Foreclosure to Buy Back Properties at Market Value

Mortgage-finance giants Fannie Mae and Freddie Mac will allow homeowners who have been foreclosed upon to repurchase their homes at market value even if they owe more, reversing a policy that prohibited such transactions.

The change comes as Melvin Watt, the director of Fannie and Freddie’s regulator, has come under increasing pressure from some groups to use the companies to provide more relief to struggling homeowners.

“This is a targeted, but important policy change that should help reduce property vacancies and stabilize home values and neighborhoods,” said Mr. Watt, the chief of the Federal Housing Finance Agency.

Previously, someone who lost a home through foreclosure and wanted to buy it back from Fannie or Freddie needed to pay the full amount owed on the mortgage, even if the market value of the home was less. That was intended to take away the motivation for homeowners to intentionally default in order to get the balance of their mortgages reduced.

In effect, that meant Fannie and Freddie had two standards where they would be willing to sell properties they owned to a new buyer at market prices when they wouldn’t do so for the former homeowner.

“There’s no reason why you shouldn’t be willing to sell a home to these borrowers on the same terms that you’re willing to sell it to someone else,” said Laurie Goodman, center director of the Housing Finance Policy Center at the Urban Institute.

The old policy drew the ire of some politicians and nonprofit groups, which argued that it encouraged homes to stay vacant and hurt neighboring property values. In June, Massachusetts Attorney General Martha Coakley sued Fannie and Freddie, alleging that the policy violated a Massachusetts state law that allowed market-value sales to foreclosed-upon homeowners in some circumstances. That lawsuit was dismissed in October.

On Tuesday, Ms. Coakley said the change “is encouraging news for homeowners in Massachusetts and across the country” while adding that she hoped the regulator would move further to reduce mortgage debt for some homeowners.

Elyse Cherry, chief executive of Boston Community Capital, a nonprofit group that provides financing to foreclosed-upon homeowners to buy their homes back, called the new policy “an encouraging step in the right direction. It makes sense for homeowners and it makes sense for neighborhoods.”

However, the impact of the change could be limited. It will only apply to the 121,000 homes that Fannie and Freddie have already foreclosed on and own, a provision that’s intended to curtail any incentive for borrowers in good standing to default. That narrow scope is unlikely to quiet the drumbeat for the FHFA to make bigger changes intended to help a larger number of borrowers who owe more than their homes are worth.

Foreclosed-upon borrowers will also still need to find the cash or financing to buy the old home back at market value, a tall order for those with tarnished credit histories.

“This is a ‘feel-good’ type of policy. It’s directionally helpful to a small number of homeowners that ran into trouble, but at the end of the day, I don’t look to this to have a major policy impact,” said Clifford Rossi, a finance professor at the University of Maryland.

Since Mr. Watt took office in January, many politicians and nonprofit groups have asked that he allow Fannie and Freddie to reduce the principal of mortgages for borrowers who owe more than their homes are worth, a step that he has so far avoided taking.

At a Senate Banking Committee hearing last week, Sen. Elizabeth Warren (D., Mass.) criticized Mr. Watt for not allowing principal reduction. Mr. Watt at the hearing said that principal reduction was “the most difficult issue that I’ve faced as director.”

The new policy in effect reduces mortgage principal, albeit for a small number of foreclosed-upon borrowers. Some nonprofit groups said that Fannie and Freddie would be better served to reduce the borrower’s principal before a foreclosure.

“It would make more sense to do a mortgage modification with principal reduction earlier in the process and prevent foreclosure in the first place,” said Kevin Whelan, national campaign director for the Home Defenders League, a nonprofit that has advocated for widespread principal reduction.

A Fannie Mae spokesman declined to comment beyond Mr. Watt’s statement.

“Our ongoing practice has been to sell homes at current market price to minimize losses to Freddie Mac and maximize opportunities to stabilize home prices in communities while fostering homeownership opportunities,” said a Freddie Mac spokesman.

Legal issues slow foreclosures

November 6, 2011 1 comment

Legal issues slow foreclosures


In a small Bergen County courtroom one recent Friday, a sheriff’s officer auctioned off two foreclosed properties in a matter of minutes, as a handful of investors kept their eyes open for bargains.

Few buyers attended a foreclosure auction of two properties at the Bergen County Courthouse.

Few buyers attended a foreclosure auction of two properties at the Bergen County Courthouse.

It was a far cry from the typical sheriff’s auction of mid-2010, when 15 or more properties were auctioned weekly and up to 100 investors crowded the courthouse’s large jury room.

Sheriff’s auctions are among the most visible symbols of the housing crisis, which left many homeowners saddled with mortgages they couldn’t afford. But foreclosure auctions have slowed dramatically since questions arose more than a year ago about “robo-signing” — that is, sloppy paperwork by mortgage lenders and servicers.

Requesting a review

Homeowners who lost their homes to foreclosure in 2009 and 2010 can have their cases reviewed to see if their mortgage companies did anything wrong, the federal Office of the Comptroller of the Currency said last week.

Mortgage servicers were to begin mailing letters last week to borrowers, telling them how to request an independent review if they believe they were injured by flawed foreclosure proceedings. If the reviewer finds they were harmed, the customer may receive compensation or another remedy.

The companies are America’s Servicing Co., Aurora Loan Services, Bank of America, Beneficial, Chase, Citibank, CitiFinancial, CitiMortgage, Countrywide, EMC, Everbank/Everhome, First Horizon, GMAC Mortgage, HFC, HSBC, IndyMac Mortgage Services, Metlife Bank, National City, PNC, Sovereign Bank, SunTrust Mortgage, U.S. Bank, Wachovia, Washington Mutual and Wells Fargo.

Requests for review must be received by April 30, 2012. For more information, visit

Though lenders were given the go-ahead in August to start foreclosing again in New Jersey after showing a judge they were following the rules, they have been slow to resume activity.

The reason: an August appellate court decision, Bank of New York v. Laks, according to Kevin Wolfe, head of the state’s Office of Foreclosure. In that case, the court dismissed a foreclosure, finding the lender violated the state Fair Foreclosure Act because it didn’t properly identify itself in a notice sent to the troubled homeowners.

Under new state court rules, lawyers working for foreclosing plaintiffs have to personally certify that they have checked the facts behind a foreclosure filing with an employee of the lender or the lender’s servicer. Many have indicated to Wolfe that they are reluctant to sign such a certification, because they’re concerned that the lender’s paperwork may not meet the requirements set out in the Laks decision.

E. Robert Levy, executive director of the Mortgage Bankers Association of New Jersey, said he believed there was no “real question about the validity of the loans being put through the foreclosure process.”

“The money is still owed; it’s just a matter of making sure you meet the procedural requirements, and we agree the requirements should be met,” Levy said.

Advocates for distressed homeowners say it’s only reasonable to ask lenders to get the paperwork right when it involves a matter as serious as taking someone’s home.

“Any delay that there is in New Jersey is occurring only because lenders haven’t followed the law,” said Margaret Lambe Jurow, a lawyer with Legal Services of New Jersey, who has represented homeowners in foreclosure cases. “Had they filed these things properly, they’d be in and out.”

The implications go beyond the losses suffered by homeowners and lenders. Housing analysts say the troubled real estate market can’t recover until the large number of distressed properties are finally sold. The properties make up a so-called “shadow inventory” — not on the market yet, and likely to ultimately sell at a large discount to other properties, pulling down housing values. Foreclosed homes typically sell at a discount of 20 percent or more, according to research.

Mortgage paperwork issues stem from the fact that most mortgages are not held by the local bank; they’re bundled into securities and resold to investors. In these cases, the company that a homeowner writes monthly checks to — the mortgage servicer — probably does not actually own the loan.

In the Laks case, for example, Sarah Laks’ mortgage was serviced by Countrywide Home Loans, but the actual owner was a trust managed by the Bank of New York. When Laks, of Lakewood, defaulted on the loan, she got a notice of intention to foreclose from Countrywide, but it did not mention the real owner, as required by the state’s 1995 Fair Foreclosure Act.

A lender’s attorney who spoke on condition of anonymity said that in the years since the Fair Foreclosure Act was passed, it’s been very common for these notices to name only the servicer, not the actual holder of the loan, as required by the Laks decision.

When mortgages were being written and sold to investors at a furious pace during the housing boom, the mortgage machine allegedly cut corners on recording who actually owns a mortgage and, therefore, has the right to foreclose.



Federal investigation


The questions over robo-signing slowed foreclosures to a trickle this year in New Jersey, after the state’s chief justice ordered six big lenders to show they were following the rules last December.

As a result, New Jersey homeowners are staying in their homes, on average, for more than 2 1/2 years without paying their mortgages before they are evicted, according to RealtyTrac, a California company that tracks the foreclosure market.

On a national level, the mortgage servicers’ questionable foreclosure practices are under investigation by the federal government and most of the nation’s attorneys general. The investigation is expected to result in a settlement reported at $25 billion; in exchange, lenders would be released from some legal claims.

Ira Rheingold of the National Association of Consumer Advocates predicted that the attorneys general’s settlement will include a road map for how lenders can establish ownership of a mortgage in cases where the transfer was poorly documented.

For example, he said, lawyers sometimes use a “lost note affidavit,” where a lender’s employee with knowledge of the loan signs an affidavit certifying that the lender actually owns it, even if the documentation is missing.

“How are you going to prove ownership — that really is the big question,” Rheingold said. “At some point people really need to be able to sell their houses. … If there’s a mortgage, somebody is owed the money. How do you straighten out this mess?”

Questions about this chain of ownership are being watched by the title insurance industry. In a recent case in Massachusetts, a court ruled that a buyer who purchased a property after an improper foreclosure was not the legal owner.

So far, there haven’t been enough such cases to make title insurance companies back off from writing policies, according to the American Land Title Association. But the industry is continuing to watch the issue, an ALTA official said.

It’s not clear when the foreclosure pipeline will start moving again in New Jersey, though foreclosure lawyers are watching another case that brings up issues similar to the Laks case. That case, U.S. Bank v. Guillaume, is scheduled to be heard by the Supreme Court soon. In the Guillaume case, an appellate court made the opposite decision as was made in the Laks case, and upheld a foreclosure action against an East Orange homeowner who said the notice of intention to foreclose didn’t properly identify the lender.

The lender’s lawyer, speaking anonymously, said the Supreme Court could get the pipeline moving again by requiring that the lender be identified in notices going to troubled homeowners, as the Laks ruling requires — but only in the future, not in cases already filed.

“We’re hoping the Guillaume case clears this up,” said the lawyer.


New Jersey Mortgage Default Rate Is Country’s Third Highest, Report Says

August 25, 2011 1 comment

New Jersey Mortgage Default Rate Is Country’s Third Highest, Report Says

A new report by the Mortgage Bankers Association says New Jersey is third in the nation in the number of loans either in foreclosure or on the brink.

Mary Pat Gallagher


A new report by the Mortgage Bankers Association says New Jersey is third in the nation in the number of loans either in foreclosure or on the brink.

More than one in 10 New Jersey mortgage loans are already in foreclosure or are 90 days or more in arrears, says the association’s National Delinquency Survey for the second quarter of 2011, which looked at almost 43.9 million mortgage loans across the country, including 1,252,958 in New Jersey.

The state’s 11.36 percent rate of “seriously delinquent” mortgages was third highest in the U.S. Florida topped the list with 18.68 percent, followed by Nevada, with 14.34 percent.

At the opposite end of the scale were North Dakota with a 1.76 percent rate, and Alaska with 2.24.

In addition to serious delinquencies, another 3.18 percent of New Jersey mortgages are 30 days late and an additional 1.24 percent are 60 days late, says the report, released Monday..

New Jersey’s ranking was driven by a high number of pending foreclosures, nearly 8 percent. Again, only Florida (14.39 percent) and Nevada (8.15 percent) have more.

The report does not state the number of loans in foreclosure, but Kevin Wolfe, assistant director for the Administrative Office of the Courts’ Civil Practice Division, says 107,464 residential foreclosure cases filed since 2009 remain open. He points out that the figure includes settled cases for which no stipulations of dismissal have been filed.

The glut of foreclosures is the product of a flood of filings that crested in 2009, at 66,717, including non residential foreclosures, and dropped to 58,445 for 2010.

Filings slowed to a trickle at the end of last year, after the judiciary froze uncontested residential foreclosures by the six biggest lenders so it could address robo-signing and other abuses that had come to light.

Wolfe estimates that those six — Bank of America, JPMorgan Chase, CitiBank, Ally Financial, OneWest Bank and Wells Fargo — file at least 70 percent and possibly more than 80 percent of uncontested residential foreclosures.

Their sizeable share of foreclosures has been evident in the precipitous plunge in filings since theirs were suspended last December. Only 6,090 foreclosures had been filed in 2011 as of the end of July, a drop of 90 percent from 2010.

Monthly filings fell from 4,358 last November, the month before the freeze, to 399 in January. They have inched back up since then, to 1,368 for July.

Filings are sure to rebound much faster now that the courts have resumed processing foreclosures for five of the big six foreclosers. All but Ally Financial, formerly known as GMAC Mortgage, got the go-ahead to resume foreclosures during the week of Aug. 15.

The five persuaded a court-appointed special master, retired judge Richard Williams, that they have stopped offensive practices — such as signing court documents that falsely stated personal knowledge of the facts of the mortgage; failing to review documents on which certifications or affidavits were based; and forging signatures — and have taken steps to prevent recurrence.

In her Dec. 20, 2010, order, Mercer County Presiding General Equity Judge Mary Jacobson said the court had “become increasingly concerned about the accuracy and reliability of documents submitted to the Office of Foreclosure” and was acting on an exigent basis “to protect the integrity of the judicial foreclosure process.”

In addition to requiring lenders to prove they have adopted and are following proper procedures, the Court has amended the rules governing foreclosure.

Among other changes to Rules 4:64-1 and 2 that took effect in June, lenders’ lawyers are now required to attach a Certification or Affidavit of Diligent Inquiry to foreclosure complaints and motions describing the lawyer’s communication with an employee of the lender or loan servicer who has personally reviewed the mortgage file and confirmed the accuracy of the information in court filings.

The courts are bracing for a spurt in new filings as well as “the large pent-up pool of cases to be moved,” by adding staff at the Office of Foreclosure and around the state, says Wolfe.

As of Tuesday, he had not yet seen the anticipated surge in filings but planned to talk with Williams about how to handle the monitoring of foreclosure filings to ensure that the new safeguards are being followed. The six lenders agreed to the monitoring in a stipulation in March.

The press release accompanying the Mortgage Bankers report suggested another cause for the New Jersey backlog. It called the existence of a judicial foreclosure system, which some states like California and Michigan do not have, the “single biggest factor” in why some states have big backlogs because it “lengthen[s] the foreclosure timeline and increase[s] the number of loans that sit in foreclosure, all other things being equal.”

Does Clicking ‘I Agree’ Create a Binding Contract?

August 21, 2011 Leave a comment

Does Clicking ‘I Agree’ Create a Binding Contract?

Refining the ‘fair and forthright’ standard for online consumer agreements
Refining the ‘fair and forthright’ standard for online consumer agreements

Elliot D. Ostrove andBrian W. Disler


As consumers continue to buy more and more products over the Internet, courts are being presented with opportunities to examine the validity of online agreements.

For example, on May 13, the Appellate Division decided Hoffman v. Supplements Togo Mgmt., LLC, 419 N.J. Super. 596 (App. Div. 2011), holding that the forum-selection clause contained on the defendant’s website did not meet the “fair and forthright” standard, and was therefore presumptively unenforceable. The court in Hoffman foreshadowed the likelihood of growth of this area of the law, stating: “[C]onsumers are increasingly purchasing products and services over the Internet. As those Internet transactions have become more prevalent, so too have legal disputes proliferated over the contractual rights created in cyberspace between buyers and sellers.”

Prior to Hoffman, courts in several jurisdictions, including New Jersey, had decided cases involving the validity of online agreements. The New Jersey Appellate Division first dealt with this issue in Caspi v. Microsoft Network, 323 N.J. Super. 118 (App. Div. 1999). In Caspi, the plaintiffs, members of the defendant’s Internet service, filed suit claiming, among other things, consumer fraud. The defendant moved to dismiss the complaint for lack of jurisdiction, claiming that the suit could only be brought in the state of Washington, as per a forum-selection clause found in the membership agreement plaintiffs allegedly agreed to when they clicked through the website.

The court in Caspi looked at the circumstances under which the plaintiffs were presented the online agreement. Before becoming a member of the defendant’s service, a prospective subscriber was prompted to view a membership agreement containing the forum-selection clause. The membership agreement appeared on the webpage next to blocks providing the choices I Agree and I Don’t Agree . Registration could proceed only after the potential subscriber had assented to the membership agreement by clicking on I Agree .

In determining the enforceability of the forum-selection clause, the court in Caspi applied a “fair and forthright” standard. The court stated that, “[i]f a forum selection clause is clear in its purport and has been presented to the party to be bound in a fair and forthright fashion, no consumer fraud policies or principles have been violated.” (Emphasis added.) The court found that the contractual terms were presented in a fair and forthright manner as the plaintiffs “were free to scroll through the various computer screens that presented the terms of their contracts before clicking their agreement.” The court therefore upheld the enforceability of the online contractual terms, including the forum-selection clause.

The Second Circuit Court of Appeals dealt with a similar dispute in Specht v. Netscape Communs. Corp ., 306 F.3d 17 (2d Cir. N.Y. 2002). In Specht, the plaintiffs brought suit in the Southern District of New York against the defendant, a provider of computer software programs. The defendant moved to compel arbitration, arguing that the plaintiffs’ claims were subject to an arbitration provision contained in a contract the plaintiffs had allegedly accepted when they downloaded the program.

The court in Specht applied California law, which, similar to New Jersey law, required reasonable notice of the online contract as a prerequisite to its enforceability. Unlike the contractual provisions in Caspi, however, the provisions in Specht were located in a “submerged” portion of the webpage. The submerged portion could not be seen by the consumer unless he or she scrolled down the webpage, beyond the material that initially filled the screen. The court in Specht found that the submerging of the contract terms did not meet the standard of reasonable notice. The court stated, “a reference to the existence of license terms on a submerged screen is not sufficient to place consumers on inquiry or constructive notice of those terms.” The arbitration provision was therefore found unenforceable.

More recently, the Eastern District of Pennsylvania dealt with the enforceability of an online agreement in Feldman v. Google, Inc., 513 F. Supp. 2d 229 (E.D. Pa. 2007). In Feldman, the plaintiff sued Google regarding its AdWords service. This service allowed a customer, after signing up for an account, to advertise his or her business on Google. Google sought to transfer the case to California, citing a forum-selection clause in the online agreement they claimed the plaintiff agreed to when signing up for AdWords.

In determining whether the forum-selection clause was valid, the court looked at whether the plaintiff was given “reasonable notice” of the online contract. Unlike the defendant in Specht, Google had taken several steps to ensure that its online contract was prominently displayed. Toward the top of the page displaying the contract, a notice stated, “Carefully read the following terms and conditions. If you agree with these terms, indicate your assent below.” Additionally, a link to a printer-friendly version of the contract was offered at the top of the contract window. At the bottom of the webpage, viewable without scrolling down, was a box with the words: Yes, I agree to the above terms and conditions . If the customer did not click on that phrase, and instead tried to click the Continue button at the bottom of the webpage, the customer could not activate the account.

The court in Feldman found that the manner in which Google displayed its online contract was reasonable. The court distinguished Google’s online contract from the online contract in Specht, pointing specifically to the fact that Google’s customers had to take affirmative action when agreeing to the contract terms. The court stated:

Unlike the impermissible agreement in Specht the user here had to take affirmative action and click the “Yes, I agree to the above terms and conditions” button in order to proceed to the next step. . . If the user did not agree to all of the terms, he could not have activated his account, placed ads, or incurred charges.

The court therefore upheld the enforceability of the forum-selection clause.

It was to the above three cases — Caspi, Specht and Feldman — that the Appellate Division referred in recently deciding whether the online agreement in Hoffman was “fair and forthright.” In Hoffman, the plaintiff, a purchaser of product from defendant’s website, sued the defendant in New Jersey state court, claiming that the defendant had, among other things, violated the New Jersey Consumer Fraud Act. The defendant moved to dismiss the complaint claiming, inter alia, that the plaintiff was precluded from suing in New Jersey because of a forum-selection clause contained within a disclaimer on the defendant’s website. The trial court agreed with the defendant, dismissing the complaint, and the plaintiff appealed.

The Appellate Division overturned the trial court, holding that the placement of the disclaimer on defendant’s webpage failed to meet the Caspi “fair and forthright” standard and, as such, the forum-selection clause contained therein was presumptively invalid. The Appellate Division found that defendant’s “submerging” of the forum-selection clause — deemed impermissible in Specht — was likewise not “fair and forthright.” Specifically, the defendant placed the disclaimer in a position on the website where it was possible for the plaintiff to make his entire purchase without ever seeing the disclaimer if he did not scroll down the page. Furthermore, once the plaintiff added an item to his online “shopping cart,” the site would skip ahead to a new page that did not contain the disclaimer. The Appellate Division highlighted these points, stating that “the forum-selection clause was unreasonably masked from the view of the prospective purchasers because of its circuitous mode of presentation.” The court ruled that the forum-selection clause was presumptively invalid and reinstated the complaint.

In light of Hoffman and the line of cases preceding it, companies that sell products directly to consumers over the Internet should review and, where necessary, revise their website layouts, to ensure that they are conforming to the now further-defined “fair and forthright” standard. Even though the cases cited above all involve forum-selection clauses, the practical application of the decision is not necessarily so limited.

In order to ensure that their online agreements will be enforceable, companies can take some or all of the following steps:

Ensure that the contract provisions are not “submerged” (i.e., the online contract is visible without the customer having to scroll down the page).

If scrolling is necessary to see all of the terms and conditions, have customers take an affirmative step to show their assent to the agreement, such as clicking a button stating, “Yes, I agree to the above terms and conditions” (agreement button).

Only allow customers to make a purchase after they have clicked an agreement button, whether scrolling is necessary or not.

Require users to scroll down through the entire terms and conditions before being allowed to click on an agreement button.

Have users who click on anything other than the agreement button, directed back to the terms and conditions before being allowed to “check-out.”

Provide a link to a printer-friendly version of the contract.

Anti-Robo-Signing Strictures Adopted For N.J. Residential Foreclosures

December 21, 2010 Leave a comment

Anti-Robo-Signing Strictures Adopted For N.J. Residential Foreclosures

By David Gialanella

New Jersey Law Journal

December 20, 2010

The state judiciary on Monday announced a set of measures in reaction to the “robo-signing” scandal in residential mortgage foreclosures.

Based on documented accounts of lending institutions rubber-stamping foreclosure paperwork, the court entered an administrative order directing lenders to show that there are no irregularities in their review processes.

The Supreme Court also adopted emergent rule changes that put the onus on lenders’ attorneys to police their clients’ practices. An attorney representing a foreclosing lender must now file an affidavit or certification confirming the attorney has communicated with a lender’s employees who confirmed the accuracy of the documents; to submit the names of those employees; and to file an affidavit or certification confirming that the filings comply with Rule 1:4-8(a), which mandates that attorney-filed papers have evidentiary support.


In a teleconference with reporters on Monday, Chief Justice Stuart Rabner said the additional obligations imposed on attorneys are consistent with existing foreclosure practice. “I would expect that attorneys will be able to comply with this,” he said.

Rabner said he took this action after reviewing a Nov. 4 report by Legal Services of New Jersey and a Nov. 16 report by a congressional oversight panel. Both found that lenders have been signing off on documents in support of foreclosure requests that they haven’t verified, a problem precipitated by lenders’ employees asked to sign stacks of affidavits without looking at the underlying papers.

In the administrative order, Acting Administrative Director of the Courts Glenn Grant singles out six of the state’s most prominent mortgage lenders as allegedly participating in robo-signing activities: Bank of America, JPMorgan Chase, Citi Residential, Ally Financial, OneWest Bank and Wells Fargo.

Grant listed specific instances of suspect verification practices by employees of those six lenders, including:

• A JPMorgan Chase employee whose eight-person team executed about 18,000 affidavits per month, none of which she reviewed before signing.

• A Citi employee who signed documents without review, had no industry experience and “could not even explain what precisely an assignment of mortgage accomplishes.”

• A OneWest Bank employee who executed 750 documents per week, spending no more than thirty seconds to examine each one.

• A Wells Fargo manager who signed 300 to 500 documents over a two-hour period each day. Managers who held her position were authorized to sign as “vice president of loan documentation” for purposes of executing the documents, but weren’t company officers in any other respect.

Grant also directed 24 other lenders, which each filed 200 or more New Jersey residential foreclosure actions in 2010, to demonstrate within 45 days that their foreclosure processes contain no irregularities.

A third prong of the judiciary’s plan, issued by Mercer County General Equity Judge Mary Jacobson ordered that the six lenders show why their processing of New Jersey foreclosure matters should not be suspended as a result of their implication in the robo-signing practices.

Those companies were ordered to make submissions by Jan. 19, when Jacobson will hold a hearing. As head of the Administrative Office of the Courts’ Office of Foreclosure, Jacobson is responsible for reviewing all foreclosure complaints.

Retired Union County Superior Court Assignment Judge Walter Barisonek was recalled on Monday to serve as a special master in charge of receiving the lenders’ submissions explaining their processes, beginning on Jan. 3. Barisonek will review those submissions, request testimony or other additional information, and decide whether to refer any of the lenders to Jacobson for further review.

Together, the 30 lenders named account for 75 percent of New Jersey foreclosure actions in 2010, Rabner said.

Ninety-four percent of the state’s foreclosure cases “proceed in the absence of any meaningful adversarial proceeding,” Grant said in the order.

“The significance of this disparity is even more striking because many of the contested proceedings are defended pro se,” Grant said. “Because these actions frequently lack an aggressive defense, the Office of Foreclosure and our General Equity judges are tasked with the responsibility of ensuring that justice is done for absent and pro se parties.”

Grant’s order said the alleged practices have the potential to call into question the validity of affidavits, certifications and other documents, as well as the integrity of foreclosure records, the judicial system and titles passed through purchase at foreclosure sales.

The New York state judiciary recently began requiring attorneys to make filings similar to those mandated in the New Jersey rule amendments, and attorneys general in at least four states and the District of Columbia have dictated such requirements, Grant said in his order.

E. Robert Levy of Levy & Watkinson in Woodbridge, executive director of the Mortgage Bankers Association of New Jersey, says the judiciary’s goals are “laudable,” but could have an unintended impact.

“When you issue a blanket order … the effect of that is the costs for consumers seeking loans generally will go up,” Levy says. “The slower the process in getting back your money [through foreclosure proceedings], the slower the process in getting money back out there [to lend].”

Levy is “also somewhat concerned from a lawyer standpoint,” he says, adding that he expects attorneys will be held to a high level of due diligence when certifying in court that their client-lenders’ employees have sufficiently reviewed foreclosure documents before signing off on them.

In the 2006 court year, plaintiffs filed 21,752 foreclosure actions; the number swelled to 65,222 in the 2010 court year.

More Diligence Required in Seeking Out-of-State Heir in Foreclosure Suit

December 5, 2010 1 comment

More Diligence Required in Seeking Out-of-State Heir in Foreclosure Suit By Charles Toutant New Jersey Law Journal December 1, 2010 A default judgment for tax foreclosure was void because the plaintiff failed to locate and serve the deceased homeowner’s out-of-state heir, the Appellate Division ruled Wednesday. The case, Fidelity Asset Management, LLC v. Faine, A-1485-09, was remanded to determine if the owner of a tax sale certificate diligently tried to find the heir, whether service by publication in a New Jersey newspaper gave adequate notice to the out-of-state heir and whether mail service on one heir is adequate for another heir at the same address. New Jersey Home Construction Inc. brought a foreclosure action in December 2006 against a home in Cinnaminson for which it held the tax sale certificate. The certificate was later sold to another company, Fidelity Asset Management, which took over as plaintiff. The redemption amount on the certificate was $19,025 plus $1,180 in costs. The homeowner, Mary Faine, died intestate in 2002. The foreclosure complaint named Faine and Toni Fleming, described as “a known heir.” The complaint also included Faine’s “heirs, devisees, and personal representatives” or “any of their successors in right, title and interest” because the plaintiff alleged it “has been unable to determine her heirs.” In May 2007, Anthony Johns and Barbara Hawkins, described as known heirs of Faine, were added as defendants after the plaintiff’s attorney, Cherry Hill solo I. Dominic Simeone, learned from the Cinnaminson tax collector that they are Faine’s grandson and daughter. On Jan. 2, 2008, Burlington County Superior Court Judge Michael Hogan entered a final judgment of foreclosure against all the defendants. On Jan. 18, an order precluding transfer was entered after a motion was filed to vacate the foreclosure judgment. The order was entered by Johns; Hawkins; Hiram Johnson, a family friend who was looking after Faine’s house; and Mallonease Scott, Faine’s other daughter. The motion contended that Scott and Hawkins, who live together in Texas, are Faine’s only heirs, and that defendant Fleming was unknown to the family. Their motion contended that Fidelity failed to engage in sufficient efforts to locate the decedent’s heirs. Fidelity said it engaged in a title search, a vital statistics search and skip-tracing procedures to look for Faine’s heirs, but only found Fleming. On May 2, 2008, Hogan denied the motion to vacate after concluding that Fidelity had satisfied the requirements of Rule 4:4-4(b)(1)(c) for mail service and Rule 4:4-5 for service by publication. On appeal, Judges Howard Kestin and Donald Coburn declined to disturb Hogan’s determinations because it was based on undisputed facts and refused to reverse the judgment of foreclosure as to Hawkins and Johns. But the panel said it could not allow the judgment to stand with regard to Scott, who was not named as a defendant and was never served. “In the face of the reality that the heirs stand to lose their right to the full value of the property, whatever that may be, for failure to pay some $20,000 on a tax sale certificate, a default judgment as to Mallonease Scott cannot be countenanced without specific findings based on further proofs as to whether engaged in reasonably diligent efforts to identify and serve her,” Kestin and Coburn wrote. The heirs’ lawyer, Moorestown solo John Poindexter III, says he will prove on remand that Fidelity’s inquiry wasn’t diligent enough. Scott “was clearly the daughter of Ms. Faine — why they didn’t find her, I don’t know. They found one of the daughters — it seems to me they should have found the other,” Poindexter says.Simeone, the lawyer for Fidelity, did not return a call.

Some Facts about the Health Care Reform Bill

November 5, 2010 Leave a comment


As the election draws near, some conservative groups are making ever-wilder claims about the new health care law:

  • An elderly man in a Crossroads GPS ad makes the death-panel-esque claim that the law “threatens our lives.”
  • The 60 Plus Association has a World War II veteran evoking the Normandy invasion and claiming that “your freedoms will be chipped away,” unless the legislation is repealed.
  • The American Action Network made the false statement that “jail time” would be the punishment for not having insurance, when the law in fact forbids any criminal penalties.

In addition, we continue to see claims from the Republican side that the law creates “government-run” health care, or will cause a steep rise in premiums for typical families, or will give health insurance to illegal immigrants, or will lead to widespread cuts in Medicare benefits. As we’ve written before, none of that is true. We also see claims that the law allows tax dollars to be used to fund abortions, despite specific language in the law forbidding that.

Misrepresenting the health care law has been perhaps the single most dominant theme of attack ads by GOP candidates, party groups and independent conservative organizations. A record estimated $4 billion is being spent on both sides in this midterm election, according to the Center for Responsive Politics. And from our observations, a large part of that is being spent to discredit the health care legislation and the Democrats who voted for it. In this article we wrap up all this health care spin, examining both the latest claims and those that have been repeated most often.


The midterm campaigns have been ripe with false and misleading claims about — what else? — the health care law. By our count, this is the fourth roundup of claims about the legislation that we’ve written. And it very well may not be the last.

A Government-Run Threat to Life and Freedom?

Some of the more outrageous recent claims appear in ads that call the new law “government-run” health care or a “government takeover.” But much to the chagrin of a minority of lawmakers who wanted a true, government-run, single-payer system, that’s not what the law delivers. Yes, there’s an expansion of Medicaid, but the law builds on the country’s private insurance system, creating more business, in fact, for those private companies by requiring individuals to have coverage.

That hasn’t stopped opponents of the law from making this claim — and going much further than that. In an ad attacking Democratic Sen. Patty Murray of Washington, Crossroads GPS harkens back to pull-the-plug-on-grandma claims by having an elderly man say the law “threatens our lives.”

How exactly does it do that? A spokesman for the group told us this was a reference to $500 billion in Medicare cuts in the law. That’s $500 billion in cuts in the future growth of spending over 10 years — more on this later — and the move, if it happens, puts Medicare on much better financial footing. The program’s board of trustees reported that [t]he financial status of the [hospital insurance] trust fund is substantially improved by the lower expenditures and additional tax revenues instituted by the Affordable Care Act,” and that the savings would extend the life of the trust fund by 12 years. But there’s a big caveat. That’s only if Congress sticks with the reductions in the legislation and previously scheduled cuts in payments to physicians, set up by a late 1990s law, and that’s not likely. Legislators postponed the physician cuts until December this year, and they’ve repeatedly canceled them in recent years.

So, either the cuts the man in the ad fears won’t happen, or Medicare would be in much better shape financially. Either way, we fail to see how this “threatens” anyone’s life, so we judge this claim to be false.

Crossroads GPS ad attacking Sen. Patty Murray of Washington: “Problem with Patty,” first aired Oct. 7

⬐ Click to expand/collapse the full transcript ⬏

Multiple Speakers: We sent Patty Murray to DC almost 20 years ago. That’s plenty for Patty Murray. We trusted her to fix things. Heck, Patty’s become part of the problem. The debt that Patty has supported is going to affect our children for generations. Her bailouts have done nothing. For heaven’s sake, she supported Obamacare and that threatens our lives. She’s been there too long. We can’t afford six more years of Patty Murray.

Announcer: Crossroads GPS is responsible for the content of this advertising.

Speaking of over-the-top claims, this week the 60 Plus Association launched a minute-long spot that has a World War II veteran claiming “your freedoms will be chipped away” if the health care law isn’t repealed. Philip Storer tells viewers that he “was one of thousands that landed on D-Day. We fought to protect something we all hold very dear, our freedoms.” Now, Storer says, those freedoms are “threatened” by this “government takeover of health care.” We contacted 60 Plus to ask what basis the group had for those claims. We haven’t yet received a response.

This is the same group, readers may recall, that had former U.S. Surgeon General C. Everett Koop on camera making the bogus assertion that the United Kingdom considers seniors “too old” to qualify for artificial joints, pacemakers and coronary stents. We put the “freedoms” claim in the growing category of unsubstantiated hyperbole.

60 Plus Association Ad: “Still Believe”

⬐ Click to expand/collapse the full transcript ⬏

Announcer: June 1944. D-Day. Allied troops land at Normandy. Their mission: save the world from a deadly and growing oppression.

Philip Storer, WWII and D-Day Veteran: I was one of thousands that landed on D-Day. We fought to protect something we all hold very dear, our freedoms. Today, our freedoms are threatened by a very different kind of enemy. The enemy is big government, wasteful spending, and crushing debt. Nowhere is this threat more apparent than in the attempted government takeover of healthcare. The first step has been taken. If we don’t repeal the healthcare bill, government will grow, debt will explode, choices will become fewer and your freedoms will be chipped away. I still believe our freedoms are worth fighting for. The fight to repeal the government takeover of health care is up to you.

No ‘Jail Time’ Here

A group called American Action Network resurrected an old falsehood that the law calls for “jail time” for anyone who fails to get health insurance. It doesn’t. As we wrote in May, the law nullifies the possibility of prison time for those who don’t get coverage and refuse to pay a fine. It specifically says: “In the case of any failure by a taxpayer to timely pay any penalty imposed by this section, such taxpayer shall not be subject to any criminal prosecution or penalty with respect to such failure.” The AAN ad ignores what the final law said, instead referring to an outdated news item from Politico from September 25 of last year. The bill was amended soon after.

The false “jail time” claim appeared in an ad that first aired Oct. 22 against Democratic Rep. Chris Murphy of Connecticut. And the assertion raised eyebrows at one TV station. AAN Communications Director Jim Landry told us that a station questioned the ad, prompting AAN to revise it to remove the reference to “jail time.” Landry told us the ad was updated sometime on Oct. 26 or 27. According to the Campaign Media Analysis Group, a unit of Kantar Media, the original “jail time” version aired 92 times through Oct. 25. CMAG hadn’t captured a revised ad yet. That version says that those who didn’t get insurance would be subject to “penalties.” That’s true.

The ad also says the law requires “thousands of IRS agents.” That’s based on a partisan analysis using false assumptions. We knocked down that whopper in an earlier item, pointing out that the law requires the IRS mostly to hand out tax credits, not collect penalties.

American Action Network Ad: “Mess”

⬐ Click to expand/collapse the full transcript ⬏

Announcer: A government health care mess, thanks to Nancy Pelosi and Chris Murphy. 500 billion in Medicare cuts. Free health care for illegal immigrants. Thousands of new IRS agents. Jail time for anyone without coverage. And now a 47 percent increase in Connecticut health care premiums. 47 percent. Call Chris Murphy. Tell him to repeal his government health care mess. American Action Network is responsible for the content of this advertising.

Coverage for Illegal Immigrants?

We haven’t heard much about this claim since Republican Rep. Joe Wilson’s “you lie” moment. But American Action Network’s ad above, and another from the group, resurrects the charge, saying the health care law provides “free health care” or “spends our tax dollars on health insurance” for illegal immigrants. The ad below is airing against Reps. Mark Critz of Pennsylvania and Stephanie Herseth Sandlin of South Dakota.

The law doesn’t provide any “health insurance” for illegal immigrants. In fact, it stipulates that insurance plans sold on the state-based exchanges are available only to citizens and lawful residents.

Patient Protection and Affordable Care Act: ACCESS LIMITED TO LAWFUL RESIDENTS.—If an individual is not, or is not reasonably expected to be for the entire period for which enrollment is sought, a citizen or national of the United States or an alien lawfully present in the United States, the individual shall not be treated as a qualified individual and may not be covered under a qualified health plan in the individual market that is offered through an Exchange.

It also doesn’t provide any subsidies for illegal immigrants or any new “free” care for them. What American Action Network objects to is Senate Democrats’ rejection of an amendment to require some type of verification system of legal status. AAN also points to the fact that citizens are required to have insurance, while illegal immigrants aren’t — but those here illegally can still get emergency care at hospitals. However, that was the case before the health care law was passed. Illegal immigrants, and others who aren’t insured, are able to get treatment for emergencies (but not non-emergencies, unless they pay for it). U.S. law requires that.

The change that might occur is which pot of government money is used to reimburse hospitals for this uncompensated care. We called the Centers for Medicare & Medicaid Services and talked with spokeswoman Mary Kahn, who explained how this works. Hospitals either get payments for emergency care through what’s called Emergency Medicaid (for patients who would be eligible for Medicaid but don’t have it) or the disproportionate share hospital (DSH) funds, provided for hospitals that treat a lot of uninsured people, Khan explained. The health care law expands Medicaid eligibility, so hospitals may find themselves filing paperwork for more money through Emergency Medicaid than DSH, whether those who are treated are illegal immigrants or not. Either way, it’s government money. And either way, illegal immigrants get treatment for emergencies and hospitals get reimbursed.

AAN also referred us to two news reports that undercut its own claim. A 2007 Reuters report said: “Less than 1 percent of Medicaid spending went to health care for illegal immigrants, according to a study that the researchers said defied a common belief that they are a bigger drain on taxpayer money.” And the group cites a January 2008 USA Today article (yes, that’s a year before Obama was even sworn in) that states: “The sweeping overhauls of the nation’s health care system proposed by Democrats Hillary Rodham Clinton, Barack Obama and John Edwards would not provide coverage for illegal immigrants.”

By the way, about half of illegal immigrants actually had health insurance before the law was passed, according to the Pew Hispanic Center.

American Action Network Ad: “Repeal”

⬐ Click to expand/collapse the full transcript ⬏

Announcer: Obamacare. A trillion dollar health care debacle. Yet Congressman Mark Critz says he opposes repealing it. It means $500 billion in new job-killing taxes, cuts billions from Medicare for seniors, and spends our tax dollars on health insurance for illegal immigrants. Yet Congressman Critz says he wants to keep it. Tell Congressman Critz to vote for repeal in November. The American Action Network is responsible for the content of this advertising.

Medicare Cuts

This might be the most common line of attack of them all. We’ve seen many versions of the claim that the health care bill cuts Medicare by $500 billion. That’s actually a reduction in the future growth of spending over 10 years, not a slashing of the current budget, as we’ve pointed out. To put that in context: The Congressional Budget Office estimates that federal Medicare spending will be $519 billion this year, and $929 billion in fiscal year 2020, even with these cuts. The health care law calls for a reduction in the currently projected growth of federal outlays of about 7 percent over the decade.

Claims that these cuts will “hurt the quality of our care” — like the one below from the 60 Plus Association — ignore the fact that the law adds some benefits to Medicare, such as free preventive care and more prescription drug coverage. And the law (section 3601) says that guaranteed Medicare benefits can’t be reduced. But one group of seniors — those on Medicare Advantage plans, about 10 million beneficiaries — will likely lose the extra benefits they receive, such as gym memberships or spare eyeglasses. These private plans currently get paid more by the government per enrollee than traditional Medicare, and the law brings those payments in line with the regular program, over time. 60 Plus ran ads similar to this one, which targets Rep. Steve Kagen of Wisconsin, against 15 other House Democrats.

60 Plus Association Ad: “Hurts – Kagen”

⬐ Click to expand/collapse the full transcript ⬏

Person #1: Steve Kagen betrayed Wisconsin seniors.
Person #2: Instead of protecting us , he supported Nancy Pelosi’s liberal agenda.
Person #3: Kagen voted for Pelosi’s health care bill…
Person #1: …which cuts $500 billion from Medicare.
Person #2: That threatens our ability to keep our doctors…
Person #4: …and keep our health plans like we were promised.
Person #5: These cuts will hurt the quality of our care.
Person #2: Steve Kagen voted against Wisconsin seniors…
Person #1: …now it’s time for us to vote against him.

Announcer: 60 Plus Association is responsible for the content of this advertising.

More Expensive Premiums?

Other ads, such as these from Revere America and American Crossroads, have claimed that under the law “costs will go up” or families will see “higher insurance premiums.” But for most Americans with health insurance, premiums are expected to stay the same or decrease a bit, compared with what would have happened to costs without the new law.

According to the nonpartisan Congressional Budget Office, those in the large group market would see between no change and a 3 percent decrease in the average premium in 2016. The small group market would see between a 1 percent increase and a 2 percent drop in the average premium. Again, that’s in comparison to what premiums would do without the health care law.

For those who buy insurance on their own, the average premium would go up by between 10 percent and 13 percent. Why? Because the benefits in this non-group market would improve. Plus, 57 percent of those in this market would get federal subsidies — the extra money would entice them to buy more expensive plans than they normally would, says CBO.

On one point the ads make a valid criticism: The overall cost of health care is projected to rise because of the new law — but barely. In April, the chief actuary of the Centers for Medicare & Medicaid Services, Richard Foster, projected an increase of less than 1 percent in overall health spending over the next decade:

CMS Chief Actuary Foster, April 22: “[W]e estimate that overall national health expenditures under the health reform act would increase by a total of $311 billion (0.9 percent) during calendar years 2010-2019.

Foster predicted that the slight increase would come about largely because 34 million persons who would otherwise be uninsured will gain coverage under the new law, and that others will gain improved coverage, and all will make greater use of health care services.

This is one area where President Obama has conspicuously failed to meet campaign promises that his health care overhaul would reduce costs in addition to expanding coverage. Foster noted: “Although several provisions would help to reduce health care cost growth, their impact would be more than offset through 2019 by the higher health expenditures resulting from the coverage expansions.”

Revere America Ad: “Defeat Hall”

⬐ Click to expand/collapse the full transcript ⬏

Announcer: Congressman Hall voted for Obamacare. Government-run health care, it’s a bad plan. Government bureaucrats will benefit. Seniors will get hurt. Costs will go up. Care will go down. Longer waits in doctors’ offices. Your right to keep your own doctor may be taken away. It’s a plan we didn’t want and don’t need. But Hall voted for it anyway. Defeat Congressman Hall. Revere America is responsible for the content of this advertising.

(For more on the Revere America ad, see our article “Pataki’s Bogus Health Care Claims.”)

American Crossroads: “Far Enough”

⬐ Click to expand/collapse the full transcript ⬏

Announcer: Not only does Ami Bera support Obamacare he says it doesn’t go far enough. Obamacare’s 525 billion dollars in job killing taxes Isn’t far enough? The higher insurance premiums aren’t far enough? What about the 500 billion dollars cut from Medicare? And reduced benefits for 1.5 million California seniors? Ami Bera and Obamacare. They’re bad medicine for California. American Crossroads is responsible for the content of this advertising.

Taxpayer-funded Abortions?

This emotional issue was a major point of contention in the final days of debate on the health care bill, and neither the anti-abortion or pro-abortion rights camp walked away happy. Does the law use ”our tax dollars” to pay for abortions, as claimed by the following ad from CitizenLink, a family advocacy group, and the anti-abortion rights group Susan B. Anthony List?

As we’ve said before, strictly speaking, it does not, except in cases of rape, incest or danger to the mother’s life, the same government restrictions that have applied to Medicaid recipients, federal workers and the military. The controversy stems from how the law aims to guarantee those rules are followed when the government provides subsidies to purchase insurance.

The law says that those receiving subsidies to buy insurance through state-based exchanges must submit a separate payment to cover abortion services (if they choose a plan that covers abortions), and insurance providers must keep federal money separate from private payments to ensure the federal money does not go toward abortion coverage. President Obama also signed an executive order reaffirming the federal rules on only funding abortion in cases of rape, incest and danger to the mother’s life. Does that go too far or not far enough? That depends on one’s viewpoint, and we’ll let readers be the judge.

The CitizenLink/Susan B. Anthony List ad (this one, targeting Rep. Joe Donnelly of Indiana) also makes the unfounded claim that the law is the “biggest expansion of abortion in decades.” But that’s conjecture. We looked at the question of whether more women would get abortions if more had insurance that covered the procedure, and we found the evidence didn’t support that claim.

CitizenLink/Susan B. Anthony List Ad: “Choice”

⬐ Click to expand/collapse the full transcript ⬏

Announcer: The fate of Obamacare came down to a few key votes, legislation that uses our tax dollars to pay for abortion, and Joe Donnelly had a choice to make. Protect life or side wth President Obama and Speaker Pelosi. And he chose them. Joe Donnelly betrayed you and voted for the biggest expansion of abortion in decades. Votes have consequences, Congressman. Citizen Link, Susan B. Anthony List, and Indiana Family Action are responsible for the content of this ad.

– by Lori Robertson


2010 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds. Centers for Medicare & Medicaid Services. 5 Aug 2010.

Lillis, Mike. “Trustees report finds healthcare reform to extend Medicare’s life.” The Hill. 5 Aug 2010.

Kaiser Health News. “Obama Signs 6-Month Fix For Medicare Reimbursements To Doctors.” 25 Jun 2010.

Henig, Jess. “Imprisoned for Not Having Health Care?” 13 Nov 2009.

The Patient Protection and Affordable Care Act., Government Printing Office. 2010.

Brown, Carrie Budoff. “Ensign receives handwritten confirmation.” Politico. com. 25 Sep 2009.

Jackson, Brooks. “IRS Expansion.” 30 Mar 2010.

Landry, Jim, American Action Network communications director. E-mails to 27 Oct 2010.

Jonathan Collegio, American Crossroads communications director. E-mails to 28 Oct. 2010.

U.S. Senate. S.Amdt. 3701, amends H.R.4872. proposed 25 Mar 2010.

Kahn, Mary, Centers for Medicare & Medicaid Services spokeswoman. Phone interview with 28 Oct. 2010.

Dunham, Will. “Medicaid spends 1 pct on illegal immigrants: study.” Reuters. 13 Mar 2007.

Wolf, Richard. “Rising health care costs put focus on illegal immigrants.” USA Today. 22 Jan 2008.

Congressional Budget Office. “Key Issues in Analyzing Major Health Insurance Proposals.” Dec 2008.

Congressional Budget Office. “The Budget and Economic Outlook: An Update.” Aug 2010.

Congressional Budget Office. Letter to Sen. Evan Bayh. 30 Nov 2009.

Foster, Richard. Estimated Financial Effects of the “Patient Protection and Affordable Care Act,” as Amended. Centers for Medicare & Medicaid Services. 22 Apr 2010.


Side-by-Side Comparison of Major Health Care Reform Proposals. Kaiser Family Foundation. accessed 1 Apr 2010.

Robertson, Lori. “The Abortion Issue.” 1 Apr 2010.