Sunday, May 20, 2012

NY Foreclosure Mill Attorneys' Failure To Submit Mandatory Paperwork When Filing Foreclosures Clog Courts, Leave Cases Languishing In Limbo

In New York City, the New York Post reports:

  • Foreclosure-mill attorneys are routinely breaking the law and clogging New York courts with unresolved cases, an explosive new study shows.

  • In a report set to be released this week, MFY Legal Services shows that foreclosure-mill law firms are still failing to file required documents in an astonishing 43 percent of foreclosure cases started in November 2010 and March 2011. The percentage was even higher for cases in October 2011. These trends suggest that as many as 5,200 of 12,142 residential foreclosures begun in New York last year are languishing in limbo.

  • It’s a huge problem,” said Jacob Inwald, Director of Foreclosure Prevention Litigation for Legal Services NYC. “Once you are sued in foreclosure, you are frozen and can’t resolve your situation.”

  • At issue is the October 2010 rule requiring foreclosure law firms to verify the accuracy of their filings. Created after the robo-signing scandal, the rule was meant to curtail false filings. But because lawyers can begin a case and file two documents afterwards — the accuracy affirmation and a request for a settlement conference — they have a loophole to exploit.

  • Troubled borrowers pay a steep price. Foreclosure fees and charges rack up, but the borrower cannot attend a settlement conference. As the delays drag on, homeowners become ineligible for certain modification deals, or too deeply in debt to climb out.

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