Foreclosure Error May Bring Home Break-In by Bank: Ann Woolner

For all the scandalous news about systemically sloppy foreclosure documentation, bankers are trying to reassure the public that no undeserved evictions resulted.

“At the end of the day, the underlying substance was accurate,” JPMorgan Chase Chief Executive Officer Jamie Dimon told reporters on a conference call this week. “There’s almost no chance that we’ve made a mistake.”

That misses a key point, which I’ll get to shortly.

But first, consider the words, “almost no chance.” I wrote about one homeowner faced with foreclosure even though he didn’t have a mortgage, having paid cash for his house. He can’t be the only one.

Foreclosure documents show bank employees didn’t get their own names, titles or employer names right or figure out who owned the note. Does it make sense that the only thing these folks got correct in thousands of foreclosures was each borrower’s payment record?

Secondly, there’s no way to know how substantial the errors were until the banks sift through their work, with the feds and state attorneys general looking over their shoulders.

There are many cases where homeowners were seeking loan modifications so that they could make good on their mortgages when they found themselves in foreclosure proceedings.

“They want to pay their loan,” said Tom Ice, a bankruptcy and foreclosure lawyer in Royal Palm Beach, Florida, who represents hundreds of homeowners fighting property seizures.

Merits Punishment

Some delinquent borrowers can resume making payments after a temporary job loss but can’t make up the arrearage, and the banks won’t let them keep their mortgages unless they can.

ABC News reported on a homeowner whose bank had agreed to modify her loan, but her home was auctioned out from under her.

Here’s the thing. If it were demonstrably true that the foreclosure debacle forced no homeowner onto the streets who hadn’t actually defaulted, what the banks did here still deserves punishment.

There is a reason states require a process for foreclosures and why notaries must swear that they actually witness the signatures they notarize. It’s because this offers a tad more protection against bogus foreclosures. It is supposed to force a little more care, attention to detail and respect for property rights before forcing a homeowner to give up shelter.

You’ve read about cases where a judge tosses out evidence, say, a murder weapon or cocaine, because police busted into someone’s home without a proper warrant. Anyone who has watched a single episode of “Law & Order” knows the importance of doing things right.

Otherwise, the case is dismissed and the suspect walks free, all because of a so-called technicality.

Constitutional Rights

Critics complain that crime goes unpunished because of nit-picking judges. But that technicality is a constitutional prohibition on unreasonable searches and seizures. It aims to make it less likely that your door will be bashed in one night for no good reason.

The 4th Amendment of the U.S. Constitution protects only against government searches. When someone else barges in, it’s called breaking and entering.

That’s what Nancy Jacobini thought was happening when she heard someone breaking into her home, so she locked herself in the bathroom and called police, according to ABC.

Not to worry. The intruder wasn’t there to steal her TV, hunt for jewels or to rape her. The man who broke into her house in Orlando, Florida, was doing it for JPMorgan Chase and was there to change the locks.

‘Alarming Frequency’

He thought the home had been foreclosed on and vacated. It was neither. Jacobini had been paying down her mortgage for 18 years, according to her lawyer, Matthew Weidner.

And while it’s true she was about four months behind in payments, foreclosure proceedings hadn’t begun much less finished, and she was still living there, Weidner says.

These break-ins happen with “alarming frequency,” he says.

You would think that banks, which by the way are reaping billions of dollars of profits and awarding record bonuses, might have taken the time to be more careful about that sort of thing, especially these days.

Banks naturally want to protect vacant houses they own and hire firms to help them do that. But they have no right to break into homes they don’t own. Chase has acknowleged its error, ABC reported. The bank is examining foreclosure files in 41 states.

The list keeps growing of ways that lenders and their employees show cavalier disregard for process and the law. Whether it’s technical or substantive error, banks have got to fix it, and fix it soon.

(Ann Woolner is a Bloomberg News columnist. The opinions expressed are her own.)

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