The banks still just don't get it.
In a staggering 92 percent of the claims brought by creditors asserting the right to foreclose against bankrupt families in New York City and the close-in suburbs, banks and mortgage servicers couldn't prove they had the right to kick the families out on the street, a three-month probe by The Post has shown.
But that didn't stop the banks from trying.
By robosigning documents and pressing foreclosures without the proper paperwork, banks have attempted to steamroll their way over sometimes-outgunned homeowners, The Post has uncovered.
But homeowners and the courts are starting to fight back.
Forced to finally face the mess, banks find themselves driven to the bargaining table, where they now hope to win a global settlement with all 50 states and the federal government. The tangled, complex mess in New York shows how tough -- and expensive -- such a settlement could be for the banks.
The Post dug through more than 150 Chapter 13 bankruptcy filings from June 2010 in New York's Eastern and Southern federal court districts -- covering the five boroughs, Long Island and nearby northern counties including Westchester--in search of local foreclosure or pre-foreclosure cases. We then put together a random sample of 40 cases where creditors such as banks -- but more often loan servicers -- filed proofs of claim for first mortgage debt.
The research unearthed claims riddled with robosigners, suspiciousdocuments and outrageous fees. And in a stunning 37 out of 40 cases, The Post discovered a broken chain of title from the original lender to the company now making claim against a local family for its home and thousands of dollars in questionable fees.
In other words, the bank or mortgage servicer filing the claim failed to prove it has any right at all to make a claim it was owed the debt or that it could seize the home in question.
The Post looked at Chapter 13 filings because the banks or mortgage servicers file proofs of claim for the debt and must, under penalty of perjury, include accurate information about the mortgage, note and fees. In New York, filing public records with "intent to deceive" is a felony.
EXPERIENCED foreclo sure defense lawyers who reviewed some of these cases for The Post say the findings reflect a widespread pattern of malfeasance by banks and loan servicers that has gone largely unchallenged for far too long.
"In-court borrowers are by definition broke and can't hire document experts, but anybody who knows this terrain knows that stuff that looks this suspicious almost certainly is fraud," says financial industry expert Yves Smith. "There are too many miraculous copies of documents showing up at the eleventh hour and nonsense like that to think this is clean."
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