Empty courtroomOn Oct. 20, New York State Chief Judge Jonathan Lippman ended robo-signing in New York state foreclosures by requiring a special affirmation from the banks' attorneys. They now must swear that they know the banks' documents are true because they checked the paperwork.

At the time, attorneys in the state told me that they expected foreclosure filings by the big banks to halt, or nearly so, for up to several months. Eventually, they said, the banks and their attorneys would create a new process that allowed the attorneys to make the affirmations.

The first empirical evidence is in, and the rule has indeed choked off the filings.

Rapid Response to the New Rule

The New York Law Journal reported that foreclosure filings dropped from about 800 in the week the rule was announced to about 100 in the second week of December. The drop off is particularly sharp in counties that had high foreclosure volumes, including Suffolk County (from 274 to 6) and Brooklyn (from 53 to 2). Queens County filings were nearly cut in half -- from 88 to 48 -- but that 48 means Queens accounted for nearly half the filings in the week.

While the 100 cases in that week were the lowest since the rule started, the bulk of the drop happened quickly, as the New York Law Journal article shows in nifty chart measuring the plunge.

I spoke with three Suffolk County judges or their representatives, and they confirmed that hundreds of foreclosure filings have been withdrawn. Erin Michael Kay, secretary to Suffolk County Supreme Court Judge Jeffrey Arlen Spinner, says his caseload was down to 250 (it was much higher) due to the number of cases withdrawn pending the filing of the "Lippman affirmation." As of now, no such affirmations have been filed in the cases still pending before him.

Further Affirmations Required

Similarly, on Dec. 1, Suffolk County Supreme Court Judge Peter Fox Cohalan issued an order dismissing all 127 foreclosures pending before him because the banks' attorneys hadn't filed the affirmation. While all the cases can be refiled once the banks documents are in order, Cohalan's order requires the banks to go beyond the Lippman affirmation.

In his court at least, a bank employee is going to have to sign an affirmation even more detailed than what Judge Lippman ordered for lawyers. The bank affirmation comes from Cohalan's concern with robo-signing, explains Daniel J. Murphy, Judge Cohalan's chief law assistant.

Going forward, banks that want to foreclose in Cohalan's court will have to have "whoever is looking at the documents provide an affidavit that the amounts are correct, the mortgage is present, the assignments of mortgage have been correctly signed and dated and the paperwork before court is accurate." To prevent robo-signing of those affidavits, Cohalan also requires bank representatives to list every document they reviewed for the affidavit. That list must include the note, and they must explain who they are, how long they've been at the bank and what their educational background is.

Only Real Vice Presidents Can Sign

Murphy explains the purpose of that mini-resume is to make sure these employees understand what they're looking at and that any "person claiming he is the vice president of the bank is in fact a vice president of the bank." While that sounds silly -- why would someone sign a document with an inaccurate title -- the robo-signing scandal has exposed the practice of people signing as a vice president who have no link to the financial institution except for a resolution authorizing them to sign.

Kay says Judge Spinner hadn't decided whether to impose a similar rule in the cases he hears. Judge Patrick A. Sweeney, another Supreme Court Judge sitting in Suffolk County, tells me that since he's retiring in a couple of weeks he's not imposing any new rules now. But he suggests that banks will ultimately be able to get their acts together and file proper papers.

Judge Sweeney oversaw the part of the New York foreclosure process in which banks and homeowners try to negotiate a modification. He says he became frustrated with attorneys and witnesses who appeared for the foreclosing banks with no real knowledge of the case at hand. So, Sweeney started insisting that attorneys in charge of the foreclosure show up, instead of "per diem" attorneys hired to make the appearance who had no knowledge of the case.

Sweeney also requires the owner of the loan, not just the servicing bank, to show up, so someone with real decision power would be present. And, Sweeney notes, the banks usually complied. That's why he expects they'll find a way to enable their lawyers to file the Lippman affirmation, of which Sweeney says the lawyers "should have reviewed the papers all along, but with the volume they got sloppy."

Judge Cohalan isn't trying to stop banks from foreclosing with his new rule, notes Murphy:
"When the paperwork is correct, we'll have a foreclosure settlement conference at which point the judge will conference with both the attorney for the bank and the homeowner, and see if there is some way to save the person's home. And we'll see if the bank is being reasonable. But if the bank is being reasonable, the foreclosure will proceed.

If people can't afford their home, if they can't pay their bills, the foreclosure will happen. Homeowners have to have a plan and the ability to pay. The banks are entitled to be paid."

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billnyc52

you can't call a bank or insurance company and get a american speaking person on the phone anymore. even if you are born in the U>S>A went to school here (all 16years) and tryed to find a job, you got to understand with the EOE you will never find a job. you have to be foreign born, understand little to no english, and work here just to send your money back to your country to pay for your 6kids there, until you can find a way to get them into the usa, and than go on welfare and free load off our system. it ok, because we take care of the foreign's better than our won people.

December 21 2010 at 7:01 AM Report abuse +1 rate up rate down Reply
petey

Of course the banks are entitled to be paid. That is a given and was mentioned several times in the story. Too bad so little attention is given to the countless people who may have lost their homes simply because a lazy bank attorney paid a stranger to rubber stamp everything without reading it. How many banks are liable for selling misleading loans to clients and did not explain what an ARM was and how this would one day tack on an average of $1,000 per month to their mortgage, so that is what they should have been rated on? None have been held liable. None have been investigated. Its a pity that more people are not outraged yet. How far do you have to be pushed?

December 21 2010 at 4:05 AM Report abuse +2 rate up rate down Reply
olderbutwizer

Stand by for The Revenge Of The Paper People!It's a sad,SAD world where people can sit in a office...push paper..or the electronic equivalent..and have NO connection the the REAL world they inhabit..and control..and y'all thought Tron and The Matrix was just science fiction..you'd think some juior junior paper pusher woulda been sent out to SEE if there was a REAL property on a REAL site..and maybe what kinda shape it was in..on the way back from Starbucks,I mean...!

December 21 2010 at 12:27 AM Report abuse +1 rate up rate down Reply
Miss Lisa Troup

ABOUT FRICKIN TIME!!!TOO LATE FOR ME AND OTHERS....ALL THE JUDGES MADE $$$$ OFF THIS,DON'T EVER DOUBT IT!!!!THEY ARE ALL ON THE TAKE,How do I know?My EX FATHER-IN-LAW was a JUDGE,and a DIRTIER,MORE ON THE TAKE, EVIL, DRUNKEN,SOB, SOP NEVER WALKED THE PLANET!!!O;(

December 20 2010 at 10:24 PM Report abuse +2 rate up rate down Reply
boatsdt219

All parties are responsible in the foreclosures of the “American Dream”. From the “home buyers” to just short of the court system for lying and over budgeting the personal financing to dishonest lawyers and mortgage companies. The buyers want a home and lie about their finances and over budget. The “Real Estate Agents” that don’t care to the lawyers and mortgage companies / banks / lenders that where their money and or the home to the buyers bought to the securities that are traded without insurance coverage. The banks, insurance companies, lawyers and mortgage companies all made a profit from foreclosures on the “American Dream. GREAD for BIG COPRORITE Money!

December 20 2010 at 7:43 PM Report abuse +1 rate up rate down Reply
Wayne

This article is about a Judicial State .... Just think what happens in a NON-JUDICIAL STATE. Non-judicial states like Arizona and California are Screwed.

December 20 2010 at 6:06 PM Report abuse +5 rate up rate down Reply
ajallenky

Wake up !!! 50% of the jobs that have been lost in the U.S. are from the construction industry - They are NEVER coming back. The rest of the lost jobs that went to China and India are because of our high WAGES compared to that of the rest of the world. Until we accept the fact that wages have to be more in line with those of the rest of the world we will CONTINUE to LOSE JOBS - All the whining and political hot air expelled by those morons in Congress doesn't change reality - I DON'T like it either - BUT, facts are facts !!!

December 20 2010 at 5:27 PM Report abuse +9 rate up rate down Reply
3 replies to ajallenky's comment
mjm98103

The only saving grace the housing market has, is that so many homes that were built in the last 50+ years were so cheaply built, poorly designed and badly maintained that nobody will buy them and they will have to be torn down.

December 20 2010 at 5:12 PM Report abuse +4 rate up rate down Reply
mjm98103

Buying a home always incures risk and rewards, its only when the system gets tweeked to give advantage or disadvantage to section of public that ballows occure, all ballons will pop due to unexpected events. The real estate boom is one of a very few events that has had such a long life, made so many people wealthy, now the time has come to pay the piper, expect a lot of pain for a long time.
What few people that can afford to buy, have much to choose from and are in no hurry to aquire a home due to fact prices are on the way down. Most sellers are
stuck with deminishing home values, only those who have 15+ years of equity can
price their homes at an attractive price, the rest are screwed. Rest assured the powers to be are burning the mid night oil to re-inflate the inflation ballown, good luck with that one, ever try to inflate a ballon that has bursted?

December 20 2010 at 4:57 PM Report abuse +1 rate up rate down Reply
rotten rollin

Foreclosures slow as banks discover they own all the residences in New York State.

December 20 2010 at 4:31 PM Report abuse +9 rate up rate down Reply
2 replies to rotten rollin's comment
ajax

and no one can qualify for a loan to buy them back.

December 20 2010 at 8:43 PM Report abuse +2 rate up rate down Reply
Relevant Data

China can.

December 21 2010 at 5:06 AM Report abuse +2 rate up rate down Reply