Get your parachutes ready 'cause it's a long way down from here!!

Foreclosure auctions hit new record

RealtyTrac says 372,445 foreclosure auctions were scheduled in July, August and September, while 288,345 properties were repossessed by lenders over the same time period. Overall foreclosure filings edged up to 930,437 in the third quarter, a 4% increase from the previous quarter. One in every 139 homeowners received a foreclosure filing during those three months. Bank repossessions, or REOs, also are on the rise. In September, a record 102,134 homes were taken back by banks. It's the first time repos have topped 100,000 in a single month. The uptick is not expected to last, RealtyTrac CEO James Saccacio said in a statement, because several major loan servicers have halted foreclosure sales pending a review of documents. Nevada had the nation's highest foreclosure rate, up 1% from earlier, for the 15th quarter in a row.

One in every 29 Nevada homes received a foreclosure filing during the third quarter. Looking at total numbers of foreclosures, neighboring California was worst, with 191,016, followed by Florida, Arizona, Illinois and Michigan. Combined, the five states accounted for half of all foreclosures last quarter. Of course, once the moratorium ends, we can expect a new tidal wave of foreclosures. John McGeough, a broker, said that the current foreclosure freeze may give distressed homeowners extra time to do a short sale and avoid having their homes repossessed by the banks. "Foreclosure should be the last resort."

Jobless claims rise

There were 462,000 initial jobless claims filed in the week ended Oct. 9, up 13,000 from an upwardly revised 449,000 the previous week, according to the Labor Department's weekly report. Economists surveyed by Briefing.com were expecting 450,000 new claims. The 4-week moving average of initial claims -- a number that tries to smooth out week-to-week volatility -- was 459,000. This number is up 2,250 from the previous week. The government said 4.399 million people continued to file unemployment claims for their second week or more, during the week ended Oct. 2, the most recent data available. That's down 112,000 from an upwardly revised 4.511 million the week before.

Economists were expecting 4.450 million people to file ongoing claims. The 4-week moving average for ongoing claims fell by 34,500 to 4.488 million. Jobless claims in two states declined by more than 1,000 in the week ended Oct. 2, which is the most recent state data available. Claims in California dropped the most, by 6,131. The state attributed the drop to fewer layoffs in the trade and service industries. Claims jumped by more than 1,000 in three states. They rose the most in Pennsylvania, by 2,869, due to layoffs in layoffs in the rubber/plastics, food, construction, and service industries.

Government gets involved in foreclosure fiasco

The top prosecutors in all 50 states announced a coordinated probe into improper foreclosures by the nation's largest loan servicers, but stopped short of calling for a freeze on all foreclosures. The group of attorneys general and bank regulators says it will work to put an immediate stop to improper mortgage foreclosure practices, and review past and present practices by loan servicers and come up with potential remedies. The inquiry will be led by Iowa Attorney General Tom Miller. "This group has the backing of nearly every state in the nation to get to the bottom of this foreclosure mess, and we plan to work together as thoroughly and expeditiously as possible," said Miller.

Alabama was not included in the original coalition of 49 states, but Attorney General Troy King indicated Tuesday afternoon that his state would end its holdout and join the investigation. In addition to action at the state level, the Federal Housing Finance Agency on announced Wednesday directed servicers to review documents and remediate problems when found. The agency, which regulates Fannie Mae and Freddie Mac, also requested that servicers proceed quickly in foreclosure cases where no problem are found, in order to avoid unnecessary vacancies.

Fannie and Freddie, which are supported by the government, own or back the vast majority of the country's mortgages. Some Democratic congressional leaders, including Senate Majority Leader Harry Reid of Nevada, have voiced support for a foreclosure moratorium while an investigation is conducted. But those Democrats have found themselves at odds with top members of the Obama administration, including Treasury Secretary Tim Geithner, who argue that a nationwide freeze would undermine an already fragile housing market and prolong vacancies. Hey, if even Obama is against more government intrusion, it's got to be a bad idea.

NRF says VAT would cost almost a million jobs

The National Retail Federation (NRF) said a study it commissioned estimates a European-style Value Added Tax (VAT) would result in the loss of 850,000 jobs in its first year, reduce the US gross domestic product for three years, and cut retail spending by $2.5 billion over its first decade. The study, which was conducted by Ernst and Young and economic research firm Tax Policy Advisers, concluded that although lower deficits would have positive long-run effects for the economy, most Americans would be worse off due to the VAT. Talk of a VAT has surfaced in recent months as a way of dealing with the rising federal deficit, which is currently at its highest share of GDP since World War II.

Although policymakers who are considering such a measure have not offered specifics about what a VAT would look like, the calculations in the study were based on a "narrow-based" VAT similar to VATs in other countries. In order to achieve the goal of reducing the annual federal deficit by 2 percent of GDP, the VAT would need to be 10.3 percent. The study also assumed the VAT would be applied to most consumer goods and services but would exempt sales of homes, rent, groceries medicine, health care, financial services and education to ease the tax's regressive impact on low-income families. "In the face of an economy that continues to struggle, immediate enactment of an add-on VAT would pose serious risk. The drop in retail spending, jobs, and GDP under an add-on VAT has the potential to further weaken the economy in the near term, rather than strengthen it," the study's authors wrote. The study also notes that other countries have reduced, not increased, their VATs in the f
ace of the recent economic downturn.

Wells Fargo adds to crisis

Legal documents obtained by the Financial Times suggest that Wells Fargo, the second-largest US mortgage servicer, also used a “robo signer”. Unlike its rivals, Wells Fargo has not halted foreclosures. The San Francisco-based bank said on Tuesday it was reviewing some pending cases, but it has maintained that it has checks and balances designed to prevent serious procedural lapses. In a sworn deposition on March 9 seen by the FT, Xee Moua, identified in court documents as a vice-president of loan documentation for Wells, said she signed as many as 500 foreclosure-related papers a day on behalf of the bank. Ms Moua, who was deposed as part of a foreclosure lawsuit in Palm Beach County, Florida, said that the only information she verified was whether her name and title appeared correctly, according to the document.

Asked whether she checked the accuracy of the principal and interest that Wells claimed the borrower owed — a crucial step in banks’ legal actions to repossess homes — Ms Moua said: “I do not.” Ms Moua nevertheless signed affidavits that said she had “personal knowledge of the facts regarding the sums of money which are due and owing to Wells Fargo”. The affidavits were used by the bank in foreclosure proceedings. Ms Moua added that before reaching her desk, it was her understanding that the foreclosure documents had been reviewed by outside lawyers. Wells declined to comment on the deposition but said its records show its “foreclosure affidavits are accurate”.

Takin it back....waaaaaay back!

Fight over who has legal right to foreclose makes mess worse (from USA TODAY)

By Stephanie Armour, USA TODAY
When Randy Persten's mortgage was foreclosed in 2008, he looked at the paperwork and found a mystery. A company he'd never heard of — called Mortgage Electronic Registration Systems, or MERS — was bringing the foreclosure action against him.

Something didn't seem right. So he got a lawyer and fought the foreclosure, arguing that MERS couldn't foreclose because it didn't own the mortgage note he'd signed promising to pay.

Persten ultimately succeeded in getting the action dropped, only to see a new action brought by a different company that says it is the true owner of his mortgage note. Persten still isn't sure who owns his mortgage.

CRISIS: BofA halts foreclosure sales in all 50 states
PROBLEMS: Mistakes widespread on foreclosures, lawyers say

"Who was this MERS? Now we have no idea who owns the paperwork," says Persten, an appliance salesman in West Palm Beach, Fla. "If I won the lotto, I'd pay off my mortgage, but I don't know who to pay."

Persten's confusion is shared by other homeowners who are fighting foreclosure by challenging the legal powers of MERS, a company set up by the mortgage industry that is behind scores of foreclosures. Some homeowners are crying foul in lawsuits alleging MERS lacks the legal right to pursue foreclosures and in some cases they allege MERS has filed flawed documents to show it has the right to take a house.

The disputes over MERS are erupting into a second battleground over the mortgage industry's business practices, just as states and the federal government are opening examinations into whether mortgage servicers failed to properly verify and notarize legal papers to get court approvals of foreclosures in some states. Dozens of state attorneys general are expected to announce this week a joint investigation into alleged paperwork deficiencies, Ohio Attorney General Richard Cordray said Sunday.

The coming investigations and reviews threaten to extend the nation's foreclosure crisis, delaying the completion of many foreclosures against delinquent homeowners whether or not they win in the end. GMAC Mortgage said last week that even if "procedural mistakes" occurred, there was no disputing that borrowers had defaulted and it has the right to foreclose. JPMorgan Chase and GMAC Mortgage have suspended foreclosures in 23 states while they review their procedures, and on Friday, Bank of America widened its suspension from those 23 to all 50 states.

The MERS challenges are turning into a pitched legal battle playing out in the courts.

MERS was set up in 1997 by the country's largest banks to electronically register mortgage title transfers rather than filing them in county offices. The Reston, Va.-based company tracks more than 64 million mortgages, and 60% of all new mortgages.

MERS may not be well known to homeowners, but its name turns up on the papers that most borrowers sign at closing.

At that closing, two documents are created. One is the promissory note explaining the terms of the loan. The second is the mortgage showing there's a lien on the property and who holds it.

In the past, when a mortgage was sold, the new owner filed mortgage documents with county offices showing it now held the lien and paid recording fees.

But as the volume of refinanced mortgages grew in the late 1990s, the mortgage industry sought to reduce its fee expenses and speed up the process of re-assigning mortgage liens as mortgages were being rapidly bought and sold.

By having MERS hold mortgage liens for the owners, MERS eliminated the need for servicers to file paper documents reporting a lien holder change each time a mortgage was sold. MERS gives loans identification numbers, which are used to track changes in loans' servicers and owners.

"Without MERS the current mortgage crisis would be even worse," MERS said in a statement.

But critics, like North Carolina bankruptcy lawyer O. Max Gardner, say the MERS database isn't always up to date, leading to uncertainty about the lien holder's identity. "Sometimes MERS members enter the information, and sometimes they don't."

MERS says it has the legal right to foreclose when the owner of the loan chooses to make MERS the holder of the promissory note and gives it the right to enforce the mortgage if it goes into default. But lawyers representing homeowners disagree, saying MERS doesn't have the legal right to foreclose because it doesn't actually own the mortgage loan.

'It's a mess'

It could become a major entanglement for the housing industry. If judges rule that MERS has no legal grounds to foreclose on homeowners because it doesn't own the mortgage, homeowners could start challenging current foreclosures or past ones.

"This will be resolved legally. Will it take years? I don't know," says Guy Cecala, of Inside Mortgage Finance. "Like everything else, it's a mess."

Some state court judges have ruled that MERS can't foreclose on homeowners because it doesn't own the loans. In August, for example, an appellate court judge in Maine ruled MERS could not bring a foreclosure action because it lacked legal standing to do so. The judge found the borrower had never assigned the mortgage note to MERS and that MERS had not been harmed when the borrower didn't make payments.

MERS says that because it acts on behalf of the servicer that collects on loans, it has the authority to bring foreclosures.

MERS' position has found legal support in some states. Minnesota has a law upholding MERS' right to bring foreclosure actions. In Arizona, a state judge this year dismissed a class action by homeowners, ruling that the MERS system was not fraudulent.

MERS says the new lawsuits are baseless and that it's not true that banks that use MERS make it more difficult to find out who owns mortgages. MERS makes mortgage data more accurate and title information more reliable, it says. "The assertions involving MERS are false and utterly without merit. We will vigorously defend against these accusations and are confident that we will prevail," MERS said in a statement.

MERS' holding of mortgages isn't the only contentious issue against the company. Charges about faulty foreclosure papers that have been leveled against mortgage servicers have also been made about MERS.

In March, a Florida judge dismissed a foreclosure case after reviewing documents signed by a MERS agent. The Pasco County judge found the paperwork was fraudulently backdated in an intentional effort to mislead the court.

In Ohio, Secretary of State Jennifer Brunner is asking a federal prosecutor to look into whether officials who signed foreclosure documents on behalf of MERS were really authorized to do so.

"We're talking about people losing their homes," Brunner says. "This is serious."

New lawsuit in Kentucky

This month, homeowners in Kentucky filed a civil-racketeering class action against MERS, saying it conspired with Ally Financial's GMAC Mortgage unit, Citigroup and other banks to illegally foreclose on them. They say the banks are wrongly foreclosing on homes through MERS, which lacks titles to the houses.

"Their entire reason for existing was and still is — until they are shut down — to hide from the public record, creditors and the homeowners, the identity of the parties who could claim an interest in the mortgage loans recorded in their name," says Heather Boone McKeever, a lawyer in Lexington representing the Kentucky homeowners.

With lawsuits against MERS seeking class-action status in Arizona, California and Nevada, judges' rulings could have major ramifications for the housing industry. If they rule against MERS, foreclosures across the country could be challenged.

Fannie Mae changed its policy in May, stating that MERS must not be named as a plaintiff in any foreclosure action on a mortgage loan owned or securitized by Fannie. Its policy is that the loan's servicer should foreclose, according to MERS.

Meanwhile, homeowners who'd never heard of MERS until they were foreclosed on are raising questions.

Luis Fitzgerald, 58, of Orlando, has been fighting JPMorgan in a foreclosure since 2008. His mortgage is held by MERS. Since he was foreclosed on, he's been living in hotels. The home he had owned is vacant. He says the battle has left him with tension headaches, and he prays each night for help.

"MERS broke the old system and has fooled the courts into believing they have the right to foreclose and have the note," says Fitzgerald, who makes art for greeting cards. "It's not right."

FORECLOSURE-GATE!!!

Karl Denninger, who has been tracking the issue of title fraud in the mortgage space for years, was on the Dylan Ratigan show earlier, and not only provided one of the most comprehensive explanations of where we are, how we got here, and where we are going (unfortunately nowhere pleasant) to date, but also was gleefully and sarcastically rhetorical with his closing remarks: "What if we find that of these $6 trillion in securities that are out there, outstanding right now, half or more of them are defective. You put them back on the banks and they all blow up. You know what - we have a resolution authority under Frank-Dodd, how about if we use it?" We would only add that courtesy of second degree, third degree, and fourth degree leverage, as we presented yesterday, the final amount of net capital at risk, courtesy of numerous other layers of debt, will end up being far, far greater than just $3 trillion. And yes, there is a reason why the OCC keeps a track of the $233 trillion in total derivatives held by US banks.

Visit msnbc.com for breaking news, world news, and news about the economy

The light is no longer at the end of the tunnel, as a matter of fact...the tunnel is now pretty well lit I'd say!

Fascinating News Headlines - Even if politicians are obviously jumping on the bandwagon to take credit, the real credit comes to those out there staying with the battle. Interesting how some of the SAME politicians who backed the system that got us into this mess, are now on this bandwagon... PLEASE don't fall for it in the upcoming election.


1. Candidate for Sheriff Rico S. Giron Will Declare a Moratorium on All Foreclosures and Evictions in His County (San Miguel, New Mexico) - - http://ricoforsheriff.com/moratorium-on-mortgage-foreclosures And he will NOT enforce any IRS liens or levies; he will repeal the Patriot Act; he will NOT accept any salary, etc. etc. WOW! Where can we get sheriffs like that in our own communities?!?
http://ricoforsheriff.com

2. Texas Attorney General calls for statewide foreclosure freeze
www.businessweek.com/ap/financialnews/D9ILJRE81.htm

3. New York Times: Flawed [apparently fraudulent] Paperwork Aggravates a Foreclosure Crisis www.nytimes.com/2010/10/04/business/04mortgage.html?_r=2&partner=TOPIXNEWS&ei=5099

4. Documents Show CitiMortgage and Wells Fargo Also Committed Foreclosure Fraud
http://srph.it/amvWqK

5. Speaker of the House Pelosi Calls For Investigation Of Foreclosure Fraud
www.huffingtonpost.com/2010/10/05/democrats-call-for-invest_n_751373.html

6. Attorneys General Ordering Banks to Halt Foreclosures for Possible Violations - - "There's a wildfire spreading across the country: instead of the continuing wave of foreclosures, the practices banks use to initiate the sales of homes are going under the microscope of judges and attorneys general."
www.californiarealestatefraudreport.com/archives/1575

7. 40,000 Turn Up for Mortgage Reduction Event in LA - - October 6, 2010
www.larouchepac.com/node/16014

8. Systemic Fraud Dominates Mortgage-Securitization and Foreclosure Scam
www.larouchepac.com/node/16009

9. State of Georgia Set to End Forced Driver's Licenses
www.legis.ga.gov/legis/2009_10/fulltext/hb875.htm
(this is not foreclosure related, but is interesting nonetheless, as it begins another branch of the trend towards greater individual sovereignty)

10. Three More States Demand Halt to Foreclosures - 10-06-10
www.thetruthaboutmortgage.com/three-more-states-demand-halt-to-foreclosures/utm_source=feedburner&utm_medium=email

11. Bombshell - Unconstiutionality of Rocket Docket Transcript - 10-07-10
http://mattweidnerlaw.com/blog

12. U.S. Attorney General Eric Holder Justice Department looking into home foreclosure mess http://articles.moneycentral.msn.com/news/article.aspx?feed=OBR&date=20101006&id=12121701

13. New York Times - "Foreclosure Furor Rises; Many Call for a Freeze" www.nytimes.com/2010/10/06/business/06mortgage.html?_r=1&partner=rssnyt&emc=rss

14. "Freezing Foreclosures" on Good Morning America ABC News - 10-04-10 http://stopforeclosurefraud.com/2010/10/04/must-watch-freezing-foreclosures-on-good-morning-america-abc-news

15. Kentucky RICO Class Action Lawsuit Attacks Foreclosure Fraud - 10-03-10 http://stopforeclosurefraud.com/2010/10/03/kentucky-rico-class-action-involving-merscorp-lps-gmac-deutsche-bank-us-bank-et-al/

16. JPMorgan, Bank of America Face `Hydra' of Foreclosure Probes - Bloomberg 10-06-10 www.bloomberg.com/news/2010-10-06/jpmorgan-bank-of-america-face-hydra-of-state-foreclosure-investigations.html

17. Huffington Post on Foreclosures - 10-07-10 variety of important updates about the national war against so-called "lenders"
www.huffingtonpost.com/news/foreclosures

- Moratorium NOW - Rep Alan Grayson Petitions the Florida Supreme Court to HALT Foreclosures - - http://4closurefraud.org/2010/09/20/here-we-go-moratorium-now-rep-alan-grayson-petitions-the-florida-supreme-court-to-halt - foreclosures/ .

- American Foreclosure Moratorium Petition. Please sign it now - - www.change.org/petitions/view/usa_national_foreclosure_moratorium_now
[that is Barack Obama's site - the petition is sponsored by his administration].

- BREAKING!!! GMAC Freezing Foreclosures in 23 States to Take Corrective Action
www.bloomberg.com/news/2010-09-20/gmac-mortgage-halts-home-foreclosures-in-23-states-including-florida-n-y-.html

- Congressional letter to FANNIE MAE regarding "foreclosure mills"
http://4closurefraud.org/2010/09/24/letter-from-rep-alan - grayson-rep-barney-frank-and-rep-corrine-brown-to-fannie-on-foreclosure-mills/

-California Attorney General Brown Directs Ally/GMAC [America's fourth largest lender] to Suspend Foreclosures http://ag.ca.gov/newsalerts/release.php?id=1990

- JPMorgan Suspending Foreclosures - New York Times
www.nytimes.com/2010/09/30/business/30mortgage.html?_r=1

- Bank of America Freezes Foreclosure Actions
www.bloomberg.com/news/print/2010-10-02/bank-of-america-freezes-foreclosure-cases-to-review-documents.html

Need I say more??

B o A halts foreclosures

Now Bank of America (BoA) has joined the crowd by freezing home foreclosures in 23 states as it investigates whether there were flaws in its process. "We have been assessing our existing processes," Bank of America said in a statement. "To be certain affidavits have followed the correct procedures, Bank of America will delay the process in order to amend all affidavits in foreclosure cases that have not yet gone to judgment in the 23 states where courts have jurisdiction over foreclosures." Bank of America did not have an estimate of the number of homeowners that will be affected by the delayed process. The announcement comes two days after JP Morgan Chase said it will also halt foreclosures for about 56,000 homeowners after learning that its employees may have approved foreclosures without personally reviewing loan files.

Last week, Ally Financial, previously known as GMAC, the finance arm of General Motors, said it will also pause foreclosures in the 23 states. Mortgage lender Freddie Mac said Friday that it is "deeply concerned" with the recent reports and said the alleged practices are not in compliance with its guidelines. "We expect to provide instructions to our servicers later today that are intended to ensure that their foreclosure processes are in compliance with state law and Freddie Mac's servicing requirements," the lender said in a statement. "It's essential that the industry work together to protect borrowers' rights and ensure the integrity of the foreclosure process."

JP MORGAN/CHASE

"JP Morgan Chase told CNBC on Wednesday that it will delay more than 56,000 foreclosure proceedings due to paperwork that was signed, 'without the signer personally having reviewed those files.' That came on the heels of GMAC halting foreclosures and evictions in 23 states for roughly the same reason. All this leads anybody with a heartbeat to figure that other large servicers will likely follow suit, as potential lawsuits abound. So what will that mean to the larger foreclosure crisis and the already weakening housing recovery? 'It's clear the pace of foreclosures will slow down,' says Laurie Maggiano, Policy Director in the Treasury Department's Homeownership Preservation Office. 'As of right now this is a policy and procedure issue until proven otherwise, but never underestimate mid-term electioneering,' says mortgage consultant Mark Hanson. 'If this does go to the next level (i.e. national foreclosure moratorium, fear that hundreds of thousands of foreclosures have be
en performed illegally, etc.), the unintended negative consequences on the mortgage market, MBS investors, banks' balance sheets and ultimately the housing market will be significant. '

We're already seeing threats of ratings agency downgrades on all the major servicers, not to mention the threat to housing's overall recovery. If the bulk of these cases are valid, then delaying them is only going to prolong the pain. 'Worst case is that the current foreclosure problems turn out to be industry-wide and trigger a landslide of legal challenges that lock up foreclosures resolutions for a year or more,' says Guy Cecala, publisher of Inside Mortgage Finance. That means all kinds of borrowers would sit in their homes free of charge, banks would be unable to get any return at all, and the housing market would still be facing the inevitable: 'We may then see a [foreclosure] surge at some point in the future,' notes Treasury's Maggiano. We've talked an awful lot about artificial government stimulus skewing the housing recovery as it tries to help; that's nothing compared to the potential for this latest scandal to wreak havoc on housing yet again."

Ally Financial legal issue with foreclosures may affect other mortgage companies

By Ariana Eunjung Cha
Washington Post Staff Writer
Wednesday, September 22, 2010; 5:37 AM

Some of the nation's largest mortgage companies used a single document processor who said he signed off on foreclosures without having read the paperwork - an admission that may open the door for homeowners across the country to challenge foreclosure proceedings.

The legal predicament compelled Ally Financial, the nation's fourth-largest home lender, to halt evictions of homeowners in 23 states this week. Now it appears hundreds of other companies, including mortgage giants Fannie Mae and Freddie Mac, may also be affected because they use Ally to service their loans.

As head of Ally's foreclosure document processing team, 41-year-old Jeffrey Stephan was required to review cases to make sure the proceedings were legally justified and the information was accurate. He was also required to sign the documents in the presence of a notary.

In a sworn deposition, he testified that he did neither.

The reason may be the sheer volume of the documents he had to hand-sign: 10,000 a month. Stephan had been at that job for five years.

How the nation's foreclosure system became reliant on the tedious work of a few corporate bureaucrats is still a matter that mortgage lenders are trying to answer. While the lenders may have had legitimate cause to foreclose, the mishandling of the paperwork has given homeowners ammunition in their fight against foreclosure and has drawn the attention of state law enforcement officials.

Ally spokesman James Olecki called the problem with the documents "an important but technical defect." He said the papers were "factually accurate" but conceded that "corrective action" may have to be taken in some cases and that others may "require court intervention."

Olecki said the company services loans "from hundreds of different lenders," but he declined to provide names.

Spokesmen for Fannie and Freddie confirmed Tuesday after inquiries from The Washington Post that they use Ally, formerly called GMAC, to oversee some mortgages. The companies have launched internal reviews to assess the scope of any potential issues.

Ally, Fannie and Freddie - all troubled mortgage companies that received extraordinary bailouts by the federal government during the financial crisis - declined to say how many loans might be affected. The Treasury Department, which owns a majority stake in Ally and seized Fannie and Freddie in 2008, also declined to comment.

Fannie and Freddie, created by Congress to finance mortgages and encourage homeownership, have in recent years been repossessing houses at record numbers. Fannie alone reported recently that 450,000 of its single-family loans were seriously delinquent or in the foreclosure process as of June 30. That's nearly 5 percent of the loans it guarantees.

Lawyers defending homeowners have accused some of the nation's largest lenders of foreclosing on families without verifying all of the information in a case, but it has been hard for them to stop foreclosure proceedings.

Ally's moratorium comprises only the 23 states - none in the Washington area - that mandate a court judgment before a lender can take possession of a property. But if Stephan signed documents related to foreclosures in states without this requirement (it's unclear whether he did), it could help a much broader range of borrowers.

Iowa Assistant Attorney General Patrick Madigan, chair of a national foreclosure prevention group composed of state attorneys general and lenders, said the fallout from the Ally review could be enormous because Stephan's actions could be considered an unfair and deceptive practice.

"If servicers are submitting court documents that aren't true or that have not been verified, that is of great concern," Madigan said.

Stephan's job at Ally was arguably one of the least enviable in the mortgage business: formally signing off on foreclosure papers that his company would submit to the courts to get approval to evict delinquent homeowners and resell their homes.

From his office in suburban Philadelphia, Stephan oversaw a team of 13 employees that brought documents to him for his signature at a rapid clip. Stephan did not respond to messages left at his work and home.

His official title was team leader of the document execution unit of Ally's foreclosure department, but consumer advocates call him the company's "super robot signor" or "affidavit slave."

In sworn depositions taken in December and June for two separate court cases involving families trying to keep their homes, Stephan revealed his shortcuts when reviewing the files. He said he would glance at the borrower's names, the debt owed and a few other numbers but would not read through all the documents as legally required. He would then sign them. The files were packed up in bulk and sent off for notarization several days later.

Stephan testified he did not know how the "summary judgment" affidavits he signed were used in judicial foreclosure cases.

At the rate Stephan was reviewing files, if he worked an eight-hour day he would have had an average of only 1.5 minutes for each document.

"A ridiculous amount of time for something so critically important," said Thomas Cox, an attorney in Maine who was one of those who deposed Stephan. He added that Maine and Florida law enforcement officials are investigating the matter.

Stephan was the only employee signing papers for foreclosures that were to be submitted to courts that did not involve bankruptcies. The latter cases, which were more complex, were handled by a separate department.

Olecki said Stephan still works for Ally but added, "We cannot comment further about his position."

While several large lenders contacted by The Post declined to talk about the document review process for foreclosures, attorneys working on behalf of homeowners said the setup at Ally was not unusual.

Christopher Immel, an attorney in Florida who deposed Stephan for a case in Palm Beach County, said he thinks Stephan was not a rogue employee but one that was performing his job responsibilities as the company told him to do.

"GMAC has a business model to do this, and Stephan was just one small part of it," Immel said. "He was under the impression it was okay to do this."

Staff researcher Julie Tate contributed to this report.