Wow! Citi recognizes that something is hooky (technical term) with the processing of foreclosures at one of the largest foreclosure mills in Florida and thus stops sending them new foreclosures to handle…hey what about those already underway?!? Maybe slowing down foreclosures and at least verifying the documents might be a good idea.

The Law Offices of David J. Stern PA have made the news frequently and not in a favorable light. It seems that not only is the Florida Attorney General’s office probing into the alleged fraud inside the firm but Citi has begun to questions the tactics they previously condoned. Yes, I said condoned. Why? Because if you believe half of the deposition of a former operations manager for this law firm you can see how the banks are in on the down and dirty paperwork processing.

I wonder how long it will take before other banks start quietly shifting work to other frims that aren’t in the public eye.

The Bloomberg report is below.

- The Bank Slayer

Citigroup Stops Using Foreclosure Law Firm Facing Florida Probe

By Dakin Campbell and Donal Griffin – Oct 12, 2010

Citigroup Inc. said it stopped steering foreclosure work to a Florida law firm whose court filings to support home seizures are under investigation by the state’s attorney general.

The bank, which is proceeding with seizures as some rivals stop to recheck documents, had used the Law Offices of David J. Stern PA. Florida Attorney General Bill McCollum said Aug. 10 it is examining whether Stern and two other firms filed “improper documentation” with the state’s courts to speed proceedings.

“Pending the outcome of the AG’s investigation, Citi is not referring new matters to this firm,” the New York-based bank said in an e-mailed statement. Citigroup services loans, including for government-sponsored entities, such as Fannie Mae and Freddie Mac. Stern “was approved by the GSEs during the time in which it was retained by Citi,” the bank said.

Lawmakers, attorneys general and consumer groups have pressed mortgage firms to follow Bank of America Corp., the biggest U.S. lender, which last week suspended all foreclosures to check whether faulty documents were used to confiscate homes. JPMorgan Chase & Co. and Ally Financial Inc.’s GMAC Mortgage unit froze seizures or evictions in Florida and 22 other states. Citigroup said last week it doesn’t plan to join them.

McCollum’s office “hasn’t made any charges or allegations of fault,” said Jeffrey Tew, an outside attorney for Plantation, Florida-based Stern, who declined to discuss its work for Citigroup. “I believe they’re a client. I can’t go into any details.”

Didn’t Check

A Stern employee said she signed assignments of mortgage, a document that shows the transfer of ownership, without checking that the information was correct, according to a May 2009 deposition taken by Thomas Ice of Ice Legal PA, a law firm in West Palm Beach, Florida. The employee, who described herself as an operations manager at the law firm, said she didn’t “verbally swear” when signing assignments.

The employee said she signed more than 100 foreclosure documents, including affidavits and assignments, for two hours each day. Under questioning from Ice, the employee said the assignments of mortgage are checked by others at the firm and that she didn’t read them.

“How much time do you spend examining each document before you sign them?,” Ice asked.

“Very little,” the employee answered.

“Do you read the document?”

“No,” the employee said.

‘Strong Training’

Citigroup, the third-largest U.S. bank by assets, said in an e-mailed statement Oct. 8 that it provides “strong training” for its employees and periodically reviews document- handling procedures within the company’s foreclosure group.

“At this point, we have no reason to believe our employees haven’t been following our procedures, so we do not believe a suspension is necessary,” it said.

In at least one recent case, Citigroup has used an affidavit signed by the David J. Stern employee in an attempt to foreclose, according to Ice. On Oct. 4, the bank presented a February 2009 affidavit signed by the employee to get summary judgment on a Charlotte County, Florida, homeowner, Ice said. The case was postponed until next month, he said.

Attorneys general in about 40 states may announce this week a joint probe of potentially faulty foreclosures at the largest U.S. banks and mortgage firms, a person with direct knowledge of the matter said Oct. 8.

Court Affidavits

Some lenders have acknowledged that employees may have completed court affidavits without checking loan documents to confirm the statements’ accuracy. In December, a GMAC employee said in a deposition in a foreclosure case filed in West Palm Beach, Florida, that his team of 13 people signed about 10,000 documents a month without verifying their accuracy.

Lenders took possession of a record 95,364 homes in August and issued foreclosure filings to 338,836 homeowners, or one of every 381 U.S. households, according to RealtyTrac Inc., an Irvine, California-based data vendor.

Citigroup, which got a $45 billion bailout in 2008 amid mounting mortgage losses, is about 12 percent-owned by U.S. taxpayers.

David Axelrod, a senior adviser to President Barack Obama, said Sunday on CBS’s “Face the Nation” program that a moratorium on foreclosures would damage the housing market. He said there are valid foreclosures that should proceed, and the White House is urging the industry to get the situation “unwound very, very quickly.”

To contact the reporters on this story: Dakin Campbell in San Francisco at dcampbell27@bloomberg.net; Donal Griffin in New York at Dgriffin10@bloomberg.net.

The following is the list of mortgage servicers (lenders) that have been initially targeted by Texas Attorney General Greg Abbot’s office for possible foreclosure fraud.

If your loan is in a foreclosure status or you have been wrongfully foreclosed within the last four years please seek assistance immediately.

- The Bank Slayer

Yeah!!!    Citi announced that it will let borrowers stay in their homes for up to six months plus snag $1,000 to help defray costs for relocation, if they agree to a deed-in-lieu of foreclosure.  (i.e., so you will stop suing them, trying to get a loan mod, short sale or file bankruptcy not to mention making them produce the Note to your home to see if it is Citi that you really owe, they are going to try to bribe you.)

What’s are some of the catches?

1. Borrowers lose their home. (Hence the term Deed in Lieu of Foreclosure.)
2. This is a PILOT program for up to 1,000 borrowers; spread over six states so there is no guarantee you will get in and/or it will continue.
3. Borrowers must have clear title. (READ: No other liens such as: 2^nd mortgage, HOA, tax, IRS, water systems, child support, credit card judgments, etc.)
4. Borrowers must have a Citi loan for the first mortgage.  (We assume this means Citi is servicing the loan OR maybe they own the loan. Who knows?)
5. Borrowers must continue to pay utilities & insurance.
6. Homeowner’s association fees will be determined on a case-by-case basis upon Citi’s determination if the homeowner can afford them.
7. Borrowers must maintain the property in its current condition.  (I wonder how they will know if your grass is always the same height.)
8. Borrowers must agree to bi-monthly meetings with relocation specialists. (You foot the bill for gas to drive across town on their schedule.)
9. Borrowers must be at least 90 days delinquent.  (Here’s to hoping they don’t foreclose before your time is up.)
10. Borrowers must occupy the property in question.
11. Borrowers will only be considered for the program after being evaluated for a permanent loan modification and being denied.
12. Borrowers must have been considered for a short sale and denied.

Excerpts from the leader of this fun house…

“At CitiMortgage, we’re committed to finding every solution possible to help families facing foreclosure. (Except principal reductions which typically require major litigation.) However, the reality is that not every homeowner has the financial ability to remain in their home,” said Sanjiv Das, CEO of CitiMortgage, in a release.

“The goal of the program is to help homeowners make a smooth transition into the next chapter of their lives. The Foreclosure Alternatives Program is another tool in our ongoing efforts to find creative, innovative ways to help our customers across a variety of difficult financial situations.”

Late last year, mortgage financier Fannie Mae unveiled a foreclosure prevention tool called the “Deed for Lease Program,” which allowed borrowers to lease their homes after agreeing to a deed-in-lieu of foreclosure.  (But of course in many cases they instead have their lawyers send nasty letters to the renters advising them that they have been foreclosed and they need to vacate.)

I’m curious, will Citi put into writing that they will indemnify the Borrower if some other party comes forward claiming an interest in the Note.

- The Bank Slayer

While Bank of America, JPMorgan Chase & Citi are suspending foreclosures for the holidays, just like Fannie Mae and Freddie Mac, this is a nothing more than a sick joke on those in Texas.

Why? Quite simply it doesn’t help you one bit.

I will make a fearless promise…ready…no one in the State of Texas will be foreclosed upon from now until January 5^th! I’m going to give everyone in Texas an extra day past their December 21, 2009 through January 3, 2009 moratorium.  Look how easily I one upped these big banks.

How?  No foreclosures can take place except on the first Tuesday of each month.  So the next possible date is…drum roll…January 5^th!   I know it is a shocker but some of these big banks issue positive looking press releases and commitments even when the promises are hollow.

If you or someone you know is facing a foreclosure situation, don’t count on these guys giving you the extra time you need to get your ducks in a row.  Act now!!

-          The Bank Slayer

Sadly less than 20% of all homeowners facing a foreclosure situation choose to list their house for sale.

The mortgage unit of Citigroup says one in five borrowers who defaults does so willingly, even though they’re able to pay the mortgage. “It’s a very large number, and it’s a very, very significant risk to the housing recovery,” says Sanjiv Das, CEO of CitiMortgage, adding that new government programs to curb strategic defaults may be needed.

Stephanie Armour at USA Today says that nationally, median prices have fallen about 25% from their peak in late 2005, although prices recently have risen compared with prior months this year. The median price in the second quarter — $170,000 — was at roughly the level it was in autumn 2003.

In other geographic regions, the increase in strategic defaulters ranged between 3 times and 18 times more.   A Experian-Wyman study found borrowers with higher credit scores when they applied for their loan were 50% more likely than other types of borrowers to walk away from a mortgage only because they were underwater, even though they could afford to pay. The study was based on an analysis of about 12 million borrowers.

“The most disturbing aspect of this is that it’s becoming acceptable to do,” says Joel Naroff, an economist with Naroff Economic Advisors. “What does that mean down the road for housing and the economy if people are happy to walk away and destroy their credit? They’re saying, ‘Why pay a high amount if they can get something, even a rental, for less?’ ”

Short sales, in which lenders agree to the sale of a home for less than the balance of the mortgage, is an alternative to a strategic default and will help salvage your credit and your financial future.

- The Bank Slayer