The day it announced a nationwide moratorium on foreclosures, Bank of America asked a U.S. District Court judge to overturn an injunction preventing it from foreclosing on a home in Silverthorne.
Last week, the homeowner, Keith Schwartz, asked the court to sanction Bank of America, its attorney and a bank employee he alleges signed a false affidavit in the bank’s effort to foreclose on his home. The court rejected the motion Wednesday.
Alleged false documentation is at the heart of a moratorium that Bank of America and other lenders instituted this month and now is being investigated by attorneys general in all 50 states.
Schwartz, who has not made a mortgage payment since December 2007, sued Bank of America in Summit County District Court in May, claiming the lender had wrongly tried to foreclose on his house in March 2009.
It was the second foreclosure the bank had filed on the property, which Schwartz bought in 2005 for $1.8 million. He owes the bank $1.25 million, according to court documents.
“They voluntarily withdrew the first one due to not following the rules of foreclosure,” Schwartz said. “They never notified me I was in foreclosure.”
Loan modification denied
Schwartz filed his original complaint after Bank of America denied his request for a loan modification. The bank said it couldn’t modify the loan because other investors own the note. He then asked the bank to identify the investors so he could negotiate with them.
“Because Bank of America is not a ‘Holder of the evidence of debt,’ it is without authority to prosecute a foreclosure of the property,” according to Schwartz’s complaint.
In its response to Schwartz’s request for sanctions, the bank notes that Schwartz has lived in the house for nearly three years without making payments and has failed to keep the property insured or pay taxes due.
“Plaintiff’s Complaint is largely predicated on the erroneous theory that, because the debt obligations of the borrowers may have been securitized, the lender has no right to be paid the debt owed,” the bank states in its response. “Such claims . . . have been summarily rejected by the courts.”
In May, Schwartz won an injunction that prevented the bank from foreclosing until his lawsuit against the bank is resolved. Shortly afterward, the bank had the case moved to federal court.
On Oct. 8, Bank of America filed a motion to have the injunction overturned. It was supported by an affidavit signed by employee Nichole Orr, who Schwartz alleges is a robo-signer, or someone who has processed large numbers of foreclosure affidavits without fully verifying the information they said they have knowledge of.
Employee’s work challenged earlier
That was also the day the bank said it would suspend foreclosures to review its documents for accuracy. The bank said Monday that it would resume foreclosures in November.
It’s not the first time an affidavit signed by Orr has been challenged in court. In July, a New York judge dismissed a foreclosure action after finding that Orr had given false affidavits to the court.
The attorneys general of every state and the District of Columbia are investigating problems with documents used to foreclose on hundreds of thousands of homeowners.
Employees of several major lenders have acknowledged in depositions that they signed thousands of foreclosure documents without reading them as required by state laws. The bank has withdrawn its foreclosure proceedings against Schwartz because the statutory time to hold the foreclosure sale expires this week, said Shirley Norton, spokeswoman for Bank of America.
“The preliminary injunction prevented the sale from going forward even if the sales halt had not been in place,” she said. “After the preliminary injunction has been dissolved or lifted, and after foreclosure sales resume, we may renew foreclosure sales proceedings at the appropriate time in the litigation process.”
Margaret Jackson: 303-954-1473 or mjackson@denverpost.com
