About the Law
Who hasn't been frustrated trying to get a human through one of those impossible telephone trees? If a person actually comes on the line, they rarely have authority to do much beyond read the script in front of them.
A federal judge faced a similar electronic barrier, not on the phone, but in her courtroom. Mortgage company attorneys filed papers based not on any actual contact with their clients, but instead, processed through a multi layered electronic "Mortgage Servicing Platform." Attorneys who signed court papers admitted they never reviewed 90 percent of the papers they filed in court.
The system was designed by a "provider of integrated technology and outsourced services to the lending industry, with market-leading positions in mortgage processing and default management services". The wheels fell off, though, in the case of In Re: Taylor, decided April 15, 2009.
Angela and Niles Taylor had financial trouble and paid their mortgage late. They also disputed flood insurance charges more recently added onto the mortgage because they, in good faith, claimed the property was not in a flood plain.
Working with the computer system, attorneys filed documents claiming that the Taylors were $4,302 behind on their mortgage. In reality, the amount due was only $360. Worse, attached to the court documents were papers from a different unrelated mortgage account.
The Philadelphia judge found that the more questions she asked, the fewer answers she received. The attorney representing the mortgage company said he had no personal access to his client. He communicated solely by means of the computer platform. Mortgage companies upload information into the system, and in fact, when mortgage holders file bankruptcy, the e-system hires distant lawyers to file the motions to go ahead with foreclosure.
Attorneys in the system never speak with the mortgage companies. Any questions go back in a process know as "opening an issue."
Attorneys either could not or would not actually directly call the client.
Because the servicing platform idea was based on cost savings, one attorney told the judge that actually calling the mortgage company would reflect poorly on his law firm. The firm's bankruptcy department manager admitted that he had no relationship whatsoever with the mortgage company he represented.
After six months of fiddling around with what passed for computer communications, the judge noted that the entire dispute was "finalized in an hour the old way, by people sitting down with all relevant information and talking to each other."
The Taylor case was resolved in the Federal Bankruptcy Court for the Eastern District of Pennsylvania. But, as many as 50 of the largest banks in the U.S. use the computer 'service' exposed in the case, and it is said to process over 50 percent of all residential mortgages in the country.
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Andrew Myers of Derry has law offices in Derry and North Andover, Mass. He is a member of the American Association for Justice and the New Hampshire Trial Lawyers Association. Send questions to andrew@attorney-myers.com.
