October 13, 2010; Source: NPR | Too often the nonprofit sector focuses on one measure of advocacy, the ability of nonprofits to advocate for more grant and contract money. The importance of regulatory advocacy—promoting regulations or changes in policies that will better protect disadvantaged populations—is too often overlooked.
Therefore, we must take note of the remarkable advocacy done by the Center for Responsible Lending, long recognized for its work on the subprime mortgage foreclosure crisis, and now responsible for litigation that has compelled attorneys general and mortgage regulators in every state to investigate charges about questionable documentation, including fraudulent “robo-signed” documents, used to rush families into foreclosure proceedings resulting in their evictions.
The polite terminology for the charges levied against the mortgage-servicers’ is “procedural defects.” The defect was having mortgage company employees sign documents that they never reviewed and without the presence of a notary public. Robby the Robot could have processed the paperwork for all anyone cared.
The Center for Responsible Lending did care. CRL was a co-plaintiff in a Maine lawsuit against Ally Financial, which owns GMAC Mortgage. The Maine case was brought by five residents against Ally as a class action suit. The pro bono attorney for one of the plaintiffs discovered that GMAC staff were a bit deficient in having read the documents they were using in court to pursue foreclosures. The Maine court sanctioned GMAC for having filed false documents in the foreclosure actions that might have displaced thousands of Maine residents. Based on the Maine decision, Ally/GMAC quickly halted all of its foreclosure actions around the nation in late September due to “procedural errors.”
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Seeing this as an industry-wide problem, not just careless paperwork by GMAC, JP Morgan Case stopped all of its foreclosure activities in 23 states, Bank of America halted foreclosures in 50 states, and PNC Mortgage announced a month’s moratorium on foreclosures in 23 states to make sure it was in compliance with state laws.
CRL’s work on this one class action suit in Maine has caused a national rethinking of the mortgage foreclosure process. It is a great example of effective advocacy by one of the nonprofit sector’s most effective research and advocacy organizations—and a powerful example of the importance of class action litigation. Even including Robby the Robot, we all owe CRL a debt of gratitude.—Rick Cohen