Foreclosure activity topped 330,000 units in October, a 4% decline from September — but only because of the national robo-gate scandal, according to new figures compiled by RealtyTrac, Irvine, Calif.

The company noted that October marks the 20th consecutive month where more than 300,000 mortgagors received a foreclosure notice of some sort. Foreclosure-related filings include default notices, scheduled auctions, and bank repossessions.

Compared to October 2009, foreclosure activity was flat in terms of units. "The numbers probably would have been higher except for the fallout from the recent 'robo-signing' controversy," said James Saccacio, CEO of RealtyTrac.

Even though all foreclosure activity declined slightly on a national level, default notices rose in both Florida and Ohio, two states hard hit by the housing downturn. On the plus side, NODs fell 9% in California compared to the previous month. Nevada and Michigan had even better results with NODs falling 17% and 18%, respectively.

According to RealtyTrac, five states accounted for 50% of all foreclosures in October with California and Florida topping the list.

Legacy Robo-Signer

Declining foreclosures might be an ongoing trend for now as the robo-signer scandal remains a problem. For instance, identifying the servicers at fault is still an issue.

Of the top-five mortgage servicers, Citigroup is the only one to still deny using robo-signers and other faulty foreclosure processes.

But a deposition making the rounds on the Internet suggested that a subprime mortgage operation Citi acquired in the waning days of that market did engage in such practices.

The April 2008 deposition of Tamara Price, then a Citi Residential Lending employee, predates the deposition of robo-signing poster child Jeffrey Stephan of Ally Financial's GMAC Mortgage.

In her deposition, conducted by Florida attorney James Kowalski, Price admitted to signing court documents in foreclosure cases without having first-hand knowledge of or reviewing the information cited in the documents.

Price, however, was not an employee of Citigroup, the parent of Citi Residential, during the period she described. Price worked for AMC Mortgage Services, which Citi purchased in September 2007, said Mark Rodgers, a spokesman for the bank, in an e-mail.

"Contrary to amended counterclaims, AMC Mortgage Services, not Citi Residential, serviced the loan at the time of the foreclosure filing, mortgage assignment and affidavits," Rodgers said. "The plaintiff has never contended the assignment or affidavits in his foreclosure proceedings were substantively incorrect."

The deposition stems from a January 2007 foreclosure case against James Young, who fell behind on payments for his mobile home after he was forced into a more expensive insurance policy, Kowalski said.

"Mr. Young did have coverage but the bank said it was not enough," Kowalski said. "It's clear at some point he did lapse and then he went to an agent to ask 'What do I do to comply with this?' It's our contention that he was current at the time the foreclosure was filed."

Rodgers said, "homeowners are provided multiple opportunities to obtain insurance from the carrier of their choice. In circumstances where a homeowner does not provide a current insurance policy, we will secure insurance coverage as may be required by the owner of the loan."

Kowalski sees many cases in which homeowners end up in foreclosure after having expensive insurance policies foisted on them.

It's especially common in the South where mobile homes are prevalent, and in areas often plagued by floods, Kowalski said.

Mobile home owners are told they need to insure the value of the mobile home as well as the land it's on, even though regular, homeowners policies just cover the home, he said. Citi has since closed its Citi Residential Servicing sites and sold the bulk of the servicing rights in Feb. 2009.

Young is still living in his mobile home and the case is continuing.

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