The information you need to know about the Robo-Signing Scandal. When submitting documents to a court, they are supposed to be true as submitted. This means you have personally verified all information in the documents and they are true.
Employees from Bank of America, GMAC, One West Bank and JPMorgan are alleged to have routinely sign hundreds of documents without verifying the information they contain. They then submitted those documents to court. This enables the banks to foreclose on delinquent properties.
Wells Fargo and CitiMortgage have recently told The New York Times that their employees do not engage in similar practices to this. But new evidence shows that they may have engaged in these practices.
Wells Fargo Confusion
Wells Fargo has a department that is specifically dedicated to signing documents. Anywhere from 50 to 150 documents are signed in this department on a daily basis with only the date being verified on each document.
An investigator found a document signed by this Wells Fargo department that supposedly transferred the mortgage from Washington Mutual Bank FA to Wells Fargo on 7/12/10. However, this is impossible since Washington Mutual Bank FA changed its name in 2004. All WaMu names ceased to exist by 2008. The debtor declared bankruptcy on this document one month earlier, too. So, why would Wells Fargo want a mortgage from someone in bankruptcy? The dates on the document are also a complete mess, but they were signed by this Wells Fargo department anyway.
CitiMortgage and Its Legal Nonsense
The same investigator found a similar example at CitiMortgage where a number of documents were signed and CitiMortgage used it to try to foreclose on properties. There is solid proof showing that the documents being signed at CitiMortgage are not being signed with verification.
One example was a signed document that was transferring a mortgage from Lehman Brothers to Citi in 2009. However, this is hard to believe since Lehman had already ceased to exist by then. When confronted about the fraudulent document, Citigroup decided not to foreclose. They instead gave the homeowner a mortgage modification of a $15,000 principal reduction and a 30-year fixed mortgage at 3%.
CitiMortgage and Wells Fargo are not the only big banks to have apparently misrepresent their practices to the media. JPMorgan Chase recently told the New York Times that they have not withdrawn any documents in pending cases. However, an investigator has found that Chase has withdrawn robo-signed documents. Chase now faces possible sanctions in some cases.
Cutting Corners
The big banks are allegedly submitting these problematic documents to the courts so they can cut corners. They do this because, in a case of foreclosure, they only need to prove that they actually have the right to foreclose. So, instead of taking the time to generate the correct documentation, banks are cutting corners left and right. Their biggest argument when legal issues come up is that the documents are essentially true, just signed badly.
A Bright Light for Bankruptcies
Many attorneys who assist clients facing foreclosure can tell you that bad documents have been turning up for years. This is only coming to light now because many people facing foreclosure don't have an attorney to check the documents for them. Many don't even contest the foreclosure.
Bankruptcy court is where you will find most fraud cases coming out because of the bankruptcy. However, not all debtors in bankruptcy have an attorney and not all those attorneys know exactly what to look for. But, enough attorneys have caught on to the banks' alleged practices and robo-signer fraud is getting exposure.
Warnings All Around
Take note title companies: It has become increasingly obvious that GMAC's alleged foreclosure problems are the tip of the iceberg. Any title insured on the resale of any foreclosed property, particularly on mortgages that were included in securitizations, may be clouded. You should double-check those documents.
Note to purchasers of foreclosures: Buy title insurance. And, you may even consider getting a lawyer to look at the foreclosure file.
Note to homeowners facing foreclosure: Be sure you or your attorney analyzes the bank documents carefully because if anything is amiss, you may be eligible for a meaningful modification of your mortgage instead of losing your home.
Banks submitting these documents take note: There's a big chance you could face big sanctions if the courts notice you make bad filings over and over.
Attorney submitting these documents take note: When the state bar associations start paying attention, you could risk your professional license on the robo-signed dotted line.
Your Twin Cities East Metro Realtor passing along useful information.
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