Is it legal to foreclose on your house if there is fraud and fraudulent signatures, and forgery in the chain of title?

Robo-Signers: Innocent Paper Pushers or Fraud Factories? 

            In September 2010, the Washington Post published a story that shed light on a little known “trade secret” lenders have been using to foreclose on families. Check out the story here: Washington Post Robo-Signer Story. What’s the dirty little secret? Robo-Signers. 

What’s a Robo-Signer?   

            Unlike the name suggests, Robo-Signers are not robots hired by lenders and banks to kick homeowners out of their houses.  They are however, staff used by lenders and banks to sign off on foreclosure documents needed to foreclose on a home. The nickname comes from the robot-like speed, at which the Robo-Signers are able to review, sign off and get important legal documents notarized.

            So far, the Banks that we know of that use Robo-Signers are Wells Fargo, Bank of America, GMAC, OneWest Bank, and JP Morgan Chase. Many employees have made statements in court about the Robo-Signing practices inside of these banks. In fact, a GMAC manager Jefferey Stephan said that he had signed off on legal documents for 10,000 foreclosure papers in a single month without even verifying them. That’s barely a minute per case, assuming he works a normal eight-hour day! See USA Today’s story here: USA Today - Robo Signer Admission.  Sounds great right? Wrong!

What’s The Big Deal? 

            In many states, mortgage servicers must file a motion in court to take someone’s home via a foreclosure. The bank or lender must prove that they have reviewed the supporting documents, checked who owns the mortgage note and had a “notary public” witness the signature.  By now you should be thinking of our famous Robo-Signer who admitted to signing off on 10,000 foreclosure papers in one month. You should be thinking how could he really review, check ownership and get so many papers notarized. The answer is simple, HE DIDN”T! Yet, the law requires it.

            Robo-Signers are essentially cutting legal corners for the mortgage servicers. Mariah Wag, a journalist for ProPublica, put it another way, “To me what the robo-signer issue shows clearly is that the industry is on this path to foreclose as many cases as they can, as quickly as possible with as little work as possible.” Read her article entitled Putting the Foreclosure Paperwork Scandal in Perspective.

            Didn’t these lenders/banks receive taxpayer money to work with homeowners in default and consider loan modifications? Didn’t they promise to take “good-faith” measures to avoid foreclosures in exchange for government money? Why then are these banks skirting the law and sending in fake documents to courts in an effort to foreclose? So what does this mean to the average homeowner? 

Doesn't the Law Prohibit Fraud and Robosigning Documents and Recording them as a precursor to Foreclosure?

Here is some basic case law from just a basic search:

 Legal authority in regard to forgery is clear.  See 5 Cal. Real Est. § 11:13 (3d ed.), Miller and Starr California Real Estate 3D  (effect of a forged Instrument): “A forged document is totally void.”   In Trout v. Taylor, 220 Cal. 652, 32 P.2d 968. (1934) the Court stated that “numerous authorities have established the rule that an instrument wholly void, such as an undelivered deed, a forged instrument, or a deed in blank, cannot be made the foundation of a good title, even under the equitable doctrine of bona fide purchase."

        In  Schiavon v. Arnaudo Brothers, 84 Cal.App.4th 374 at 378 (2000), the California appellate court held, â€œA deed is VOID if the grantor's signature is forged or if the grantor is unaware of the nature of what he or she is signing.” (emphasis added).   In Montgomery v. Bank of America Nat. Trust & Savings Ass'n, 85 Cal.App.2d 559, 193 P.2d 475, Cal.App.2.Dist.(1948) the California appellate court held:  "A void instrument such as an undelivered or a forged deed does not convey anything and cannot be made the foundation of a good title.  Since the deed is absolutely void and conveyed no title to the grantees plaintiffs may recover the property through an action to quiet title or by an action to rescind upon returning the consideration paid by the Mannings."   In Wutzke v. Bill Reid Painting Service, Inc., 151 Cal.App.3d 36, 198 Cal.Rptr. 418, Cal.App. 3 Dist., 1984 the Court held:        

"A forged document is void ab initio and constitutes a nullity; as such it cannot provide the  basis for a superior title as against the original grantor.”

If a Substitution of Trustee is not valid, the resulting sale is VOID and no requirement for “tender” as Defendant alleges is owed, is required. See Dimrock v. Emerald Properties, 81 Cal.App.4th 868, 97 (2000), which held â€œIn particular, contrary to the defendants' argument, he was not required to tender any of the amounts due under the note” in order to attack a void trustee sale. See Pro Value Properties Quality Loan Service Corp., 170. Cal.App.4th 579 (2009).  

What Does This Mean To Me?

            Many popular foreclosure blogs and websites suggest that if you are in foreclosure are have been foreclosed on you should get your mortgage & foreclosure paperwork audited.  ForeclosureIndustry.com suggests that when these banks are questioned about these activities, guess what? They start negotiating. Loan modification, anyone? The link above will take you to their story. Another popular foreclosure blog, ForeclosureHamlet.com suggests that this robo-signing practice amounts to fraud and homeowners facing foreclosure should talk to an experienced real estate or foreclosure attorney. In response to this robo-signing many of the largest banks have suspended tens of thousands of foreclosures including, Ally Financial Inc.’ GMAC Unit, Bank of America and JP Morgan Chase & CO. Surprisingly, Wells Fargo & Co. has stated that it has no plans to halt foreclosures and that their foreclosure affidavit process is sound.

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            If you have questions about robo-signers or are facing a foreclosure call The Law Offices of Steven C. Vondran. The Law Offices of Steven C. Vondran can help with a robo-signer audit or foreclosure audit. Call us at (877) 276-5084.

          Steven C. Vondran is a real estate, foreclosure, bankruptcy attorney licensed to practice law in California and Arizona. We are a debt relief agency and we help people file for bankruptcy protection under the Bankruptcy Code.  You can find out more about Robosigner fraud at http://www.RobosignerAudits.com or http://www.ForeclosureDefenseResourceCenter.com.