Remember that whole thing about the banks using armies of Wal-Mart castoffs and entry-level employees to sign affidavits attesting to the legitimacy of complicated mortgage documents without knowing any of the contents inside? Remember how they took responsibility for that and said they were halting foreclosure operations until they figured things out? Remember how they said they got things under control and would resume foreclosure operations, all legal-like? Remember how they signed consent orders from a federal regulator saying they would overhaul their servicing operations, and how they entered into negotiations with the banks on penalties for the same?
Funny story. They’re still robo-signing.
Two stories yesterday, one from the AP and the other from Reuters, detail the fact that the banks continue to employ robo-signers to accelerate foreclosure processes and commit document fraud. I urge you to read both pieces, but I’ll provide a couple excerpts. From AP:
County officials in at least three states say they have received thousands of mortgage documents with questionable signatures since last fall, suggesting that the practices, known collectively as “robo-signing,” remain widespread in the industry.
The documents have come from several companies that process mortgage paperwork, and have been filed on behalf of several major banks. One name, “Linda Green,” was signed almost two dozen different ways.
Lenders say they are working with regulators to fix the problem but cannot explain why it has persisted.
I love that, they can’t explain it. “We don’t know why people are coming into our offices and drawing a salary for sigining all these papers like we tell them to!”
In its effort to seize the two-bedroom ranch house of 87-year-old Margery Gunter in this down-on-its-luck Florida town, OneWest Bank recently filed a court document that appears riddled with discrepancies. Mrs. Gunter, who has lived in the house for 40 years and gets around with the aid of a walker, stopped paying her loan back in 2009, her lawyer concedes. To foreclose, the bank submitted to the Collier County clerk’s office on March 3 a “mortgage assignment,” a document essential to proving who owns a mortgage once the original lender sells it off.
But OneWest’s paperwork is problematic. Among the snags: state law permits lenders to file to foreclose only if they already legally own a mortgage. Yet the key document establishing ownership wasn’t signed and officially recorded until months after OneWest filed to foreclose on Mrs. Gunter. OneWest declined to comment on the case.
Reuters has found that some of the biggest U.S. banks and other “loan servicers” continue to file questionable foreclosure documents with courts and county clerks. They are using tactics that late last year triggered an outcry, multiple investigations and temporary moratoriums on foreclosures.
In recent months, servicers have filed thousands of documents that appear to have been fabricated or improperly altered, or have sworn to false facts.
By the way, I had this story for you and delivered it to you months ago. The AP story relies entirely on the yeoman work of a few registers of deeds, who surveyed their offices and found all these robo-signed documents, including ones still coming in. John O’Brien in Massachusetts and Jeff Thigpen in North Carolina and Curtis Hertel in Michigan should be commended for getting AP to take the story. It’s a big deal. O’Brien continues to get documents that he won’t record because they were robo-signed, with signatures purportedly from the same person in completely different handwriting.
The Reuters article uses the registers, but also has some more meat. It singles out Christina Carter as a “known robo-signer” for documents from Ocwen and HSBC, and uses recent court cases to show that robo-signing is continuing. It has evidence that at least five servicers who signed consent decrees with the OCC – OneWest, Bank of America, HSBC, Bank USA, Wells Fargo and GMAC Mortgage – are still robo-signing.
First of all, kudos to the registers of deeds for finally breaking through, past the likes of me, and getting some traditional-media treatment for their story. As John O’Brien likes to say, “my office is a crime scene.” This feels like he finally got the police out to see it.
Next, I have to see this as a game-changer for the state and federal efforts to create a settlement with the banks over foreclosure fraud. That effort is fatally wounded at this point. How could you have a settlement now? The banks promised to end robo-signing voluntarily. They promised in the consent decrees with OCC. And they kept on doing it. If you sign a settlement with these banks, why should you have any confidence that they will follow through with anything on their side of the bargain? They’ve just perjured themselves before Congress, before federal regulators and in the court of public opinion!
By the way, of course these processes are still ongoing. This is a coverup. The banks either don’t own the homes on which they are foreclosing, or cannot prove it in a legal manner. So they have to have unaware robo-signers attest to the documents. The documents are forgeries or fabrications.
The state AG investigation and the federal regulatory apparatus is revealed here as frankly a crock. Registers of deeds have done more with almost no resources to investigate the depth of the fraud than any powerful Attorney General thus far. The state and federal probes, on the other hand, have been inadequate.
Yves Smith points out.
The more serious point here is the banks actually probably do want to clean up the documents. So why haven’t they done so? Clearly the costs for some, potentially most, cases are too high relative what they deem reasonable to pay. Tom Adams has estimated that the additional costs per foreclosure are probably in the $20,000 to $40,000 range. While those numbers may seem incredible, they make the banks’ failure to comply make sense. While those charges in theory should come from the investors (!) the banks may either be having trouble procedurally making the changes (as in they may need to find completely new attorneys, a major undertaking) or may worry about wakening the heretofore sleeping giant of investors, since if they chose to go after chain of title issues, they could blow up the entire mortgage industrial complex.
But why should we expect anything different? The regulators are clearing willing at most to inconvenience the banks at the margin. Given how deep seated mortgage problems are, that means they will try to do anything but deal with the problem squarely for as long as they possibly can.
I don’t see how the settlement talks can continue given these revelations.