Late last summer, the country learned about a new wrinkle in the mortgage and real estate crisis: robo-signing — the practice by some banks and financial institutions of signing off on the paperwork governing mortgages without anyone reading or reviewing it. The robo-signing scandal led many banks to suspend foreclosures until they could get their paperwork in order, and eventually caused 14 banks to reach a settlement with federal banking regulators in March of this year.
In the settlement, the financial institutions agreed to investigate their internal procedures, as well as to stop filing false affidavits and falsely notarizing documents — which they shouldn't have been doing in the first place, because it's illegal. But a multi-state investigation of foreclosure records by Reuters shows that at least five companies (OneWest, Bank of America, HSBC Bank USA, Wells Fargo and GMAC Mortgage) are still filing documents of questionable validity.
Investigation Into Robo-Signing
The investigation turned up many problems with the documents these banks have filed. Among them are promissory notes with missing signatures, mortgage assignments from banks that went out of business before the date the document was supposedly signed, and even legal documents used to begin the foreclosure process (called complaints) that simply contain incorrect facts.
Not only did Reuters turn up problems with some of the same financial institutions, but even the same robo-signing employees appear to be up to their old tricks. One employee of Nationwide, Bryan Bly, testified in July of last year that he "signed" over 5,000 mortgage assignments per day. His name continues to appear on thousands of mortgage assignments in 2011, even though his company had vowed to stop the practice.
Homeowners, Proceed With Caution
It's easy for homeowners to assume that the banks have their financial paperwork in order, but as this ongoing controversy demonstrates, that's not always the case. When the robo-signing controversy first surfaced last year, it led to many foreclosure actions being delayed or even cancelled outright, thanks to the diligent work of the mortgage foreclosure attorneys defending the homeowners.
So if you or someone you know is facing foreclosure, talk to an experienced attorney, who at a minimum will be able to guide you through the foreclosure process, and may also be able to offer other solutions - possibly even putting the process on hold if there are problems with the paper trail.
