Mortgage ‘Robo-Signing’ Still Running Rampant

It seems that some people never learn. After last year’s suspension of foreclosures due to suspicious signatures and questionable paperwork, it seems that banks and mortgage processors are at it again.
Employees are still signing documents that they haven’t read and using fake signatures as a way to speed up the foreclosure process – a practice that critics say points to a systemic problem with the paperwork involved in home mortgages and titles.

Since last fall, at least three states have openly admitted to receiving thousands of mortgage documents with questionable signatures. This “robo-signing” of documents is what led to the nationwide shutdown of foreclosures last fall.

According to the AP:

Banks and mortgage processors haven’t acted aggressively enough to put an end to widespread document fraud in the mortgage industry.

Robo-signing refers to a variety of practices. It can mean a qualified executive in the mortgage industry signs a mortgage affidavit document without verifying the information. It can mean someone forges an executive’s signature, or a lower-level employee signs his or her own name with a fake title. It can mean failing to comply with notary procedures. In all of these cases, robo-signing involves people signing documents and swearing to their accuracy without verifying any of the information.

Most of the tainted mortgage documents in question last fall were related to homes in foreclosure. But much of the suspect paperwork that has been filed since then is for refinancing or for new purchases by people who are in good standing in the eyes of the bank. In addition, foreclosures are down 30 percent this year from last. Home sales have also fallen. So the new suspect documents come at a time when much less paperwork is streaming through the nation’s mortgage machinery.

While so far no individuals, lenders or paperwork processors have been charged with crimes, the Michigan Attorney General in June issued criminal subpoenas to several firms that process loans for banks, including Lendor Processing Services, a subsidiary of Fidelity.

Read the entire text of the AP article here.

  • Mimi

    This will, in my opinion, continue to be a trend as long as foreclosures are occurring at their current rate.

    This article came out on Sunday, and new players in the Robo-signing arena continue to emerge
    http://www.toledoblade.com/Real-Estate/2011/07/31/Robo-signing-lingers-in-mortgage-industry.html

    This part of the article really got my attention:
    “Part of the problem, banks contended, was that foreclosures became so rampant in 2009 and 2010 that the banks were overwhelmed with paperwork. The 14 biggest U.S. banks reached a settlement with federal regulators in April in which they promised to clean up their mistakes and pay restitution to homeowners who had been wrongly foreclosed upon.

    This is NOT ok for any banks to be doing, especially 14 (!) of the biggest U.S. banks. They should take the time to do things in a professional and correct way so that they don’t have to spend millions of dollars trying to fix their mistakes.

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