What You Need to Know About Robo-Signing
A change in times has seemingly impacted the accountability of our banking institutions. It appears that they have minimal regulations in their process of handling — and mishandling — foreclosures.
Here is one practice you should know about that can have dire consequences should you fall prey to it: Robo-signing.
What exactly is Robo-signing? Robo-signing usually refers to when an employee of a mortgage servicing company signs foreclosure documents without reviewing them. Rather than actually reviewing the individual details of each case, robo-signers assume the paperwork to be correct and sign it automatically, like robots. Robo-signing can also refer to the forging of executive signatures by lower-level employees, or a signature accompanying a faked title. It can also refer to failing to practice proper notary requirements.
Banks or mortgage servicing companies will use the practice of robo-signing documents to foreclose on borrowers without verifying their accuracy. In many cases, the robo-signers don’t even read or understand the document they are signing…and often several thousand documents might be robo-signed by a single individual in a month.
The normal process leading up to foreclosure consists of the following:
- As part of the foreclosure process in the 25 or so states that require judicial foreclosure (the lender must go to court), most of the time the lender has prepared the necessary information to demonstrate that the homeowner has defaulted on a mortgage, and that the lender owns the mortgage.
- For the most part, in a judicial foreclosure state, the lender proves the facts by submitting documents and a written statement signed under oath (called an affidavit) by a person (typically a bank employee) who has reviewed the documents, and who is supposed to have some personal basis for believing the facts to be true.
This process is generally in place to prevent foreclosures on homes where the foreclosing bank cannot prove that it actually owns the mortgage, or where the homeowner is not actually in default to the degree asserted in the foreclosure papers.
However, since the robo-signing scandal has broken, it has been revealed that several larger banks have routinely used affidavits signed by employees who have not personally reviewed the documents, and have no basis for believing that the homeowner is in default — or that the bank owns the loan.
Indicators of robo-signing include:
- The most evident indication of robo-signing is a borrower who has proof of never being delinquent in his or her payments.
- Proof that the borrower is making payments as contractually agreed, and funds are misapplied, or not applied at all.
- An incorrect bank name is reflected on the documents. For instance, a Bank of America employee signing documents on behalf of Bank of New York. (Documents signed by persons who do not have the legal authority to sign them may very well be void.)
- If the borrower identifies that the document has not been properly executed.
The document has to have the proper dates on it, and may have to meet state law notary requirements. We have seen foreclosure notices with a signature — while missing a date, or any evidence that the document was actually notarized.
Robo-signing has been revealed to be a crisis dating back several years (so far, questionable documents have been found dating back to 1998) – with ramifications that may stretch far into the future. This is because recently, more of the documents in question for robo-signing practices are for re-financing, or for new purchases by people in good standing.
So far, tens of thousands of robo-signed documents are jeopardizing homeowners’ legal ownership by raising the question of who legally owns their home. Title-deeds are being questioned in court, impacting not only whether the home-owner can sell their home…but if they even actually own it.
How prevalent is robo-signing? An investigation of mortgage documents in one Massachusetts county revealed more than 25,000 suspect signatures; in one North Carolina county, 74 percent of signatures inspected on mortgage documents were questionable; and in one Illinois county, a random sample of 60 documents revealed that all 60 – 100 percent – carried robo-signed signatures.
What can you do if you’ve received a notice of foreclosure, and want to make sure you haven’t been caught up in the robo-signing scandal?
- Collect and review the documents in question.
- If you think the document you’ve received is questionable, or may have been robo-signed, contact an attorney that can assist you in a forensic loan audit, or a securitization audit. These can assist with identifying if you are a victim of robo-signing, and help you to pursue the lender further.
Note: As of today, finding the evidence of robo-signing does not STOP foreclosure – but it does potentially offer the borrower an opportunity to delay the process by requesting a workout option. This ultimately results in more time to come to a mutual agreement.
If the lenders are suspected to have participated in the robo-signing process, the Attorney General may choose to further investigate the allegations. And if so, if you desire to remain in your home, you can use the extra time to come up with a plan to do so.
Kella McCaskill has worked with the country’s largest financial institutions in the mortgage lending industry for the past 10 years, and is founder of Community Housing Assistance Services, Inc in Tampa, Florida, consulting and training law firms and non-profit organizations. She has written about the foreclosure epidemic and illegal banking practices for National Consumers Digest Magazine, and serves the local community as an advocate “to assist in the reduction of homelessness resulting from foreclosure.” Along with her mobile and e-workshops for homeowners, she created the interactive DVD “Loan Mod 101.” For more info visit:http://www.kellamccaskill.info