Tuesday, October 12, 2010

Major banks forced to suspend foreclosures after 'robo-signing' of documents exposed

Sign Of The Times - ForeclosureImage by respres via FlickrGMAC Mortgage, JPMorgan Chase and Bank of America recently announced that they were suspending foreclosures after lawsuits exposed fraudulent practices. Other banks charged with illegalities include Wells Fargo, CitiMortgage, HSBC and National City.

The Washington Post reported Oct. 9 that senior Obama administration officials were saying that "a nationwide moratorium on foreclosure sales may be inevitable, despite their grave reservations about the impact a broad freeze would have on the nation's housing market and economic recovery."

Problems turning up in courts across the country are varied, the New York Times reports, but all involve documents that must be submitted before foreclosures can proceed legally. Here are some of the more common shortcuts that have been exposed:
  • Thousands of documents have been signed by employees, dubbed "robo-signers," who admit they have not verified crucial information like amounts owed by borrowers.
  • Questionable legal notarization of documents has been common, in which, for example, the notarizations predate the actual preparation of documents—indicating that signatures were never actually reviewed by a notary.
  • Other notarizations took place so far from where the documents were signed that it was highly unlikely that the notaries witnessed the signings, as the law requires.
  • On other important documents, an official’s name is signed in radically different ways suggesting that some are forgeries.
Additional problems have emerged, the Times reports, when multiple banks have all argued that they have the right to foreclose on the same property, "a result of a murky trail of documentation and ownership."

This is a developing story that will have a wide and deep immpact
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