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Big banks still robo-signing, committing foreclosure fraud

Seriously? After all of this?

It is shocking that big banks are still perpetrating the same sins that have landed them in court with everyone from the feds to homeowners, but it is almost not even surprising that this bad behavior continues even today. In July, we reported that robo-signatures were still being used amidst scandal, so it is conceivable that six more weeks hasn’t changed anything.

This spring, all of the major banks signed regulatory consent orders to improve their foreclosure practices after major illegal infringements, mostly revolving around robo-signing which is where a signature is given to documents that have not been manually reviewed, and one person’s signature ends up on hundreds of documents in a day with the handwriting not matching (hint: multiple people using one person’s signing authority). For months, banks have been negotiating with states attorneys to settle the loan-servicing abuses.

Consent orders be damned

Regardless of signing consent orders, AmericanBanker.com (AB) has uncovered evidence that the robo-signing practice continues almost a year after banks were caught in the scandal. As recently as August, documents show Bank of America, Wells Fargo, OneWest Financial and Ally Financial (including others) to contain backdating of paperwork necessary to support their right to foreclose. Additionally, various documents reviewed by AB included signatures by current bank employees claiming to represent lenders that no longer exist.

A consumer bankruptcy lawyer in North Carolina told AB that servicers and trustees submit promissory notes in court without proper endorsements showing the chain of title from one lender to another, then afterward there will be “a magically appearing note with a stamped endorsement.” Plaintiff’s lawyers depose the person whose name is “magically” stamped on the endorsement and are being told that the signer is no longer with the bank or party for whom they signed. One New York bankruptcy lawyer called such mortgage documents “Ta-Da!” assignments because they seem to appear out of nowhere.

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Perhaps MERS halting all facilitation of foreclosures has given banks a reason to scramble and continue to do things inappropriately rather than on the straight and narrow as they have all pledged to do, but in the meantime, it is not just investors that stand to lose when this house of cards crumbles, but ultimately, the homeowners who are being illegally foreclosed on stand to lose the most.

Tara Steele is the News Director at The American Genius, covering entrepreneur, real estate, technology news and everything in between. If you'd like to reach Tara with a question, comment, press release or hot news tip, simply click the link below.

31 Comments

31 Comments

  1. Kathleen Cosner

    September 2, 2011 at 3:54 am

    Glad you reported on this Tara! Just read an article last night from the AP, published in the Plain Dealer, that robo-signing has been found on Deeds, and origination docs going back to *1998* in maybe 4-5 states!

  2. Jonathan Benya

    September 5, 2011 at 1:40 pm

    No surprise here. Banks are trying furiously to get the foreclosure train back on the tracks, and they have no idea how to do it without committing fraud.

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