Robo-Signing Mortgage Documents Causes Stir
July 20, 2011
In March, big bank mortgage lenders promised to terminate fraudulent document practices, but evidence suggests many of these practices are still prevalent. These practices have led to unwarranted foreclosures and left many homeowners with ruined credit. A practice, known as robo-signing, has caused major problems in the mortgage industry and raising concerns among the federal regulation agencies.
What Is Robo-Signing?
There are several ways in which these practices can stir up trouble for homeowners. Under qualified bank employees are signing off on mortgage related affidavits without confirming the details of the loan. These affidavits specify whether the bank owns the loan or whether the homeowner still owes on the loan, causing issues with the current status of the mortgage loan. Some loans appear delinquent when, in actuality, the payments are either (a) owed by the homeowner and current or (b) have been transferred to the hands of the bank.
These official loan documents end up being unlawfully notarized and become official, despite inaccurate information. Many times the notary is not present at the time the signatures were made or the notary’s signature was forged. There have also been cases of a bank employee signing documents representing many different financial institutions. In cases where official documents contain inaccurate information and have been unlawfully verified, contesting the inaccurate information is nearly impossible. Many homeowners are finding themselves responsible for falsely delinquent mortgage loans.
What Is The Solution?
Federal regulation agencies have increased patrol of big bank mortgage lenders and have been keeping a closer eye on business practices. The robo-signing scandal came to light earlier this year and lenders were required to stop these practices. However, as evidence surfaces about the continuation of such practices, it is evident more protections need to be in place. A plan for a more lender audits is in the works to help identify and prosecute violators of the regulations that have been put into place. Consequences for violators are being revised to include more severe penalties for violators.
