Home > Foreclosure alternatives > ‘Robo-signer’ Investigations Bring Foreclosures To a Halt

‘Robo-signer’ Investigations Bring Foreclosures To a Halt

 

"Robo-signers" allegedly signed thousands of foreclosure documents without properly reviewing them.

 

In the last week, we’ve added a new word to the English language: “robo-signer.”

With all the foreclosures in the banking system’s and the default processing industry’s pipeline, several states have filed complaints alleging that processors signed thousands of documents without even reading them.

Several big players in the mortgage industry — GMAC, Bank of America, and JP Morgan Chase — have asked judges to halt foreclosure proceedings in some states while they determine if proper procedures were followed, according to an article in the New York Times.

With the complicated system of mortgage securitization, it is often difficult to prove exactly who owns the note on a particular piece of property. So often, lenders will begin foreclosure proceedings using an affidavit attesting that they own the note on the property. Often these affidavits are prepared by the law firms processing the foreclosure.

Here is where investigators are alleging that the robo-signers came into play, as they would sign off on documents without verifying basic information such as how much a borrower actually owes. And, investigators say, some documents were notarized improperly, with notaries stamping documents that had yet to be signed in some cases.

How will this affect you as a home owner?

If you are in some stage of foreclosure, the proceedings against you will likely be delayed while your lender verifies that all the paperwork they filed is correct. Some estimates state that delays will run in the neighborhood of 30-90 days, but nobody can be sure at this point.

If you are buying a foreclosed property, much of the foreclosed inventory in the country is frozen while the banks conduct their investigations. Expect delays in closing if you are in contract to purchase a foreclosed property.

And what will this mean to the economy and the real estate market as a whole?

Steven Pearlstein writes in his Washington Post column that “there may be some good that comes out of this mess.”

“Stretching out the foreclosure process would reduce the number of houses dumped on the market over the next six months, which could help firm up housing prices in the short term and put some extra support under a sagging economy. But everyone should understand that the longer the foreclosure process goes on, the longer it will take for the excess supply of houses to be absorbed, for prices to stabilize and for the real estate market to return to something closer to a normal equilibrium.

A moratorium should also put pressure on banks and loan servicers to finally bite the bullet, as many of us suggested they do two years ago, and move more aggressively to restructure problem loans by writing off more of the principal and refinancing what remains at lower interest rates over longer terms.”

Advertisements
  1. No comments yet.
  1. No trackbacks yet.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: